CLT
UPDATE
Wednesday, April 14, 2004
Tomorrow the tax man cometh
Volunteering to pay the state more taxes than owed is an option few Massachusetts taxpayers seriously consider - except for a handful of Bay Staters who were feeling especially generous this year.
Of the 1.9 million people who have sent in their state tax forms this year, 624 taxpayers checked off a box agreeing to pay taxes on 5.85 percent of their income, rather than the required 5.3 percent. Their generosity means an extra $65,740 for the state's coffers....
"These people who kept insisting on higher taxes aren't willing to put their money where their mouths are," said
Barbara Anderson of Marblehead, executive director of Citizens for Limited
Taxation. "If they want to pay more taxes, then they should do that and leave the rest of us alone."
Anderson first floated the idea of giving taxpayers an option to pay more in 2000, when voters decided to cut their income tax rate from 5.85 to 5 percent over three years. The Legislature later froze the rate at 5.3 percent.
"We filed the legislation to allow all those taxpayers who voted against the income tax rollback to pay the higher rate," she said. "They don't seem to be responding to our gesture of good will."
The Salem News
Tuesday, April 13, 2004
Few takers on offer to pay higher taxes
Last year, state residents submitted 1,929 tax returns taking advantage of the state's generous offer to pay a higher tax rate. That extra bit-more-than-half of 1 percent contribution totaled $377,626, according to Timothy J. Connolly, DOR communications director.
Admittedly that will not cover the entire $250 million the state may have to make up because of last year's unconstitutional change in the capital gains tax. But it does mark these volunteer contributors as special people, given their tax returns made up 0.05 percent of the state's 3.3 million tax returns.
Not only are they rare, but they are getting rarer. This year, the rate of voluntarily hiking one's own taxes is 20 percent behind the rate at this point in the filing season last year, Mr. Connolly said.,,,
Actually, [last year] there were even more than 1,929 returns by taxpayers who filled in the oval indicating that they want to be tax patriots. There were 1,002 other returns by taxpayers who proudly filled in the above-and-beyond oval.
But they had the good sense not to have any 5.3 percent income on which to pay tax. And so their generosity cost them no money.
The Telegram & Gazette
Monday, April 12, 2004
Pay extra taxes? DOR will accept
Pay extra state taxes and DOR is ever so grateful
Massachusetts residents endure a high cost of living but not because of state and local taxes, according to a new study by the conservative-leaning Tax Foundation in Washington, D.C. Ranking 36th among the 50 states, Massachusetts can easily afford to increase tax revenues without reviving its "Taxachusetts" reputation. The Massachusetts House should keep this in mind as it starts to consider the budget this week....
Even with a 5.95 percent income tax rate in 1999, Massachusetts ranked 27th in its combined state and local tax burden. Voters decided to cut the rate to 5 percent in 2000, and the state is enduring the consequences. Voters got a modest tax cut at the expense of important government programs....
No one would suggest that Massachusetts set out [to] be number one in state and local taxes, but a moderate increase in the income tax would help pay for programs that mitigate the high cost of living and support an educational system to sustain the incomes of Massachusetts residents. The fictitious fear of "Taxachusetts" should not blind the state to the urgent need for an effective government.
A Boston Globe editorial
Monday, April 12, 2004
Tax distortions
Chip Ford's CLT
Commentary
Monday's Boston Globe editorial -- aptly titled
"Tax distortions" -- glibly stated: "Voters got a modest tax cut at the expense of important government
programs...." This is the same Boston Globe that railed against
the same "modest" rollback
of the temporary income tax increase, only in 2000 it shouted from the rooftops
that the sky would fall if it passed, that civilization as we know it
would come to a screeching halt.
How is it only "modest" now when they want
to raise it back up, but radical only four years ago when we wanted to
lower it? How can anyone with any credibility assert such a ridiculous contradiction
-- unless it's the Boston Globe looking to hike taxes as always, by any means and
regardless of what it has to print?
The Boston Globe this time recommended a state tax increase
because
the Tax Foundation ranks Massachusetts 36th in state and local tax
burden, relative to personal income -- if federal taxes are
removed from the equation. (Were your federal taxes removed lately?) It also mentioned that when combined with federal
taxes we're elevated to 4th, but said this is because our residents
"earn some of the highest incomes in the
country."
