October 25, 2000
Can Both Cut Taxes and Fund New Services and Programs, Study Shows
can cut its personal income tax rate to 5% and still expand services
and programs, according to a just-released 40-page study by the Beacon
Hill Institute at Suffolk University. Even in the event of a recession,
the state can expand services and programs by 17.3% over the next five
years and do so without depleting its reserves.
7, voters will decide whether to approve ballot question 4, which would
reduce the state's personal income tax rate from 5.75% to 5% by 2003.
current law and without any tax cut, state spending can be expected
to rise by 8.1% annually, from $21.4 billion in calendar year 2000 to
$31.6 billion in 2005. Given inflation of 3%, the state will expand
services and programs by 27.5% over the five-year period without any
study finds that the tax cut would require only a decrease in the growth
of state government services and programs. No cuts would be required.
the tax cut and no recession, the state will still be able to
expand spending at an average annual rate of 6.5% over the next five
years. In no year will the increase in spending fall below 5%. The
state will be able to expand services and programs by 22.5% over the
the tax cut and a recession, the state will have to slow spending
growth only to 6.2% annually over the five-year period. The state
can expand services and programs by 17.3% over the five-year period
and do so without depleting its reserves.
tax cut will confer substantial economic benefits. By 2003 it will
create: 79,354 new jobs; $800 million in new business capital, such
as factories, computers and office space; and $6.17 billion in new
Tuerck, BHI Executive Director and Chairman of the Suffolk University
Department of Economics, said, Massachusetts can have this tax
cut and the substantial economic benefits it will confer and still generously
expand state services and programs. Not a single service or program
will have to be cut, not even if there is a recession.
Hill Institute at Suffolk University is a nonprofit, nonpartisan economic
research organization. The new study, Massachusetts STAMP and Question
4, shows how the state can expand both the private sector and government
as it implements the tax cut. The BHI FaxSheet, Economic
Answers to Question 4, summarizes the study's results and is
available at . Copies of the full study or the BHI FaxSheet can
be obtained by calling BHI at 617/573-8750.
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