State House News Service: Minimum wage, tolls, tax exemptions change as lawmakers enter 2008

Posted January 3, 2008

As of Tuesday, it cost drivers more to ride on the Massachusetts Turnpike, residents face larger tax penalties if they don't have health insurance, and the state's lowest paid workers will get a bump in their weekly checks. The New Year triggers the series of changes tied to the calendar and the end of the six-week winter legislative recess.

The state's minimum wage rises from $7.50 to $8 an hour. In 2006, over the veto of Gov. Mitt Romney, the legislature agreed to boost the wage floor from $6.75 to $7.50 an hour on Jan. 21, 2007, and to set up this week's wage hike. Supporters of the wage increase claim that more than 300,000 workers are affected, mostly adults who work full-time.

Massachusetts is now be tied for third-highest minimum wage, with California, trailing Washington and Oregon, where indexed minimum wages will surpass the $8 an hour threshold. Illinois also has an indexed minimum wage that will push that state's wage floor to $8.25 in 2010. While business groups and Republicans will likely continue to resist efforts to further raise the minimum wage, activists, with no more wage hikes on the horizon, are likely to step up their campaign for an indexed wage.

Health insurance requirement

The penalty phase of the state's new mandatory health insurance law has already begun, with non-exempt individuals who failed to secure insurance by Dec. 31, 2007, subject to the loss of their personal exemptions, worth $219, when they file tax returns in the spring. But the dawn of the new year raises the stakes for the uninsured. As of Tuesday, the meter is now running on the monthly basis for non-exempt uninsured individuals in Massachusetts. The penalty in 2008 is up to half of the cost of the least expensive health insurance plan available, which leaves the Department of Revenue, controlled by Gov. Deval Patrick's administration, with broad discretion to determine the depth of the financial hit for being uninsured.

Dick Powers, a spokesman for the state Connector Authority, said individuals earning between $30,000 and $50,000 per year fall into the affordability "grey area," making them the most likely to seek exemptions from the mandate or hardship waivers.

Personal tax exemptions

The personal tax exemptions that were erased under a 2002 tax increase law, which was enacted over acting Gov. Jane Swift's veto, will be full restored in the new year. Tax revenue growth eclipsed the 2.5-percent threshold needed to trigger the latest increase in personal exemptions, which will rise in 2008 to $8,800 for a married couple filing jointly and to $4,400 for a single person.

"It's worth about $25 million in lost revenue, and it will deliver for the married filing jointly household about $29.15; for a single person fourteen dollars and change," said Department of Revenue spokesman Robert Bliss.

Tax rate

Voters in 2000 approved a ballot question reducing the income tax rate to 5 percent, but that rate was frozen at 5.3 percent under the 2002 law. Tax cut supporters railed against the schedule of minor tax cuts that the Legislature put in place when they raised taxes, saying that meaningful tax relief was not achievable under the plan. The schedule takes a new twist in 2008 when, later in the year, revenue collectors will determine whether growth for the year is sufficient to prompt a reduction in the income tax rate itself. Current law calls for the rate to be dropped in half-point increments over six years, culminating in a 5 percent rate in 2014.

Toll hikes

Massachusetts commuters may have avoided some of the doomsday toll increase scenarios put forward by the state turnpike authority in November, but tolls are still set to rise in the New Year. On Jan. 1, tolls in Boston's Ted Williams and Sumner tunnels increased 50 cents to $3.50, and tolls at the turnpike extension in Allston and Weston went up to $1.25, from $1. Drivers with Fast Lane transponders will have the same level of discount, and new transponders will cost $5 less under a deal reached with manufacturers last month.

Reporting by the State House News Service