MA state tax update

From: Rich Carreiro <rlcarr@animato.pn.com>
Subject: MA state tax update
Date: Tue, 19 May 1998 09:53:27 -0400

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There are now competing tax cut plans in the MA legislature.

The current system:
* Earned income taxed at a flat 5.95%.
* Mass bank interest taxed at 5.95% after an exemption of $100
  ($200 if MFJ).
* To "5.95% income" you can apply a $2200 exemption ($4400 if MFJ)
  with deductions allowed for FICA+Medicare contributions
  (capped at $2000 per person), medical expenses, 50% of rent paid
  (capped at $2500 per household), and a few others.
* Long-term gains taxed from 3% to 5% depending on holding period 
  (when fully phased in the tax will be from 0% to 5% depending on
  holding period).
* All other unearned income taxed at 12% (!)
* Does not conform to federal treatment of Roth IRAs.
* Does not conform to federal treatment of gain on sale of residence.

The system passed by the MA House:
* Tax on short-term gains lowered from 12% to 10%.
* All other income taxed at 5.7%.
* Conforms on Roths.

The system introduced in the MA Senate:
* Leaves all rates the same (with an exception noted below).
* Doubles exemption to $4400 ($8800 if MFJ).
* Conforms on Roths.
* Conforms on sale of residence.
* The tax on all unearned income for senior citizens with
  taxable income of less than $30,000 ($60,000 if MFJ) will 
  be 0% (no typo).

And finally, there's a question on the November ballot that if
approved by voters would reduce the tax on all unearned income
to 5.95%.

Rich Carreiro
rlcarr@animato.pn.com
P5-100/RedHat Linux 4.1



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