On Taxation – the public cost of a 1 percent tax cut

Dear Editor,

Massachusetts voters may soon be asked to approve a simple-sounding idea: reduce the income-tax rate from 5 percent to 4 percent so every resident keeps more of their paycheck.

Here is the part that will get less attention: Tufts researchers estimate the proposal would reduce state revenue by $5.1 billion annually. Once fully phased in, it would wipe out roughly 10 percent of total state tax revenue, equivalent to about $1,250 in savings for the median household. But in a city like Revere, holes that size do not stay on Beacon Hill. They show up in the systems families rely on. They show up in what gets cut, what gets deferred, and what gets pushed back onto households one bill at a time.

For a typical household in Revere, the savings are real but hardly transformative. Census data puts the city’s median household income at $86,969. After applying the state’s personal exemption for a married couple filing jointly, a rough estimate puts the annual savings for a median Revere household at around $782, or about $65 a month. That money can cover gas, some groceries, or the odd bill. But it is also the kind of money that disappears fast in a high-cost-of-living area.

It is also worth asking what kind of political world this initiative comes from. It did not rise from the break room or the kitchen table. It came out of the Mass Opportunity Alliance, a coalition organized around maximizing private-sector “competitiveness.” The alliance was conceived by the Massachusetts High Technology Council in partnership with the Pioneer Institute and the Massachusetts Competitive Partnership, institutions that have long preached a politics of privatization, streamlining, and “competitiveness” in public life.

The coalition behind this tax-cut push is not made up of outsiders diagnosing a broken system. It comes out of the same governing ideology that has already left its mark on one of the commonwealth’s clearest public breakdowns.

Once you start weighing the budgetary gymnastics required to make up the $5.1 billion difference, the story gets ugly fast. Start with some of the biggest punching bags in Massachusetts politics. Shut down the trains and buses and zero out the MBTA’s $1.9 billion in funding. Strip out the state’s $1.2 billion housing production and assistance budget. Abolish the Department of Transitional Assistance, which funds food and cash assistance for those who need it most, at $1.178 billion. Then add dismantling the State Police to recoup another half-billion or so annually. After all that, the state would still be staring at a budget deficit of just over $200 million. Incidentally, the FY27 budget proposal includes $198 million for the state’s universal school meals program.

From there, kitchen-table math gets pretty simple. As of March 21, sliced ham and American cheese were on sale for $5 a pound, a loaf of store-brand bread was $1.49, and a bag of about 10 apples was $3.99. That comes to $15.48 for one bare-bones week of lunches for two kids: ten plain ham-and-cheese sandwiches and ten apples. Stretch that over four school weeks, and you are at $61.92. In other words, almost the entire monthly tax-cut savings for the median Revere household would barely cover the most stripped-down lunch routine imaginable for two children.

And on the same rough math that produces that household’s estimated tax cut, its contribution to the entire statewide school-meals budget comes out to only about $2.53 a month. This is what anti-tax politics always tries to hide: public provision often costs each family very little compared with what the same need would cost them in the private sector.

It is easy to point to excessive overtime, management bloat, or political patronage in the state payroll. But even if the state cut its $10.9 billion payroll in half, every libertarian’s dream, it would only just fill the tax-cut gap. In reality, cuts that deep would not produce a leaner, more efficient public sector. It would mean empty desks, longer waits, and more work handed off to private contractors. The state’s own Taxpayer Protection Act warns against this: replacing public workers with private firms rarely serves the public interest.  Small government too often means the same work coming back with a consultant’s fee and a profit margin attached.

And who is really gaining from all this is not difficult to see. WBUR’s summary of the Tufts analysis found that households making between $75,000 and $200,000 would save about $1,267 a year. Households making more than $1 million would save about $37,421. MassBudget found the same basic pattern: the top 1 percent would receive an average annual tax cut of $31,600, while the bottom 80 percent would average just $534. In this sense, this effort reads less like tax relief and more like an attempt to reopen a question that Massachusetts voters already answered when they passed the Fair Share Amendment: should the state ask more of those at the top, or go back to delivering its largest tax breaks to them?

The age-old “Taxachusetts” crowd talks as if the $5 billion will just be deposited back into our pockets. It will not. If the state is to provide for its residents, the bill will instead get shifted onto the taxes and fees that are most regressive and harmful to the working class: property taxes, sales taxes, gas taxes, and tolls.

Furthermore, WalletHub’s 2026 ranking of state and local tax burdens puts Massachusetts 13th nationally, with a 9.57 percent tax burden. That is not low, but it is also nowhere near the caricature of some uniquely overtaxed outlier. At the same time, the Commonwealth Fund ranked Massachusetts first in the nation for overall health care system performance in 2025, and Massachusetts students led the country on all four main 2024 NAEP reading and math measures. Ohio has a tax burden similar to Massachusetts’s, yet it ranks 30th in overall health system performance, and its students scored significantly lower on average across all NAEP measures. Whatever truth “Taxachusetts” holds, Massachusetts is not collecting high taxes for bottom-of-the-barrel outcomes.

By now, the true nature of the campaign should be apparent. This is not a working-class tax-relief effort, but another scheme to facilitate an upward transfer of wealth, engineered by business-backed groups and political actors who have spent decades insisting that public systems can be slimmed, privatized, and disciplined into greater efficiency and profit. The people of the commonwealth have already seen this ideology come to pass. The result was not streamlined government or better outcomes, but deterioration, public frustration, and ballooning deferred-maintenance costs in the case of the MBTA. For Revere, it is a small gain for most, a windfall for the wealthiest, and a growing crack in the public infrastructure that we all rely on.

Matthew Terrell

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