Massachusetts is home to great colleges, amazing hospitals, high-tech success stories — and a dismal business tax climate.
That includes the highest per capita public debt burden in the nation, according to the national Tax Foundation, driven partly by six-figure state pensions, as the Herald reported this week.
The result is the Bay State is ranked as having the 36th most competitive state business tax climate in the nation, according to the Washington, D.C.-based Tax Foundation.
“The tax health of the state is not good,” said Michael Lucci, vice president of state projects for the nonprofit. “The state has a relatively high tax burden, especially compared to New Hampshire.”
The foundation ranks the Granite State among the Top 10 states for taxes on business, with Wyoming coming in first followed by South Dakota, Alaska, Florida, Montana then New Hampshire.
Connecticut, California, New York and New Jersey are rated as having the worst state business tax climate for 2020, the foundation states.
“Massachusetts as a whole has high income and strong growth and education is a key driver,” Lucci told the Herald. “But having a better tax code can make that better … and help the state if a recession were to hit.”
Key indicators show tax bills in Massachusetts are not as high as they were in the past, but the state is still in the Top 10 in many categories per capita, including:
- The second highest corporate tax collections at $320. The national average is $139.
- The third highest for individual income tax collections at $2,146. The national average is $1,083.
- The fifth highest for state and local tax collections at $6,469. The U.S. average is $4,946.
“The Taxachusetts label is not completely gone but it has improved. It is still a high tax state,” Lucci added.
Gov. Charlie Baker said Saturday “the single biggest thing we heard from the rating agencies … is actually not about pensions and debt, it was about the state of the state’s stabilization fund, and over the past several years we have basically tripled the size of our stabilization fund to $3.5 billion. It’s as big as it’s ever been.”
Baker said the pension payouts are “on a schedule” and the state will “fund them every single year on the schedule” that reaches to 2037.
UMass Amherst economics professor emeritus David Kotz urged continued investment in state infrastructure.
“Look at China. That country grew so fast because because the government invested in high-class railways and roads,” said Kotz. “We’ve got to invest in what we’re good at.”
