CLT
UPDATE
Sunday, October 26, 2003
Tax holiday proposed; but bogus tax hike
study arrives
Christmas bargain hunters and Patriots Day patrons would be treated to a tax-free shopping bonanza under a sales-tax holiday plan state Senate leaders are offering as a "reward" to Massachusetts consumers....
The Senate's proposal to waive the state's 5 percent sales tax for one day during the Christmas and spring tourism seasons will be included in a $115 million economic stimulus plan senators will release and debate in the coming weeks....
The $15 million tax break, which would need approval from the House and Gov. Mitt Romney, would be paid for out of the state's dwindling reserve funds, Travaglini said....
"I doubt there would be enough additional economic activity to pay the $15 million," said Massachusetts Taxpayers Foundation President Michael
Widmer.
The Boston Herald
Sunday, October 26, 2003
Merry tax holiday! Pols eye $15M plan
Eric Kriss was not trying to pick a fight when he defined the critical variable in government as "the ratio between givers and takers." He was, he says, making a "philosophical point."
In citing the need for balance between those who pay taxes and those who consume services he was just "stating the obvious," says the Romney administration's chief budget officer....
Having ruled out new taxes to raise cash, Romney's short-term solution has been to reduce the number of "takers" draining state resources. His long-term strategy, to attract new jobs and investment to provide more "givers," has not proven nearly as easy as cutting folks off the Medicaid rolls....
If Romney rules out tax increases and cannot rely on economic growth to raise revenue, he is left with the winnowing process Kriss so bluntly described....
Kriss demurs, taking our conversation full circle: "I didn't make these comments to slide into a conversation about raising taxes."
The Boston Globe
Sunday, October 26, 2003
Making it all add up
By Eileen McNamara
Controversial? Hardly. Kriss was stating the exact challenge facing this administration and Legislature. But human service advocates and their friends persist in keeping their heads in the sand and hope throwing sand in everyone's eyes will distract policymakers and the media from this central question....
Refusing to grapple with the question is how the state got itself into such a fiscal mess in the first place. Gov. Mitt Romney has distanced himself from Kriss' remarks. He shouldn't. No governor should want a budget chief willing to mince words, or demur from facing the hard questions. There's plenty of that already on Beacon Hill.
A Boston Herald editorial
Friday, October 24, 2003
Kriss asks right question
Tax cuts, not profligate state spending or the economic doldrums, are to blame for the Commonwealth's current fiscal crisis, according to a new study by an economist at the University of Massachusetts at Amherst....
"Unless the state restores tax rates to previous levels, it will continue to experience serious budget shortfalls and more cuts to essential services," the report states....
Michael J. Widmer of the Massachusetts Taxpayers Foundation, who believes the state should consider raising some taxes, nevertheless cautioned against placing too much of the blame for the state's fiscal woes on the tax cuts. Widmer said the collapse of the stock market, the recession, and the explosive growth of health care costs all contributed to the current crisis.
"It's certainly correct to say that tax cuts have exaggerated the fiscal crisis," Widmer said. "It's not correct to say that they alone are responsible."
The Boston Globe
Thursday, October 23, 2003
UMass report blames tax cuts for state's fiscal troubles
Economist says reductions cost state $5.5b
Chip Ford's CLT
Commentary
Today we give the state Senate an "'atta
boy" slap-on-the-back for its proposal to suspend the sales tax, even
if only for a day or two. This shows that Senate
President Travaglini and others recognize its dampening effect on the
state's economy and competitiveness and are willing to seek economic
advantage by leveling the playing field, while celebrating a holiday or two
as sales tax-free.
The so-called Massachusetts Taxpayers Foundation,
again calling for tax hikes, is of course tossing a wet blanket on the Senate's
sales tax holiday proposal.
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UMass has released yet another
"study" calling for tax increases, right on schedule. Don't
they ever tire of flogging the same old tired horse, surrendering the
few remnants of any credibility?
