The way we tax

With revenue diminishing due to the stock market downturn and rising unemployment rates, the Bay State is experiencing the same fiscal squeeze being felt nationwide. As states across the country struggle with tax levies that no longer seem to be covering the spending obligations they took on during the 1990s boom years, the adequacy, fairness, and efficiency of state revenue regimes have become critical issues. How appropriate, then, it is that this year’s Government Performance Project report, in the February issues of Governing magazine, is titled “The Way We Tax.” In this 50-state evaluation, Governing graded each state on a scale of one to four stars in three areas of taxation: how well it generates money sufficient to support services the state offers; the equity of the system for taxpayers; and how well the tax-collection system is managed. Although the magazine of state and local government concludes that “most state tax systems are inadequate for the task of funding a 21st Century government,” Massachusetts makes it into the middle of the pack, receiving seven out of a possible 12 stars.

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One reason for the middling score is the Bay State’s heavy reliance on the personal income tax (third highest among the 50 states). This costs Massachusetts points in both adequacy (income taxes are volatile, more subject to swings in the economy than property or sales tax, and therefore subject to shortfalls) and fairness to taxpayers (this is not fully explained, but the non-means-tested exemption of all services and many goods from the sales tax seems to score against us, a well as placing the bulk of last year’s tax-hike burden on individual tax-filers). But Governing is impressed by the Commonwealth’s management of tax collection. It notes that electronic filings amount to one-third of all tax returns (saving the state time and money), and that last year’s tax amnesty program, expected to generate $42 million, brought in more than $100 million. The magazine also calls the Bay State a “pioneer” in pulling cash directly from the bank accounts of tax debtors.

State
Total Score (stars)
Adequecy of Revenue
Fairness To Taxpayers
Management of System
% of Revenue From Income Tax (rank)
Delaware
11
* * * *
* * *
* * * *
33.1 (28)
Hawaii
9
* * * * * * * * *
31.5 (33)
North Dakota
9
* * * * * * * * *
17.3 (41)
South Dakota
9
* * * * * * * * *
*
Idaho
8
* * * * * * * *
40.3 (20)
Indiana
8
* * * * * * * *
37.0 (23)
Michigan
8
* * * * * * * *
30.5 (35)
Minnesota
8
* * * * * * * *
43.6 (11)
Missouri
8
* * * * * * * *
43.2 (13)
New Mexico
8
* * * * * * * *
20.7 (40)
Utah
8
* * * * * * * *
41.9 (16)
Vermont
8
* * * * * * * *
31.1 (34)
Wisconsin
8
* * * * * * * *
43.8 (9)
Wyoming
8
* * * * * * * *
*
Georgia
7
* * * * * * *
48.2 (7)
Iowa
7
* * * * * * *
36.6 (24)
Kansas
7
* * * * * * *
39.8 (21)
Maine
7
* * * * * * *
43.5 (12)
Maryland
7
* * * * * * *
43.8 (9)
Massachusetts
7
* * * * * * *
57.7 (3)
Nebraska
7
* * * * * * *
40.5 (19)
New Hampshire
7
* * * * * * *
4.3** (42)
New Jersey
7
* * * * * * *
41.5 (17)
New York
7
* * * * * * *
59.0 (2)
North Carolina
7
* * * * * * *
48.2 (7)
Ohio
7
* * * * * * *
42.3 (14)
Oregon
7
* * * * * * *
74.4 (1)
Pennsylvania
7
* * * * * * *
31.7 (32)
Washington
7
* * * * * * *
*
Alaska
6
* * * * * *
*
Arizona
6
* * * * * *
22.7 (38)
Arkansas
6
* * * * * *
31.9 (31)
Connecticut
6
* * * * * *
42.2 (15)
Florida
6
* * * * * *
*
Kentucky
6
* * * * * *
33.8 (27)
Louisiana
6
* * * * * *
24.3 (37)
Montana
6
* * * * * *
37.2 (22)
Oklahoma
6
* * * * * *
35.9 (25)
Rhode Island
6
* * * * * *
41.4 (18)
South Carolina
6
* * * * * *
34.6 (26)
Virginia
6
* * * * * *
55.1 (4)
West Virginia
6
* * * * * *
28.8 (36)
California
5
* * * * *
49.3 (5)
Colorado
5
* * * * *
48.8 (6)
Illinois
5
* * * * *
33.1 (38)
Mississippi
5
* * * * *
21.8 (39)
Texas
5
* * * * *
*
Alabama
4
* * * *
33.0 (30)
Tennessee
4
* * * *
2.5** (43)
Nevada
3
* * *
*

* State has no income tax.
** Income tax applies only to interest and dividends.

