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Understanding Our Tax System: A Primer for Active Citizens

Note on updated information: For a partial list of Fiscal Year 2010 revenue impacts resulting from 1991-2009 tax law changes, please click here.

  Effective Date Tax Type FY06 Revenue Impact ($ Millions)
Corporate Research Tax Credit 1991 Corporate -59
Reduce Part B income tax rate from 5.95% & 6.25% to 5.3% 1992- 2002 Income -1,311
Increase Corporate Investment Tax Credit from 1% to 3% 1993 Corporate -32
Cigarette Tax Increase from $026/pack to $1.51/pack 1993, 1996, 2002 Cigarette 350
Conform MA Estate Tax With Federal Estate Tax 1993-1996 Estate -268**
Create New Head of Household Income Tax Filing Status 1994 Income -16
Allow Investment Tax Credit for Leased Equipment 1994 Corporate -2
Raise No-Tax-Status Threshold for Low-Income Families with Children 1995 Income -15
Bank Tax Reform. Reduce Rate From 12.54% to 10.5% Over 5 Years 1995-1999 Financial Institutions -17
Single Sales Factor Apportionment Formula for Manufacturers 1996-2001 Corporate -69
Harbor Maintenance Tax Credit 1996 Corporate -2
Long-Term Capital Gains Tax Rate Reduction from 6.0% to 0%, then raised to 5.3% 1996 - 2002, 2003 Income -185
Apportionment Changes for Mutual Fund Companies 1997 Corporate -132
Raise Under 12 Dependent Deduction From $600 to $1,200 1997 Income -18
Exempt From State income Tax of Retirement Pay and Survivorship Benefits of Retirees from the Military and Other Uniformed Services. 1997 Income -19
Tuition Deduction 1997 Income -14
Tax Credit for Septic System Repairs Required by Title V 1997 Income -16
Implemented 10% Earned Income Tax Credit, then Increased it from 10% to 15% of Federal Credit 1997, 2001 Income -80
Sales Tax Exemption for Internet Access 1997, retroactive to 1990 Sales -72
Self-Employed Health Insurance Deduction (Federal Change, State Link) 1998 Income -25
Convention Center Surcharges 1998 Rooms, Sales 56
$250,000/$500,000 Capital Gains Exclusion for Sale of Principal Residence 1998 Income -5**
Exempt Earnings and Distributions for Roth and Education IRAs 1998 Income -3
Allow Income Exclusion for Contributions to "403b" Annuity Plans 1998 Income -50
Reduce Tax Rate on Interest/Dividend Income from 12.0% to 5.3% 1998, 2000, 2001, 2002 Income -534
Personal Exemptions Doubled in 1998, Reduced by 25% in 2002, Increased in 2005, and 2006 1998, 2002, 2005, 2006 Income -295
Utilities Deregulation 1999 Sales -28
Insurance Tax Cuts 1999-2004 Insurance -40
Sales Tax Exemption for Rebates/Coupons 2000 Sales -17
Senior Circuit Breaker 2001 Income -37
Increase Rental Deduction from $2,500 to $3,000 2001 Income -16
Increase Higher Education Student Loan Deduction 2001 Income -5
Eliminate 3% Adjusted Gross Income Floor on Adoption Expense Deduction 2001 Income -1
Increase Dependent Under 12 Deduction from $1200, Extend it to Elderly and Disabled Dependents 2001 Income -96
Raise Child Under 13/Dependent Care Expense Deduction from $1,200 to $3,600/$7,200 2001 Income -115
Low Income Housing Tax Credit 2001 Income -20
Aircraft & Aircraft Parts Sales Tax Exemption 2002 Sales -8
EGTRRA Pension Changes 2002 Income -30
Use Tax Reporting on Income Tax Returns 2004 Sales 3
Taxation of MA Source Income 2003 Income 1
Royalty/Interest Addback & Sham Transaction Loophole Closing 2003 Corporate 58
Subsidiary S-Corp Loophole Closing 2003 Corporate 45
Eliminate Exemption for Corporate Trusts Having Less than 10% of Income Attributable to Massachusetts 2003 Income 5
Change to Interest Rate Paid On Refunds 2003 Various 28
R&D Status Expansion - Expenditure Test 2003 Corporate -10
FY03 REIT Loophole Closing 2003 Financial Institutions 50
Allocation of Non-Apportionable Income to Massachusetts 2004 Corporate 13
Massachusetts Business Trusts - Prevent Sheltering Sale of Assets 2004 Income 45
Sales Tax “Drop-Shipment” Provision 2004 Sales 4
Restrict Sales Tax Exemption for Promotional Advertising Materials 2004 Sales 15
Sales Tax “Morton Buildings” Provision (Use Tax -- Out of State Fabrication) 2004 Sales 4
Use Tax Reporting on Income Tax Returns 2004 Sales 3
Intercept Lottery Winnings to Pay Past Due Taxes 2004 Income 8
Massachusetts Securities Corporations - Updated Definition of Securities 2004 Corporate 13
Fire Sprinklers Accelerated Depreciation 2004 Income, Corporate -2
2005 Federal Income Tax Code Update 2005 Income -23
Historic Preservation Tax Credit 2005 Income, Corp/Business Excises -1
Collection of Taxes – Extending the “Lifetime” of a Tax Lien 2005 Various 1
Heating Deduction 2005 Income -15
Energy Efficiency Credit 2005 Income -28
Federal Telecomms Internet Access Tax Moratorium 2005 Sales -13
Tax Income of Nonresident Partners from Sales of Partnerships Holding Real Estate 2005 Income 15
Penalties — Abusive Tax Shelters 2005 Various 3
Apply Sales Tax to Standardized Software in Intangible Form 2005 Sales 13
FY06 Sales Tax Holiday 2005 Sales -15
License Renewals and Tax Compliance 2005 Income 2
Medical Device User Fee Credit 2006 Corporate, Income -4
Sunday Liquor Store Openings 2006 Alcoholic Beverates 2
Eliminate Small Business Exemption for Energy Purchases 2006 Sales 2
Total

-3,027
* Excludes tax law changes where initial impact was after FY06
** Original revenue estimate. Not updated for recent growth in financial or housing markets. Actual impact is most likely higher.
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