I don't know what more can be added to UMass's
notoriously self-serving "polls" and "studies" that
hasn't already been said. Boston Globe columnist Jeff Jacoby noted it in
his column "Musings, random and otherwise"
on June 8. I wrote about it on April 19 in the CLT Update entitled
"Deceptive tax hike strategy further exposed."
UMass manufactures and pumps out these alleged studies like
clockwork, always supporting its vested interest despite contrary
polling results. Its shameless minions, endlessly in pursuit of more
taxpayer dollars, simply won't be cowed by the reality that surrounds
their ivory towers.
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Chip
Ford |
The Boston Herald
Sunday, October 26, 2003
Merry tax holiday! Pols eye $15M plan
by Elisabeth J. Beardsley
Christmas bargain hunters and Patriots Day patrons would be treated to a tax-free shopping bonanza under a sales-tax holiday plan state Senate leaders are offering as a "reward" to Massachusetts consumers.
"It's our opinion that consumers have been the main driving force in sustaining our economy during this recession," Senate President Robert E. Travaglini (D-East Boston) told the Herald. "It would be inappropriate, quite frankly, to ignore them at a time when we're trying to be helpful to every other aspect of the economy."
The Senate's proposal to waive the state's 5 percent sales tax for one day during the Christmas and spring tourism seasons will be included in a $115 million economic stimulus plan senators will release and debate in the coming weeks.
Clothing, computers, school supplies, electronics, meals and a host of other goods would be exempt from the sales tax.
Big-ticket items, like cars and planes, would not be exempt.
The $15 million tax break, which would need approval from the House and Gov. Mitt Romney, would be paid for out of the state's dwindling reserve funds, Travaglini said. Senators have been working on the plan for months and have discussed it with House leaders, he said.
Senate leaders say the tax amnesty would boost consumers' confidence in the economy, dissuade them from shopping through the Internet and catalogs, and entice them to open their wallets wider - giving a shot in the arm to merchants whose sales have been flat.
"We aren't seeing sales go up, yet we still have inflation," said Massachusetts Retailers Association President Jon Hurst, who described the Senate plan as "great."
By scheduling one of the tax-free shopping days during Patriots Day weekend, Senate leaders say they're hoping to bring in cash from out-of-state Boston Marathon tourists.
"We're stimulating spending here, but also bringing in new monies," said Commerce and Labor Chairman Sen. John A. Hart Jr. (D-South Boston).
The Senate plan calls on the Department of Revenue to report back to lawmakers on the tax break's impact by January.
The notion of a tax-free holiday for consumers arose two years ago when ex-Acting Gov. Jane M. Swift tried to rush a proposal through in the weeks leading up the Thanksgiving.
House leaders declared Swift's plan dead-on-arrival - complaining it would only siphon money away from other shopping periods, and that it went too far by allowing big-ticket items to be tax exempt.
Travaglini and Hart predicted the limited nature of their proposal would make it more palatable to the House.
Washington, D.C., tried a sales-tax amnesty in 2001 and saw a 40 percent spike in department store sales, Hart said. A similar experiment in Texas resulted in the sale of $400 million worth of tax-exempt clothes, double the previous year, he added.
Fiscal watchdogs support the plan's narrow scope and said it may prompt some new economic activity, but warned it's no panacea.
"I doubt there would be enough additional economic activity to pay the $15 million," said Massachusetts Taxpayers Foundation President Michael
Widmer.
The proposal is sure to spark an outcry from those who believe every extra penny should be used to ward off further cuts, at a time when lawmakers are facing a looming $2 billion deficit.
Travaglini said he's willing to take the heat. "The perception of it being a tax cut is clearly offset by the potential for long-term gain, and I'm willing to take that gamble," he said.
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The Boston Globe
Sunday, October 26, 2003
Making it all add up
By Eileen McNamara
Eric Kriss was not trying to pick a fight when he defined the critical variable in government as "the ratio between givers and takers." He was, he says, making a "philosophical point."
