CITIZENS   FOR  LIMITED  TAXATION  &  GOVERNMENT

 

CLT Update
Wednesday, October 3, 2001

Boston Globe columnist calls for
freeze on tax rollback


After a decade of big revenue and spending increases, the Massachusetts Taxpayers Foundation is warning that the state faces a shortfall of as much as $1 billion compared to what is budgeted in the House and the Senate....

By freezing the tax cut until some certainty returns, we would simply be deciding not to cut taxes again, not raising taxes.

Freeze the tax cut
by Steve Bailey
The Boston Globe
Oct. 3, 2001


If you can believe it, Boston Globe business columnist "Downtown" Steve Bailey is calling to freeze the income tax rollback in one of the dumbest columns I've read in a long time. Apparently he sees no contradiction in his two above sentences.

"Dozens of changes have been made in Proposition 2 since it was passed," he further decrees, adding, "when voters ended rent control in Boston, Cambridge and Brookline, the Legislature amended the law to give the elderly and others more time."

Never mind that these examples are false, inaccurate and exaggerated (both laws have been merely tweaked around the edges, Prop 2 only half a dozen times in two decades); just how does it compare to gutting last year's Question 4 income tax rollback? The better, more accurate comparison would be what the Legislature is doing with the Clean Elections Law, also overwhelmingly passed by the voters ... a law championed by the Globe to this day!

And why was the promised tax rollback, in his opinion, "incredibly ill-timed"? Because the Legislature refused to honor its promise for eleven years as revenue surpluses poured in, and it took us two tries -- four years -- getting the signatures to finally put it on the ballot after being derailed in court by the teachers union the first time around!

Like poor, naive Charlie Brown, Steve Bailey is willing to trust Lucy the Legislature to hold the football in place this time, not pull it our from under him and flip him onto his butt again!

As you can see, the legislative leadership, backed by the misnamed, so-called Mass. Taxpayers Foundation and its downtown business community financiers, are moving on our tax rollback.

Chip Ford


The Boston Globe
Published on:
Thursday, October 4, 2001
Letters to the Editor

Fooling with the tax rollback again

"BY FREEZING the tax cut until some certainty returns, we would simply be deciding not to cut taxes again, not raising taxes," Globe business columnist Steve Bailey deceptively asserted ("Freeze the tax cut," Oct. 3).

It's absurd to again have to make this winning argument, but the income tax increase of 1989 was promised as only "temporary" -- needed just to get the state through its fiscal crisis of that time. Since then, state spending has doubled, a "rainy day" fund of over $2 billion has been squirreled away, and the promise was broken -- until voters finally kept it themselves with a resounding 59-41 percent vote.

The tax rollback is being phased in over three years -- a far more generous approach than when the increase was abruptly imposed. This provides legislators with an opportunity to plan ahead for a gradual adjustment in the tax rate back to its 1989 level.

Even more absurd is that taxpayers could possibly believe a freeze would last only "until some certainty returns." We've been there, done exactly that in 1989, and were betrayed for over a decade. The Legislature squandered any such credibility long ago. We taxpayers today recognize only too well, "Fool me once, shame on you; fool me twice shame on me."

CHIP FORD
Citizens for Limited Taxation
Peabody


The Boston Globe
Wednesday, October 3, 2001
BUSINESS

DOWNTOWN
Freeze the tax cut

By Steve Bailey

Timing may not be everything, but boy does it help.

Take Jane Swift, for instance. Last night the governor was all over television trying to show she is on top of a fragile situation here in Massachusetts, both at the airport, where terrorists hijacked two planes with disastrous results, and at the State House, where the fiscal situation is deteriorating by the day.

Meanwhile, her predecessor, Paul Cellucci, was comfy in Ottawa, far from the Massport director he appointed and the tax cut he fathered. Cellucci's big decision last night: Will it be Ben Stiller in "Zoolander" or Michael Douglas in "Don't Say a Word"?

The choices Cellucci left Swift are not nearly so appealing. There is still much we don't know about what went wrong at Logan, but on the economy and the state's fiscal position two things are perfectly clear: It is getting worse and worse in a hurry.

My advice to the governor: Swallow hard and freeze Cellucci's incredibly ill-timed tax cut.

We have heard it said over and over since Sept. 11, but when it comes to the economy the world really has changed. The debate about whether we are in a recession or not is over. The only questions are how long and how deep? Federal Reserve chairman Alan Greenspan has recognized just how extraordinary these times are by cutting short-term rates a full percentage point in two weeks.

Rather than picking around the edges, Swift should act just as decisively by delaying the tax cut voters gave themselves a year ago when the world was a very different place.

After a decade of big revenue and spending increases, the Massachusetts Taxpayers Foundation is warning that the state faces a shortfall of as much as $1 billion compared to what is budgeted in the House and the Senate. Last week the state reported that revenues for September were down a startling $228 million, or 13 percent, compared to a year ago -- putting the finishing touches on the state's worst quarter since 1990. "September confirmed all our worst fears," says House Speaker Thomas Finneran, who has seen this picture show before.

On Beacon Hill the talk is all about budget cuts, spending the $580 million surplus from last year and how much of the $1.7 billion rainy day fund to use. "It will not be pretty," says Senate President Thomas Birmingham.

And also not necessary. A year ago we could have had a reasonable argument about whether cutting the income tax rates was a good idea or bad, and the voters thought it was a good idea. Today, like the questions of whether we were headed for recession, that argument is over. The Cellucci tax cut was an incredibly bad idea.

Putting the tax cut on hold would mean about $450 million for the state each of the next two years. There is plenty of precedent for delaying the tax cut: Dozens of changes have been made in Proposition 2 1/2 since it was passed; when voters ended rent control in Boston, Cambridge and Brookline, the Legislature amended the law to give the elderly and others more time.

Both Birmingham and Finneran say that in recent days they have raised delaying the tax cut with Swift, but she told them she would veto any such move. Both judge it politically undoable. Swift's secretary of administration and finance, Stephen Crosby, says raising taxes now would be just the wrong thing now.

Crosby has been one of Swift's biggest assets, but he's wrong across the board here. By freezing the tax cut until some certainty returns, we would simply be deciding not to cut taxes again, not raising taxes. More important is the effect on the economy vs. the effect on the state budget: Delaying a $450-million tax cut will not produce a blip in a state economy approaching $300 billion. On the other hand, $450 million represents one damaging hole in the state's budget.


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