Gov. Deval Patrick's bold plan to raise revenue and invest in Massachusetts' future

Massachusetts Gov. Deval Patrick is proposing a tax overhaul to raise revenue for investments in transportation and education, while making the tax system more progressive. Patrick wants to lower the state sales tax, eliminate a corporate deduction, and raise both the income tax and the amount of income exempted from the income tax.

Under Patrick's plan, the state income tax would go up one percentage point, to 6.25 percent, but exemptions, the amount of income on which you don't pay income tax, would be doubled. At the same time, the sales tax would drop from 6.25 percent to 4.5 percent. The effect:

While average taxpayers who earn less than $37,523 would see a $100-to-$200 tax cut, everyone else would pay higher taxes. Those who earn more than $102,886 would bear the brunt, paying an additional $3,200 a year in combined income and sales taxes.

For those in between, the change would be less dramatic. Taxpayers who earn $37,523 to $60,414 a year would pay $100 more, while those who earn $60,414 to $102,886 would pay $400 more.

Patrick argued his plan will make the tax code simpler and fairer because he will double personal exemptions and eliminate 45 deductions. His plan ­also calls for changing the corporate tax code to raise $149 million annually. Those changes include ending a deduction for large companies and eliminating a special classification for security and utility firms.

This is the kind of big thinking that's too rare even in states, like Massachusetts, with Democratic governors and heavily Democratic legislatures. When they're in control, Republicans don't hesitate to enact sweeping agendas, but Democrats are so much more timid, a timidity we're already seeing in the responses of Massachusetts legislators to Patrick's proposal. But go below the fold to see how, introducing the plan in his State of the Commonwealth address, Patrick made the case for what the state could do with the $1.9 billion in additional annual revenue this plan would provide:

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