In citing the need for balance between those who pay taxes and those who consume services he was just "stating the obvious," says the Romney administration's chief budget officer. Kriss's cold calculus landed him in cold water with Democratic lawmakers and antipoverty activists, not because his view is at odds with the governor's but because his candor is.
While Governor Mitt Romney promises both to balance the budget and to preserve core services, Kriss makes plain that accomplishing the former is dependent on redefining the latter. Estimating the ratio of net contributors to net recipients in Massachusetts at 3 to 1, Kriss called for "a completely new way of seeing government, both in cultural and practical terms."
Say, the haves and the have-nots?
Kriss's vision of government-for-me is what the Massachusetts electorate voted for a year ago. Kriss just said it out loud. Romney questioned his budget chief's choice of words, but did not disown the underlying philosophy. How could he? He agrees with his former Bain & Company colleague. "In Massachusetts, for every three taxpayers, there is one person receiving free health care. Simply put, if you're a taxpayer, you're not just paying for yourself, you're paying one-third of the cost of another person's health care bills, as well," Romney said in his State of the State Address in January.
So what, says Representative Anne M. Paulsen, a Belmont Democrat and a member of the Health and Human Services Committee. "Our taxes are an insurance policy. We pay them to help those in need. We hope we never need Medicaid or that bed in a homeless shelter, but, if we do, we are part of a society that will provide it."
That analogy doesn't work for Kriss, who sees a more static landscape of givers and takers. "Take a child born with severe mental retardation," he says. "He is not going to be able to buy an insurance policy. He is never going to be a net contributor. We make a decision to take care of him. But there are many areas of gray where we have to ask whether government can provide services and still be sustainable."
Having ruled out new taxes to raise cash, Romney's short-term solution has been to reduce the number of "takers" draining state resources. His long-term strategy, to attract new jobs and investment to provide more "givers," has not proven nearly as easy as cutting folks off the Medicaid rolls.
Just last week, the New England Economic Project reported that it will take Massachusetts years to recover the tens of thousands of jobs lost in the last few years.
By the end of 2006, there still will be 9,200 fewer jobs than there were at the beginning of 2001, according to Michael Goodman, a University of Massachusetts economist who prepared the forecast.
If Romney rules out tax increases and cannot rely on economic growth to raise revenue, he is left with the winnowing process Kriss so bluntly described.
The challenge, says Kriss, is "to find a balance that is both ethical and appropriate. What kind of a society would it be if 1 percent of the people tried to support 99 percent of the people? What kind of society would it be if 99 percent supported 1 percent? We have to find the right ratio."
But that is precisely the conversation we cannot have if any discussion of taxes is taken off the table. The delivery of medical care and social services to the needy does not lend itself neatly to mathematical formulas. Isn't deciding what society owes to its elderly -- former net contributors -- and to its children -- future net contributors -- half of the equation?
Kriss demurs, taking our conversation full circle: "I didn't make these comments to slide into a conversation about raising taxes."
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The Boston Herald
Friday, October 24, 2003
A Boston Herald editorial
Kriss asks right question
OK, so his word choice could have been more diplomatic, but that doesn't mean Administration and Finance Secretary Eric Kriss' point about the balance of state services and the revenues needed to support them is wrong.
The central thesis of Kriss' speech to the Greater Boston Chamber of Commerce, was this: "How to implement reforms fast enough in order to provide sustainable government services in an era of deeply constrained resources."
Controversial? Hardly. Kriss was stating the exact challenge facing this administration and Legislature. But human service advocates and their friends persist in keeping their heads in the sand and hope throwing sand in everyone's eyes will distract policymakers and the media from this central question.
Kriss got himself into trouble by defining "sustainable" government services as striking the right balance between those "who contribute through taxes and those who receive government benefits."
"The ratio between givers and takers," he added, "turns out to be a critical variable of government."
Of course it is. Kriss could have said it another way: How high can taxes be raised to spend on government before such tax policy undermines the economy and becomes self-defeating, forcing cuts?
