Understanding Our Tax System: A Primer for Active Citizens

An Introduction to the MassBudget Tax Primer
By: Kurt Wise and Noah Berger
Thursday, September 9, 2010

Taxes are the way that we combine our resources, through government, to accomplish things that we can’t do as well, or perhaps at all, as individuals: educate our children, build and maintain transportation infrastructure, provide police and fire protection, keep our air and water clean, promote public health, and maintain a social safety net. In a democracy, people are ultimately responsible for deciding how much of their resources to commit to paying for these public goods, and how to share those costs. That’s what tax debates are about.

This guide will provide tools for everyone who wants to understand and participate in those discussions. The primer explains the five principal criteria used to assess a tax system. It then provides an overview of the Commonwealth’s current tax system, describing how much revenue is collected from the most important categories of state and local taxes. Placing the Massachusetts tax system in a broader context, the primer moves on to show how Massachusetts compares to other states and to the U.S. as a whole, and how the Commonwealth’s system has changed over time. Finally, the primer provides a closer look at each of the six major kinds of taxes which together compose the Massachusetts tax system, trying to answer a number of basic questions: How does each of these taxes work and how much revenue does it raise? How has each of these taxes changed over time? How does each of these taxes affect different income groups?

A number of key observations emerge from the data provided in this primer. As readers will see, the Commonwealth’s tax system has changed significantly over the last three decades. During that time — and contrary to common belief — Massachusetts has become a relatively low-tax state for residents and for businesses. At the same time, these comparatively low levels of overall taxation do not fall evenly upon all income groups; low-income residents pay more than twice as much of their income toward state and local taxes than high-income residents do. Readers of this primer will explore these ideas in much greater detail and many other ideas as well.

With the help of this guide, readers can achieve a solid understanding of how the Massachusetts tax system works and how it affects the people who live here. Armed with that knowledge, readers will be in a position to participate more fully and effectively in the ongoing discussions about state and local taxes.

Understanding Our Tax System: A Primer for Active Citizens. Use the Article Navigation at the bottom of the MassBudget website to read chapters on:

Criteria for Assessing Taxes and Tax Systems
The Massachusetts Tax System
How Much of the Total Taxes Collected in Massachusetts Comes from Each Tax?
How Total State and Local Tax Revenue in Massachusetts Compares to Other States?
History of Changes in the Structure and Level of Taxation in Massachusetts
The Big Picture: Who Pays How Much Tax?
The Property Tax and Related Transfer Taxes
Personal Income Taxes
The General Sales Tax
The Selective Sales Taxes
Business Taxes
Other Taxes