Yes, and we also pay federal taxes on those higher
incomes, elevating Massachusetts' ranking to
4th highest taxed state in the nation; So how does it follow that most of us
can now afford to pay higher state taxes too -- on top of our
acknowledged "high cost of living"? It's also important to
note the Tax Foundation
statistic that the Boston Globe did not mention: taxes per
capita moves our ranking up even higher to the 3rd highest tax burden in the
nation.
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CLT's voluntary tax check-off is again a success this
year, even more so. It's drawing even less revenue than it did last
year, demonstrating -- as we'd intended when CLT proposed it -- that the
1,055,181 who voted against our tax
rollback in 2000 either have had a change of mind from when they loudly
professed that they "don't need and want a tax cut" -- or were
simply lying all along.
Either way, every taxpayer in Massachusetts but for a
half of one percent is taking our tax rollback. This means that if the
ballot question were to be voted on today, we'd win with 99.5 percent of
taxpayers' votes! Our long struggle and ultimate success, despite
vehement opposition from the teachers union and the rest of the Gimme
Lobby, has become near-unanimously popular.
Lee Hammel of Worcester's Telegram & Gazette
reported:
Actually, there were even more than 1,929 returns by taxpayers who filled in the oval indicating that they want to be tax patriots. There were 1,002 other returns by taxpayers who proudly filled in the above-and-beyond oval.
But they had the good sense not to have any 5.3 percent income on which to pay tax. And so their generosity cost them no money.
This could indicate that almost all of those
1,055,181 -- the 41 percent who voted against our tax rollback --
don't pay any income taxes whatsoever anyway: another example of
the precarious government
takers vs. givers balance.
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Chip
Ford |
The Salem News
Tuesday, April 13, 2004
Few takers on offer to pay higher taxes
By Meredith Warren, Staff writer
Volunteering to pay the state more taxes than owed is an option few Massachusetts taxpayers seriously consider - except for a handful of Bay Staters who were feeling especially generous this year.
Of the 1.9 million people who have sent in their state tax forms this year, 624 taxpayers checked off a box agreeing to pay taxes on 5.85 percent of their income, rather than the required 5.3 percent. Their generosity means an extra $65,740 for the state's coffers.
But with Thursday's tax deadline fast approaching and 1.4 million more people expected to file, state Department of Revenue officials say they doubt they'll get as many takers as they did last year, when the check-off box first appeared on the tax form. Last year, 1,929 people paid more, including 169 North of Boston residents. All together, they gave the state an extra $377,626 in tax money.
The question was created two years ago by Republican lawmakers trying to make a point to tax hike supporters.
"These people who kept insisting on higher taxes aren't willing to put their money where their mouths are," said
Barbara Anderson of Marblehead, executive director of Citizens for Limited
Taxation. "If they want to pay more taxes, then they should do that and leave the rest of us alone."
Anderson first floated the idea of giving taxpayers an option to pay more in 2000, when voters decided to cut their income tax rate from 5.85 to 5 percent over three years. The Legislature later froze the rate at 5.3 percent.
"We filed the legislation to allow all those taxpayers who voted against the income tax rollback to pay the higher rate," she said. "They don't seem to be responding to our gesture of good will."
State Rep. Theodore Speliotis, D-Danvers, said he prefers to donate his money when he knows exactly where it's going.
"If you were to make a contribution to the commonwealth or any bureaucracy as large as state government, you'd want to dedicate it to something," Speliotis said. "I'm no different than the average taxpayer. The object is to give your fair share and no more."
Tracking down the generous taxpayers is nearly impossible, since the Department of Revenue won't identify those who pay more.
North Andover accountant Larry Ardito certainly doesn't know who they are.
"I have not had any takers," Ardito said. "I took that question very seriously last year, and asked each one of my clients if they wanted to pay at 5.3 or 5.85 percent. One asked me if it was a trick question."
