Limited Taxation & Government
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Barbara's Bi-Weekly Column

The Patriot Ledger
Saturday, July 18, 1998

Tax cut isn't anything to be grateful for
By Barbara Anderson

I know it's summer and maybe you just want to be left alone. OK, but at least tell me you aren't pathetically grateful that politicians are offering to let you keep a sample of your own money.

I really can't bear to see taxpayers sitting up begging like dogs, or worse, lying on their backs with their paws in the air, grateful for a little attention from their masters. Wag, wag, lick, lick.

The fact is, you're not being offered much. Not only does the legislature pass a tax cut that is canceled by an increase in the same tax in the same bill, it generously offers us another tax cut that we could have passed ourselves on the November ballot. Then it calls this combination the "Biggest Tax Cut In State History," hereafter referred to as the BTCISH, and waits for us to wag our tails in gratitude.

First, legislators double the personal income tax exemption.  This is long overdue because, unlike the federal exemption, the Massachusetts exemption is not adjusted for inflation, and each year it loses value.

Next, legislators cut the 12 percent rate on savings and investment income to the same rate as wage and salary income. This is sweet of them, but this ratecut has already been certified as an initiative petition and we can do it without their help.

The rate on wage income will not be cut at all. With its refusal even to begin a phase-down from the present 5.95 percent, the legislature sends a defiant message that it has no intention of ever restoring the 5 percent rate as it promised when the increase was passed in 1989. Wag, wag, lick, lick.

Then we read the part about the tax increase.

The BTCISH lifts the cap on the state "rainy day" fund, which, when it is full, flows into the tax reduction fund and is returned to the taxpayer with an increase in the personal exemption. This year we taxpayers should get about $475 million from this fund -- more than the $423 million we get from the personal exemption in the BTCISH -- but the tax package keeps that money in the "rainy day" fund instead, thereby giving us a net reduction this year in our potential personal exemption.

There are other small, mostly overdue tax cuts, but because the "rainy day' fund tax increase is more permanent than anything else in the bill, and the investment rate cut is on the ballot, we rate BTCISH an overall negative.

It's like someone stealing my cookie, then offering to give me half back. I want to tell him he can keep the cookie and hopefully, choke on it; on the other hand, I really would like a taste. Then I find out that the thief is only returning crumbs.

Since I was hanging around the State House on the day the tax package was announced, I dropped by gubernatorial candidate Brian Donnelly's press conference about the state surplus. He said that we should all be better human beings and give my cookie to the needy. I was glad I hadn't eaten any cookies lately, or I'd have needed an airplane-style cookie bag.

Later I saw Scott Harshbarger on TV, offering my cookie to cities and towns. At least Pat McGovern once acknowledged that the cookie was originally mine, and offered to give it back one small piece a year. Governor Cellucci tried to get the whole cookie, but settled for crumbs.

Actually, all the Legislative Republicans, along with the Democrats, voted for the crumbs and the tax increase, with the exception of Senator Robert Hedlund, R-Weymouth. He, like Treasurer Joe Malone, wants the state surplus returned to the taxpayers who created it with the extra .95 percent on the income tax rate.

At least there are two people on Beacon Hill who don't roll over and play dead when the taxpayers need a watchdog. Meanwhile, the BTCISH dog do hunt: the surplus stays in the "rainy day" slush fund, the income tax rollback promise stays broken and taxpayers I suppose are grateful for small tax cuts.

Guess that's just the way the cookie crumbles. Wag, wag, lick, lick.

Barbara Anderson is co-director of Citizens for Limited Taxation and Government.

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