Here's the lede from Mass Budget and Policy Center (Blue, the color theme by no coincidence):
Seeking to close a $5 billion budget gap, the legislative Conference Committee crafted a budget that will require sacrifices across the board.
Oh my God, billions in the hole. Why?
Overall, state taxes as a share of the economy were $3.3 billion lower in FY2008 than they were in FY1998. The two primary causes of this decline were income tax cuts and erosion of the state sale tax.
Income tax:
- The income tax rate was reduced from 5.95 percent to 5.3 percent, costing $1.3 billion.
- The tax rate on dividend and interest income was reduced from 12 percent to 5.3 percent, costing $720 million.
- The personal exemption was increased from $2,200 per person to $4,400 per person, giving each taxpayer a cut of $117, and costing $440 million.
- In 2002 the state repealed the capital gains tax cuts enacted in 1994 which increased revenue by $1.1 billion.
Overall changes in the state income tax resulted in net loss of $1.4 billion in income tax revenues.
Nevermind that tax revenue has grown almost 50% over the past 10 years; nevermind that 2009 budget was the second highest in the history of the State.
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