In Brief: Mass. Banks Pay Record in State Income Tax

A year after the state reformed the bank tax, Massachusetts banks reported paying a record $234 million in state corporate income taxes in the fiscal year ended June 30.

That's an increase of 14% from fiscal 1995, and $25 million more than state projections.

Critics of the 1995 bank tax reform law that will lower the tax to 10.5% from 12.54% over five years had predicted a decline in tax payments as a result.

But banking industry officials cited a stronger economy and bank earnings as reasons for the high tax payments. They said fiscal year 1996 was the first in which Massachusetts taxed out-of-state banks that do business there, even if the banks don't have a physical presence inside its borders.