and the
Citizens Economic Research Foundation

Barbara's Column
April #3

Finishing fourth is no distinction
by Barbara Anderson

The Salem News
Friday, April 22, 2005

Tax Freedom Day 2005 in the United States of America was last Sunday, April 17.

So at first glance, this column appears to be late. If I'd told you earlier, you could have celebrated your first day of working for yourself after all estimated 2005 federal, state and local taxes were paid.

You could have combined the celebration over the long weekend, with the income tax filing deadline on Friday and then, Patriots Day on Monday.

But upon further analysis: no, you could not have done that. Tax Freedom Day in Massachusetts is one week later than the national average. We Bay State taxpayers worked an extra week for the government. We get to celebrate Sunday, April 24.

The Washington-based Tax Foundation divides the official government tally of all taxes collected each year by the official government tally of income earned. It has computed Tax Freedom Day back to 1900, when total U.S. taxes paid were 5.95 percent of income; this dropped to 5 percent in 1910. The turn of the century was when Justice Oliver Wendell Holmes Jr. wrote the much-quoted "Taxes are what we pay for a civilized society."

By 2000 we were paying 33.6 percent for civilization; this has dropped to an estimated 29.1 percent this year, a slight increase over 2004. This does not include the national debt, which is taxes we are deferring to our grandchildren in order to support current levels of expenditure.

We can only hope that the money we pay to fight uncivilized society, like terrorists, will give our descendants a safer world at least, just as the Reagan debt bought us freedom from the communist threat.

In Massachusetts, our tax burden relative to personal income is higher (31.1 percent) because there are many wealthy taxpayers here who pay the higher federal graduated rates. If you remove federal taxes from the equation and compute only state and local taxes, our tax burden drops to 32nd at 9.8 percent of personal income.

However, before you celebrate that lower status, you should know that if the total tax burden is computed per capita representing the amount paid for every man, woman and child in the Commonwealth Massachusetts pays the third highest taxes in the country, 35.2% above the national average, behind only Connecticut and New Jersey. If you count only state and local taxes, we are fourth highest, with New York also ahead of us.

Just off the top of your head, do you think we have the fourth most civilized state in the country?

One of my criteria for a civilized society is that it keeps its word. Two days before tax filing day, the House Ways and Means Committee proposed state budget was released. It chose not to accept Gov. Romney's proposal for the income tax rate reduction the Legislature promised in 1989 when taxes were "temporarily" raised.

Another criteria is a civilized society respects its citizens. In 2000, Massachusetts voters created a new law that phased out the 1989 income tax increase over three years, rolling the rate back to 5 percent. In 2002, during yet another uncivilized fiscal crisis, the Legislature froze the rollback at 5.3 percent. The governor wants to drop the rate to 5 percent next January, halfway through this the fiscal year that begins this July. House leaders want to spend the extra money on, among other things, reduced college tuition for the children of illegal immigrants.

Nothing against the kids, but can a civilization survive for long if it rewards illegal immigration? Our state legislators should at least support the nation's laws. And clearly, the entire world can't come here to live and send its kids to college, so this is one place to draw the line.

If I were defining a civilized state, I would focus on law enforcement and protection: the reasons government was formed in the first place. Massachusetts would fund its crime labs, so murderers could be identified quickly by their DNA.

Children would be cared for; if they are neglected or abused by their parents, a civilized state has a solid back-up system in place. There would be careful selection and frequent monitoring of foster parents.

The state would not be giving pay hikes to college presidents while losing prosecutors because of low pay. Communities would not be laying off public safety personnel while giving teacher pay raises. Yes, civilization requires an educated population, but not necessarily the fourth highest spending per student in the country, 35 percent above the national average.

When the tax returns that were sent in last week are processed, we will know how many filers took advantage of the state's "voluntary tax," which allows Massachusetts taxpayers to pay the higher 5.85 percent rate that was in effect before the voters lowered it in 2000. At the very least, those tax advocates and columnists who constantly quote Justice Holmes while lobbying for tax hikes should be able to say they funded more civilized society than I did.

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