|On Monday, the Massachusetts Department of Transportation (DOT) revealed a potential plan that lays out additional revenue sources for the state's transportation funding. The plan calls for an average of $1.02 billion per year in new revenue over the next 10 years. The plan would fully fund operations and implement a "21 Century Transportation Plan." Among the revenue proposals were five tax increases, as follows: payroll tax of 0.16 percent, gas tax increase by 30 cents per gallon, state sales tax increase to 7.75%, income tax increase to 5.66%, and finally, a new vehicle miles traveled tax of 2.4 cents per mile. It is unclear at this time, which of these revenue increases would be preferred by our elected leaders to fund the DOT plan.
The new 0.16% payroll tax proposed in Regional Transit Authority (RTA) districts would be a new regional tax, penalizing companies that employ workers within the RTA districts. If our goal is to put more people to work and be more business friendly, this is not a proper approach.
Next, although this tax has received much attention in the past few years, it remains one of the weakest options. Despite its unpopularity throughout the state (83% oppose a 15 cent increase ) the Mass DOT plan proposed a 30 cent per gallon gas tax increase which would take the Massachusetts gas tax from 21 cents to 51 cents. This would not only put Massachusetts as the highest in the New England area, but further, the highest in the nation. The federal gas tax is 18.4 cents per gallon, compounding the two taxes would cost Massachusetts drivers nearly 70 cents per gallon in taxes.
The next tax proposed was the state sales tax increase from our current 6.25% to 7.75%. This increase would again, not only put Massachusetts as the highest in the New England region, but also highest in the nation with California coming in at number two at 7.5%. The Massachusetts sales tax last increased in 2009, from 5% to 6.25%, a 25% increase. This proposed increase would be the 2nd over the last 4 years, rising nearly 55% since 2009.
Another proposal was raising the state income tax from 5.25% to 5.66%. Currently, Massachusetts is one of only seven states that issue a flat income tax. Among these other six, Massachusetts already has the highest tax percentage. However, if Massachusetts were to raise the income tax to 5.66% that would put us further out of touch with neighboring New Hampshire which has 0% income tax. Additionally, this increase would place Massachusetts as the 2nd highest among New England states based on the national medium income of $52,762.
The new vehicle miles traveled tax that was proposed would tax 2.4 cents for every mile traveled. This is difficult to put into perspective because despite pilot programs, no other state has implemented this tax, putting Massachusetts at the highest in the nation if applied. With the uncertainty of the effectiveness of such a new concept, this seems like a less than viable option. The proposed methods of measuring miles traveled are viewed as possible infringements to personal privacy and have a number of possible loopholes.
While we may agree that transportation needs should be at the forefront, these proposals may place Massachusetts at an economic disadvantage lacking competitiveness with neighboring states.