While fewer people are choosing to pay higher taxes, the Department of Revenue is having better luck with another new feature on the tax form - a line that specifically asks Massachusetts taxpayers whether they owed the state any use tax on items they bought out of state. The law requires Massachusetts residents who shop in another state to pay the difference between the Massachusetts sales tax of 5 percent and the sales tax in the other state. Since New Hampshire has no sales tax, the use tax here is 5 percent.
When the question first appeared last year, the state collected $1.2 million in use tax, and DOR officials predict they will surpass that amount this year.
Already, 25 percent more people have reported that they owe the tax this year than they did at this time last year, said DOR spokesman Tim Connolly. Taxpayers who shopped over the border are also reporting that they owe more, Connolly said. This year, the average amount reported is $69, up from $54 last year.
Ardito said clients this year have been more willing to report the use tax they racked up while shopping in places like New Hampshire.
"They'll tell me, 'I'm sure I bought stuff up there,' and add $250 or $300 worth of purchases," he said.
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The Telegram & Gazette
Monday, April 12, 2004
Pay extra taxes? DOR will accept
Pay extra state taxes and DOR is ever so grateful
Lee Hammel, T&G Staff
In a world where you can choose to watch a television program showing people eating maggots, we shouldn't be surprised by a tax form that lets you choose to pay a higher rate of taxes than your neighbors do.
And if any place allows you to do that, it comes as no shock that it's the commonwealth of Massachusetts.
But there it is, just below Line 22 on Resident Income Tax Form 1, where the state demands you calculate the 5.3 percent tax you must pay on your wages, business income and Massachusetts bank interest. It's up to you, your friendly tax form tells you, if you want to pay 5.85 percent on your income instead.
The line informing you of this option is in red type that's smaller than most of the rest of the form, as though the state is embarrassed to even mention this.
Who knows how cutting-edge the Department of Revenue is? How long before parking tickets let you pay an additional $10 for parking next to a fire hydrant?
Maybe more people would exceed the speed limit if only the police would let them pay more than the standard $10 per mile per hour.
Surely the private sector will not be outdone in customer service. Perhaps as a courtesy, insurance companies would allow motorists to add their own collision damage surcharges even if they were not fortunate enough to have had an accident.
Someday in the future, will we be able to tip vending machines?
Last year, state residents submitted 1,929 tax returns taking advantage of the state's generous offer to pay a higher tax rate. That extra bit-more-than-half of 1 percent contribution totaled $377,626, according to Timothy J. Connolly, DOR communications director.
Admittedly that will not cover the entire $250 million the state may have to make up because of last year's unconstitutional change in the capital gains tax. But it does mark these volunteer contributors as special people, given their tax returns made up 0.05 percent of the state's 3.3 million tax returns.
Not only are they rare, but they are getting rarer. This year, the rate of voluntarily hiking one's own taxes is 20 percent behind the rate at this point in the filing season last year, Mr. Connolly said.
The idea for this came from conservatives in the Legislature irked by their fellow lawmakers, who two years ago unsuccessfully fought the decrease in the once-mandatory 5.85 percent rate. If they want to pay higher taxes, let them, said Republicans joined by
Citizens for Limited Taxation.
The Department of Revenue is trying to keep a straight face on all of this. "It's their choice," Mr. Connolly said of people raising their own taxes.
"We're not encouraging it and we're not discouraging it."
Actually, there were even more than 1,929 returns by taxpayers who filled in the oval indicating that they want to be tax patriots. There were 1,002 other returns by taxpayers who proudly filled in the above-and-beyond oval.
But they had the good sense not to have any 5.3 percent income on which to pay tax. And so their generosity cost them no money.
A deficit-laden state appreciates their sentiment nevertheless.
It's hard to know what motivates those who are paying more money into the state's general fund. The Department of Revenue isn't saying who they are, perhaps to keep banks from making them offers to give them less interest on their savings accounts.
Maybe they just want to show their love of living in the Bay State. Except that 474 of those paying 5.85 percent on their Massachusetts income don't even live in Massachusetts - they just make their money here, according to the
DOR.
But 37 of them are from Worcester. Another 20 live in Fitchburg, and 11 Leominster residents did more than their bit. One guy from Gardner gave the state some extra tax dollars, too.
Several certified public accountants in Worcester said not one of their hundreds and hundreds of clients has authorized them to pay at the higher rate.