Source: Governing magazine (www.governing.com)

 

State
Total Score (stars)
Adequecy of Revenue
Fairness To Taxpayers
Management of System
% of Revenue From Income Tax (rank)
Delaware
11
* * * *
* * *
* * * *
33.1 (28)
Hawaii
9
* * * * * * * * *
31.5 (33)
North Dakota
9
* * * * * * * * *
17.3 (41)
South Dakota
9
* * * * * * * * *
*
Idaho
8
* * * * * * * *
40.3 (20)
Indiana
8
* * * * * * * *
37.0 (23)
Michigan
8
* * * * * * * *
30.5 (35)
Minnesota
8
* * * * * * * *
43.6 (11)
Missouri
8
* * * * * * * *
43.2 (13)
New Mexico
8
* * * * * * * *
20.7 (40)
Utah
8
* * * * * * * *
41.9 (16)
Vermont
8
* * * * * * * *
31.1 (34)
Wisconsin
8
* * * * * * * *
43.8 (9)
Wyoming
8
* * * * * * * *
*
Georgia
7
* * * * * * *
48.2 (7)
Iowa
7
* * * * * * *
36.6 (24)
Kansas
7
* * * * * * *
39.8 (21)
Maine
7
* * * * * * *
43.5 (12)
Maryland
7
* * * * * * *
43.8 (9)
Massachusetts
7
* * * * * * *
57.7 (3)
Nebraska
7
* * * * * * *
40.5 (19)
New Hampshire
7
* * * * * * *
4.3** (42)
New Jersey
7
* * * * * * *
41.5 (17)
New York
7
* * * * * * *
59.0 (2)
North Carolina
7
* * * * * * *
48.2 (7)
Ohio
7
* * * * * * *
42.3 (14)
Oregon
7
* * * * * * *
74.4 (1)
Pennsylvania
7
* * * * * * *
31.7 (32)
Washington
7
* * * * * * *
*
Alaska
6
* * * * * *
*
Arizona
6
* * * * * *
22.7 (38)
Arkansas
6
* * * * * *
31.9 (31)
Connecticut
6
* * * * * *
42.2 (15)
Florida
6
* * * * * *
*
Kentucky
6
* * * * * *
33.8 (27)
Louisiana
6
* * * * * *
24.3 (37)
Montana
6
* * * * * *
37.2 (22)
Oklahoma
6
* * * * * *
35.9 (25)
Rhode Island
6
* * * * * *
41.4 (18)
South Carolina
6
* * * * * *
34.6 (26)
Virginia
6
* * * * * *
55.1 (4)
West Virginia
6
* * * * * *
28.8 (36)
California
5
* * * * *
49.3 (5)
Colorado
5
* * * * *
48.8 (6)
Illinois
5
* * * * *
33.1 (38)
Mississippi
5
* * * * *
21.8 (39)
Texas
5
* * * * *
*
Alabama
4
* * * *
33.0 (30)
Tennessee
4
* * * *
2.5** (43)
Nevada
3
* * *
*

* State has no income tax.
** Income tax applies only to interest and dividends.

Source: Governing magazine (www.governing.com)

State
Total Score (stars)
Adequecy of Revenue
Fairness To Taxpayers
Management of System
% of Revenue From Income Tax (rank)
Delaware
11
* * * *
* * *
* * * *
33.1 (28)
Hawaii
9
* * * * * * * * *
31.5 (33)
North Dakota
9
* * * * * * * * *
17.3 (41)
South Dakota
9
* * * * * * * * *
*
Idaho
8
* * * * * * * *
40.3 (20)
Indiana
8
* * * * * * * *
37.0 (23)
Michigan
8
* * * * * * * *
30.5 (35)
Minnesota
8
* * * * * * * *
43.6 (11)
Missouri
8
* * * * * * * *
43.2 (13)
New Mexico
8
* * * * * * * *
20.7 (40)
Utah
8
* * * * * * * *
41.9 (16)
Vermont
8
* * * * * * * *
31.1 (34)
Wisconsin
8
* * * * * * * *
43.8 (9)
Wyoming
8
* * * * * * * *
*
Georgia
7
* * * * * * *
48.2 (7)
Iowa
7
* * * * * * *
36.6 (24)
Kansas
7
* * * * * * *
39.8 (21)
Maine
7
* * * * * * *
43.5 (12)
Maryland
7
* * * * * * *
43.8 (9)
Massachusetts
7
* * * * * * *
57.7 (3)
Nebraska
7
* * * * * * *
40.5 (19)
New Hampshire
7
* * * * * * *
4.3** (42)
New Jersey
7
* * * * * * *
41.5 (17)
New York
7
* * * * * * *
59.0 (2)
North Carolina
7
* * * * * * *
48.2 (7)
Ohio
7
* * * * * * *
42.3 (14)
Oregon
7
* * * * * * *
74.4 (1)
Pennsylvania
7
* * * * * * *
31.7 (32)
Washington
7
* * * * * * *
*
Alaska
6
* * * * * *
*
Arizona
6
* * * * * *
22.7 (38)
Arkansas
6
* * * * * *
31.9 (31)
Connecticut
6
* * * * * *
42.2 (15)
Florida
6
* * * * * *
*
Kentucky
6
* * * * * *
33.8 (27)
Louisiana
6
* * * * * *
24.3 (37)
Montana
6
* * * * * *
37.2 (22)
Oklahoma
6
* * * * * *
35.9 (25)
Rhode Island
6
* * * * * *
41.4 (18)
South Carolina
6
* * * * * *
34.6 (26)
Virginia
6
* * * * * *
55.1 (4)
West Virginia
6
* * * * * *
28.8 (36)
California
5
* * * * *
49.3 (5)
Colorado
5
* * * * *
48.8 (6)
Illinois
5
* * * * *
33.1 (38)
Mississippi
5
* * * * *
21.8 (39)
Texas
5
* * * * *
*
Alabama
4
* * * *
33.0 (30)
Tennessee
4
* * * *
2.5** (43)
Nevada
3
* * *
*

* State has no income tax.
** Income tax applies only to interest and dividends.

Source: Governing magazine (www.governing.com)