Massachusetts governor wants to hike income taxes, cut sales tax

Wed Jan 16, 2013 9:21pm EST

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Jan 16 (Reuters) - Massachusetts Governor Deval Patrick on Wednesday proposed hiking the state's income tax rate and lowering sales taxes as part of a plan to invest nearly $2 billion in education and infrastructure.

In his proposed overhaul of the commonwealth's tax system that he said would be fairer to taxpayers, Patrick said the income tax rate should rise by 1 percentage point to 6.25 percent.

Massachusetts should also double the personal exemptions for taxpayers while eliminating several itemized deductions, he said.

"There is no good time to raise taxes," Patrick, a Democrat, said in prepared remarks. "I would not ask if I did not believe in my heart that investing meaningfully today in education and transportation will significantly improve our economic tomorrows."

Patrick also proposed cutting the sales tax to 4.5 percent from 6.25 percent. He said sales tax revenue could then be used exclusively to fund transportation, school buildings and other public works.

"With these changes our sales, income and business taxes will be comparable to and competitive with other states in the region and beyond with which we compete," he said.

The proposal requires the approval of the Democratic-led Massachusetts legislature. Patrick is expected to make a formal budget proposal later in January.

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