Whoever these taxpayers are, "You'd have to think you're doing it to make a contribution to the good of the commonwealth," said William E.
Philbrick, a CPA at Greenberg Rosenblatt Kull & Bitsoli. "Or they misread the instructions."
Stephen W. Heald, a partner in the Worcester accounting firm of Heald &
Bianculli, said he certainly doesn't have any clients contributing more to the repaving of Interstate 290 than they have to. In fact, Mr. Heald marvels at a client in his 70s who keeps meticulous records so that he won't cheat the state out of any of its use tax.
The use tax, as few people know, is what is owed to the state when Massachusetts residents buy anything in another state or country or over the Internet and pay less than the 5 percent sales tax charged by Massachusetts. Few people know about it and even fewer pay it.
Mr. Heald said, "This guy keeps careful records" and this year paid $70 in use tax the DOR probably would never have known he owed.
The operative word here is "probably." Mr. Heald has another client who rented heavy equipment "in Maine or somewhere," and the state later found out, "and he got nailed for $12,000" in use tax, plus penalties.
Massachusetts redesigned Form 1 last year to include a line for the use tax, thus making more taxpayers familiar with it, Mr. Connolly said. Before that, taxpayers had to obtain and send in a separate tax form if they wanted to pay the use tax - an event that happened about as often as people performed root canals on themselves.
With the redesigned Form 1, taxpayers turned in $1.2 million in use tax last year. Right now "we're 44 percent ahead of last year," Mr. Connolly said.
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The Boston Globe
Monday, April 12, 2004
A Boston Globe editorial
Tax distortions
Massachusetts residents endure a high cost of living but not because of state and local taxes, according to a new study by the conservative-leaning Tax Foundation in Washington, D.C. Ranking 36th among the 50 states, Massachusetts can easily afford to increase tax revenues without reviving its "Taxachusetts" reputation. The Massachusetts House should keep this in mind as it starts to consider the budget this week.
If federal taxes are included, Massachusetts jumps to 4th place because its residents earn some of the highest incomes in the country. The federal government makes no allowance for the reality that dollars stretch much farther in other parts of the country. The cost of living in the Atlanta area, for instance, is 40 percent less than it is in Boston, according to the economic research organization Accra.
Even with a 5.95 percent income tax rate in 1999, Massachusetts ranked 27th in its combined state and local tax burden. Voters decided to cut the rate to 5 percent in 2000, and the state is enduring the consequences. Voters got a modest tax cut at the expense of important government programs.
The Legislature, desperate to raise revenues, fixed the rate at 5.3 percent in 2002 and raised capital gains taxes retroactive to May 2002. The Supreme Judicial Court ruled this illegal last week, saying the increase should have taken effect on Jan. 1. A single SJC justice will determine whether that is Jan. 1, 2002, in which case taxpayers will owe more, or Jan. 1, 2003. If the latter, the state would refund $250 million. Retroactive taxes are unfair, but the state needed more revenue in 2002 and still does. The best course would be for the governor and the Legislature to pay the refund and return the income tax to a more sensible rate.
Extra tax revenue could result in better medical services for needy people, higher aid for education, and financial incentives for communities to encourage housing construction. The cost of housing in the Boston area is nearly double that in Atlanta. If state government doesn't intervene to stimulate production and moderate the cost, housing will continue to be a powerful engine for inflation.
An income tax increase is unlikely because Governor Romney has staked his political career on not raising taxes. His no-tax pledge is in the tradition of New Hampshire, which has no sales tax and an income tax only on dividends and interest. New Hampshire ranked 49th in the Tax Foundation's survey of state and local taxes.
The most populous parts of New Hampshire reap the benefits of being within Boston's economic orbit without many of its costs, such as the transit system, expensive school districts, and medical benefits for poor people. Because it is near the high-paying jobs of Massachusetts, New Hampshire rises to 27th place when federal taxes paid by residents are included.
No one would suggest that Massachusetts set out [to] be number one in state and local taxes, but a moderate increase in the income tax would help pay for programs that mitigate the high cost of living and support an educational system to sustain the incomes of Massachusetts residents. The fictitious fear of "Taxachusetts" should not blind the state to the urgent need for an effective government.
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