Refusing to grapple with the question is how the state got itself into such a fiscal mess in the first place. Gov. Mitt Romney has distanced himself from Kriss' remarks. He shouldn't. No governor should want a budget chief willing to mince words, or demur from facing the hard questions. There's plenty of that already on Beacon Hill.
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The Boston Globe
Thursday, October 23, 2003
UMass report blames tax cuts for state's fiscal troubles
Economist says reductions cost state $5.5b
By Scott S. Greenberger, Globe Staff
Tax cuts, not profligate state spending or the economic doldrums, are to blame for the Commonwealth's current fiscal crisis, according to a new study by an economist at the University of Massachusetts at Amherst.
The report, released as legislators prepare to grapple with what is expected to be a $2 billion budget shortfall in the coming fiscal year, asserts that the state lost about $5.5 billion in revenue by cutting personal income, capital gains, corporate, and sales taxes between 1996 and 2002.
Without the tax cuts, the study says, the state would not have had to slash roughly $3 billion in spending on health, education, and other programs over the past three years. In the current fiscal year, the state also had to resort to fee increases on marriage licenses, house purchases, and license renewals that totaled $500 million, according to one analysis.
The author of the report, Elissa Braunstein of the Political Economy Research Institute at
UMass, said yesterday that politicians find it "virtually impossible to resist" cutting taxes when the economy is humming and state coffers are overflowing. But Braunstein said the tax cuts prevented Massachusetts from fully capitalizing on the boom of the late 1990s. Now, she said, it's time to repair the damage.
"Unless the state restores tax rates to previous levels, it will continue to experience serious budget shortfalls and more cuts to essential services," the report states.
Governor Mitt Romney has pledged to veto any broad-based tax increase, saying it would boost unemployment and slow the economic recovery.
Some critics say Braunstein's study gives short shrift to the link between tax cuts and the overall economy: Thanks to the tax cuts, they argue, Massachusetts is now in a better position to compete with other states for businesses and workers.
"Massachusetts already has a reputation for being hostile to business," said David G.
Tuerck, an economist at the Beacon Hill Institute of Suffolk University. "If we had failed to cut taxes during that period, we would be bringing in more revenue but the overall condition of our economy would be much weaker now."
Michael J. Widmer of the Massachusetts Taxpayers Foundation, who believes the state should consider raising some taxes, nevertheless cautioned against placing too much of the blame for the state's fiscal woes on the tax cuts. Widmer said the collapse of the stock market, the recession, and the explosive growth of health care costs all contributed to the current crisis.
"It's certainly correct to say that tax cuts have exaggerated the fiscal crisis," Widmer said. "It's not correct to say that they alone are responsible."
Braunstein doesn't completely discount the recession, but she argues that its impact on revenue was far less than the tax cuts. Weighing decreases in personal and corporate income as a result of the recession, she estimates that the economic slowdown accounted for only $1.5 billion in lost revenue. As for spending, she says that between 1991 and 2002, state expenditures declined as a percentage of personal income, from 9.7 percent to 9.1 percent.
Braunstein said state spending also stimulates the economy. And Noah Berger, executive director of the Massachusetts Budget and Policy Center, pointed out that businesses and workers choose a home based on the availability of "skilled workers and a decent quality life," not just low taxes.
"When tax cuts lead to cuts in education and higher education, that hurts our economy," Berger said.
At this point, however, there seems to be little appetite on Beacon Hill for a tax increase. Social service advocates hope that as citizens begin to feel the impact of cuts in health care, education, and public safety, there will be an outcry for a tax hike. But so far, legislators say they have yet to feel the pressure from outraged constituents.
Romney, meanwhile, continues to argue that tax increases are exactly the wrong medicine for a state economy struggling to emerge from recession.
"We are not in favor of increasing costs to businesses at a time when we're trying to encourage job growth and expansion in Massachusetts," said Romney spokeswoman Nicole St. Peter. "Raising taxes will kill jobs and make it harder for an economic recovery to take place."
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