The proposed law would reduce and then repeal the 7 1/2% surtax on Massachusetts state income taxes and would limit state tax revenue growth to the level of growth in total wages and salaries of the citizens of the state.

It would set the rate of the surtax on Massachusetts state income taxes at 3 3/4% for tax years beginning during 1986, and it would repeal the surtax for tax years beginning on or after January 1, 1987.

The allowable state tax revenues for any fiscal year are limited to the allowable state tax revenues for the prior fiscal year as increased by the average rate of growth of Massachusetts wages and salaries for the three immediately preceding calendar years, For purposes of calculating the proposed limit for fiscal year 1987, allowable state tax revenues for fiscal 1986 are the net tax revenues for that fiscal year, but excluding revenues derived from the surtax on state personal income tax, Further, if in any fiscal year the calculation of the limit results in allowable state tax revenues less than the amount of allowable state tax revenues for the prior year, then allowable state tax revenues for that fiscal year shall be equal to the allowable state tax revenues for the prior year, The revenues limited by this law would not include non-tax revenues such as federal reimbursements, tuitions, fees and earnings on investments.

The amount of allowable state tax revenues for any fiscal year would have to be reduced if a new state law were enacted allowing local governments to impose new or increased taxes or excises, The reduction would be equal to the amount of revenue derived from the new tax or increase, The reduction in state tax revenues would first take effect in the fiscal year following the enactment of the new law authorizing new local taxes or increases.

If state tax revenues exceed the limit imposed by the proposed law, as determined by the State Auditor, a tax credit would have to be granted equal to the total amount of excess tax revenue, The credit would be applied to the then current personal income tax liability of all taxpayers in proportion to their personal income tax liability in the preceding year.

The provisions of this Act could be enforced in court by a group of taxpayers.