and the
Citizens Economic Research Foundation

Barbara's Column
October #3

The tax debate comes full circle
by Barbara Anderson

The Boston Globe
Saturday, October 14, 2006

It wouldn't be a proper election without the traditional tax debate, and it's gratifying to know that the 17-year-old "temporary" income tax hike still polls well as a voter concern. This has less to do with the $675 million that restoring the 5 percent rate would give taxpayers than with citizens' insistence that the Legislature honor their will on a ballot question.

But as we debate respect for the voters vs. political arrogance, there are other aspects of the 2006 tax debate that aren't as well defined.

First to muddle the tax landscape is "Christy's Proposition 1," the centerpiece of the Christy Mihos campaign. His website says that "it will cap property values from the time of purchase until the property is sold, thus providing more certainty to homeowners, who will not experience unpredictable increases in property taxes due to reassessment." Mihos promises that if the Legislature won't pass it, he'll take it to the ballot in 2008.

I don't know to what the "one" in Proposition 1 refers; maybe we can look forward to "Christy's Proposition 2, 3, and 4"? I do know that it can't be done.

The Massachusetts Constitution requires that all property be assessed at "full and fair market value." That's why local assessors must oversee regular revaluations to keep assessments up to date. A constitutional amendment, a four-year process, would be needed to allow Proposition 1.

Even if signatures were collected on an initiative petition, and/or legislative support were assured, the proposal couldn't get to the ballot until 2010. Then it would likely lose, because it is clearly unfair and economically unwise.

Mihos doesn't mention changing Proposition 2, a number that does have a meaning. It lets property taxes in a community increase 2 percent over the previous year's levy (plus a factor for new construction), regardless of what is happening with assessments.

If Mihos's Proposition 1 assessments are for those who stay put, the newcomers to a town or neighborhood would pay both their own and part of everyone else's share of taxes. Taxpayers would be penalized for moving to a different community, moving across town or across the street; for upsizing to a bigger house as a family grows, or downsizing to a condo as a family shrinks. People who might consider moving here from another state would have yet another reason -- along with our weather, odd political culture, and high per capita tax burden -- to choose another destination.

California's Proposition 1 (so called because it limits taxes to 1 percent of value) does freeze assessments, but it was a constitutional amendment, and people choose to move to sunny California despite the unequal treatment for newcomers. Massachusetts would not have that advantage; our population and housing market would decline even more than they have recently.

Property taxes, even with Prop 2, are too high here. Gubernatorial candidates Mihos and Deval Patrick argue that any income tax cut causes higher property taxes. The Massachusetts Taxpayers Foundation argues against the income tax rollback in its "concern" for property taxpayers -- which would be more believable if it hadn't also opposed Prop 2 when it was on the 1980 ballot.

Back then, both our property tax and income taxes were among the three highest in the nation. The reason Massachusetts has an income tax, as well as a sales tax and lottery, is that we were assured over many years that these new revenue producers would cut the property tax. They did not; all the taxes increased together. Voters eventually caught on to this scam and voted to cut property taxes themselves.

But the scam is back. In all their expressed concern about the property tax, opponents of the $675 million income tax rollback have no plan to cut property taxes by that amount, or any amount at all. Patrick wants to add local option taxes to the already-high mix. Mihos wants to shift the burden to first-time homeowners.

Taxpayers should simply insist on respect for the voters, and see where that takes us on tax issues.

Barbara Anderson is executive director of Citizens for Limited Taxation, which created Proposition 2.

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