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Refund of Revenue Surplus Could Spur Economy

BOSTON, MA  -- The windfall surplus in the Massachusetts FY 96 budget could be turned into a powerful stimulus to the state economy. This is the finding of the Beacon Hill Institute at Suffolk University.

By cutting the tax rate on earned income by enough to “” the surplus to state taxpayers and by making the tax cut permanent, the legislature would create 9,900 to 27,800 new jobs, bring about $1.4 to $2.1 billion in new capital spending and increase annual wages of Massachusetts workers by $667 to $932 million per year.

“ action by the legislature, the surplus will be returned through an increase in the personal exemption -- a step that will put the money back into the pockets of taxpayers, but that will do almost nothing to stimulate the economy,” said David G. Tuerck, Beacon Hill Institute executive director.

The Beacon Hill Institute used its dynamic, econometric state tax-analysis model to estimate the job-creating effects of the tax cut. Its findings are described in the BHI FaxSheet, The Massachusetts FY 96 Budget Surplus: Why the Good News Isn’t So Good and How to Make it Better.

The Beacon Hill Institute conducts economic research on public policy issues affecting Massachusetts citizens and businesses.


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