What about the Bay State's fiscal cliff?
© by Barbara Anderson

The Salem News
Wednesday, December 5, 2012

So as the national government heads for “the fiscal cliff,” how’re we doin’ in Massachusetts?

An estimate by the Heritage Foundation of the impact on each state’s taxpayers if the “Bush tax cuts” expire shows the average increase per tax return in Massachusetts falls into the $4,001 to $5,200 range, among the highest in the nation because of our state’s high personal income. I’m not one of “the rich,” or even the “typical family” looking at an increase of $2,200, so except for losing the payroll tax break, this doesn’t directly impact me: I’m not counting on one of those rich people to create me a job.

However, we all have to be concerned about the Massachusetts economy, and what the Patrick administration will do with the “fiscal cliff” spending cuts that could impact both our private and public sector. Even before that happens, the state budget is $256 million in deficit for this fiscal year, which is half over. This means that the budget for next year, always planned as an increase on the previous year, will also have to be cut.

The usual liberal/union groups are still advocating an increase in the state income tax rate from its present 5.25 percent to 5.95 percent. Gov. Deval Patrick is hoping to be able to apply the state sales tax, which he increased from 5 percent to 6.25 percent, to Amazon Internet sales.

Some Washington politicians and advocates have been urging the federal government to raise the federal gasoline tax to pay for increased highway spending. Some local political, union and business groups have long wanted an increase in the state gasoline tax to pay to fix the infrastructure that no one seems to properly maintain here. The combination hike could be large.

Not to be outdone, a local coalition of unions/liberal action groups, calling itself Public Transit-Public Good, has come up with a brand-new bright idea for raising Massachusetts taxes. At a Statehouse hearing last week, they pitched a payroll tax on employers to cover all employees who earn more than $100,000 (the standard for being considered “rich” seems to be slipping). The money would be used to maintain the transportation infrastructure, including the MBTA.

According to the State House News Service, “employers would pay to state government a percentage of the salary of workers earning more than the threshold, with the money dedicated to transportation financing. A tax of three-quarters of 1 percent would generate more than $190 million annually.”

Inevitably, the pay level would decrease and the tax percent would increase, until not just “the rich” would pay this. Fortunately, the Massachusetts Constitution does not allow a graduated income tax: All earnings must be taxed at the same flat rate, and my educated guess is the courts wouldn’t be fooled by this indirect method of graduation.

Advocates may have a fallback plan though: taxing us all by miles driven. Let’s take a moment to wonder why the 1990 gas tax increase didn’t maintain the roads and bridges as promised, why a state with the fourth-largest per-capita tax burden and the highest per-capita debt in the nation can’t already afford a well-run transportation system.

Don’t tell me about the extraordinary cost of the Big Dig. I was around when the Dukakis administration told us it would cost less than $3 billion, just to get people to sign on.

Not to seem hostile to all new taxes, though: Here’s one I like! Rep. Dan Winslow, R-Norfolk, is filing a bill for a 25 percent tax on the money left over in politicians’ campaign funds after an election. Right now, it’s not considered taxable income as they carry it forward to their next campaign.

“There’s more than $20 million sitting in war chests,” Winslow told me this week. Simple math: $5 million from politicians instead of more taxes from us. An added benefit is that it removes some of the advantage incumbents have over citizens who challenge them.

Other legislators are working on saving money from expenditures. Fortunately, Rep. Jim Lyons, R-Andover, wasn’t one of the excellent Republican candidates defeated in November; he’s renewed his fight to prevent state benefits being paid to illegal immigrants.

Despite the state deficit and ongoing legislative opposition, Patrick issued an executive order last week giving reduced in-state tuition rates to undocumented immigrant students. Lyons and other Republican legislators are filing a bill restricting all state benefits to U.S. citizens and legal immigrants. Last year, they forced the Patrick administration to admit it spent $270 million on illegals. (See state deficit, above. And while you’re there, think about this ...)

The Legislative leadership has just approved pay raises for legislative staffers. Nothing against hardworking staffers, but you hafta wonder: If the governor can bypass the Legislature with executive orders, why do we need legislators at all? We could save the entire legislative budget!

Never mind; tis the season to be jolly. I’ve been avoiding Christmas carols since Halloween, but this week brings Belsnickle, my German hometown’s traditional holiday beginning. ’Tis time to enjoy Christmas and wish peace on Capitol and Beacon hills to men of good will and fiscal restraint.

The comments made and opinions expressed in her columns are those of Barbara Anderson
and do not necessarily reflect those of Citizens for Limited Taxation.

Barbara Anderson is executive director of Citizens for Limited Taxation. Her column appears weekly in the Salem News and other Eagle Tribune newspapers; bi-weekly in the Tinytown Gazette.

More of Barbara's Columns

Citizens for Limited Taxation    PO Box 1147    Marblehead, MA 01945    508-915-3665