BOSTON, Mass. (WWLP) - Rising tax collections this year put Massachusetts on track of triggering an automatic income tax cut in 2013, but because tax collections have recently stalled, that tax cut will not be triggered.
Under state law, if tax revenues grow over a certain rate adjusted for inflation, it triggers a reduction in state income tax, which currently would be from 5.25 percent to 5.2 percent.
This trigger is a compromise reached between the Legislature and a successful November 2000 ballot question that called for an income tax reduction from 5.95 percent to 5 percent by 2003.
This recent tax cut would have cost the state up to $125 million dollars, but because of negative tax revenue growth, the income tax will not be reduced.
Jay Gonzalez says, "Tax revenues haven't been growing as fast as required to trip that statutory trigger and also it's adjusted by inflation and inflation has gone up the last three months. "
Secretary Gonzalez also says fiscal uncertainty stemming from Washington and Europe has weakened investor confidence.
It's negatively affecting the global economy and tax revenue collections here in the Massachusetts.