Baxandall-Testimony-to-FMCB




Thank you members of the Fiscal Management and Control Board for the
opportunity to provide these comments. The Massachusetts Budget and
Policy Center (MassBudget) is a non-profit, non-partisan research
organization that seeks to improve economic and budgetary policy in the
Commonwealth.



I wish to address the Board’s ongoing consideration of
creating a low-income discounted fare system as some other transit
authorities have done. I wish to put this decision in the context of
broader trends in how the Commonwealth raises revenue and who the
Commonwealth raises revenue from.



In short, the Commonwealth’s revenue system is upside down.
The MBTA’s fare system is part of the problem, and it could
be part of a solution.



Massachusetts’ revenue system is “upside
down” because it asks those with lower incomes to contribute
a larger share of their income in state and local taxes than it does
for those with higher incomes. Those with lowest fifth of incomes in
the Commonwealth contribute on average 10 percent of their income in
taxes. The broad middle class with incomes in the middle three-fifths
of the income spectrum contribute a little over 9 percent of their
income. Meanwhile, people with the highest one percent of incomes pay
on average less than 7 percent of their income in state and local
taxes. As a portion of income, those with the greatest ability to pay,
contribute the least.



This situation came about because over the last two decades
Massachusetts cut its tax rate on earned income, dividends, interest,
and capital gains. While these progressive taxes have been cut, the
Commonwealth turned to higher sales taxes and other regressive user
fees.



Transit fares are example of a regressive user fee. And the
MBTA’s four fare increases since 2012 have make the situation
worse. For a commuter with investment income and salary of several
hundred thousand dollars a year, transit fares represent little more
than a nuisance. For a middle earner struggling with rising housing
costs, it’s a real burden. And for those with lower incomes,
higher fares can mean painful choices. As the initial findings of the
recent research study out of MIT suggest, for low-income riders, the
fare price matters a lot. Low-income riders sacrifice trips they would
have otherwise make to help themselves and their families.



It doesn’t have to be this way. MassBudget has published
research on over a dozen ways the Commonwealth can raise revenue more
progressively. Almost any fare increase will be highly regressive. But
reducing fares for low-income riders can be a small but meaningful step
toward turning our revenue system right side up, while also restoring
ridership.



Thank you for your attention and consideration.



Phineas Baxandall


Senior Analyst, Massachusetts Budget and Policy Center



Scroll to Top

Get news from Massachusetts Budget and Policy Center in your inbox.

Select list(s) to subscribe to


By submitting this form, you are consenting to receive marketing emails from: Massachusetts Budget and Policy Center, 1 State Street, Boston, MA, 02109, http://www.massbudget.org. You can revoke your consent to receive emails at any time by using the SafeUnsubscribe® link, found at the bottom of every email. Emails are serviced by Constant Contact