Limited Taxation
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Barbara's Column
July 2001 #1

State ponders 'tax cut' for those who don't pay taxes
by Barbara Anderson

The Salem Evening News
Tuesday, July 10, 2001

No matter where I am, if I'm speaking or writing, Miss Ball is there.

She sits erect, paying close attention to each word I choose, insisting that it be an accurate expression of the reality I wish to share with my listener or reader.

Her first question to her small class of college freshmen taking Advanced English was: "what is a chair?"

There were five of us in the class that term, and most of us just pointed at the thing on which we were sitting. Big mistake. For the next few sessions we had to sit on our hands as we learned to use words, not gestures, to express ourselves.

Go ahead, define a chair. No, it's not just something on which you sit: it's not a stool, sofa, bench, (or hands). OK, it has to have a back; does it need legs? So is a barstool with a back on it a chair? Help, it's my first day of college and I'm flunking already!

We learned to carry a dictionary, and then to think like a dictionary. We learned how to eschew sloppy word usage. And Miss Ball told us the reason for this: civilization depends upon the ability to communicate, and communication depends on the precise use of words.

So, there was Miss Ball, sitting on her chair in a corner of my mind last week, asking "what is a tax cut?"

Well, there's this budget surplus, and ... "Define surplus."

Uh, let's see, surpass, surplice, surplus: that which remains over and above what is required, in this case to fund budget appropriations. Excess revenue. Excess tax collections.

So, if excess tax collections are returned to taxpayers (people who pay taxes), it's called a tax cut.

Governor Swift is proposing "a one-time $150 million tax relief package designed to further assist working families who receive the earned income tax credit."

My first thought was that, many of the people who get the earned income tax credit don't pay income taxes. Miss Ball would ask, then how can they get a tax credit? It should indeed be clear that a person who doesn't pay taxes cannot get a tax credit, a tax cut or tax relief. The governor further confused the issue by stating that her proposal is for people who did not benefit from either the state income tax rollback or the Bush tax cut, presumably because they don't pay income taxes.

She doesn't call her proposal a tax cut, though that is the phrase used in media reports. Miss Ball would insist she define "tax relief." Relief: "that which mitigates pain, grief, etc." Well, if recipients pay any taxes at all (payroll, sales, fuel) and get a check for some amount from Massachusetts, that check will help mitigate the pain of paying these other taxes. So very loosely defined, the Swift plan is probably "tax relief."

Miss Ball frowns on loosely defined. So more precisely:

If the check from the state returns taxpayer money to a taxpayer who paid at least that much in state taxes this year, it's a tax cut. If the recipient has paid at least that much in total local, state or federal taxes, it's tax relief, sort of.

But if the recipient has paid less in taxes than the amount of the check, then the Swift proposal is simply a transfer of over-collected money from taxpayers to low-income people.

On the other hand, if the state were to keep an earlier commitment to put surplus funds in the state "tax reduction fund," then all taxpayers would be getting a real tax cut.

When the state stabilization fund was created, we were told that its overflow would go into a tax reduction fund and eventually trigger a one-time increase in the personal exemption -- for all taxpayers -- on the income tax form. This is not as good as indexing the personal exemption, the way the federal government does, but it's fair and it's an honest tax cut.

Unfortunately, over the past decade, and over CLT's objections, the stabilization fund cap has been raised a number of times to avoid having money flow into the tax reduction fund. If this is the year that there's finally enough surplus to flow, it should be returned to all the taxpayers who created it.

However, Beacon Hill has redefined "surplus" to mean "anything that is left over after we spend all the excess revenues," i.e., "nothing."

Too bad we can't make our politicians remove their hands from our pockets and sit on them in a chair in the corner until they learn to communicate properly.

Barbara Anderson is executive director of Citizens for Limited Taxation. Her syndicated columns appear weekly in the Salem Evening News and the Lowell Sun; bi-weekly in the Tinytown Gazette; and occasionally in other newspapers.

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