Because the "temporary" tax increase of 1989 is sixteen years old this year, CLT has filed a bill to restore the 5 percent income tax rate for Tax Year 2005. We also support Governor Romney's proposal to restore the 5 percent rate for Tax year 2006 which seems more doable at this time. However, when there is a surplus at the end of this fiscal year, we will urge the Legislature to use it to restore the 5 percent rate immediately.
The NTU sent the following letter to Governor Romney
National Taxpayers Union
108 North Alfred St.
Alexandria VA 22314
February 4, 2005
The Honorable Mitt Romney
Governor of Massachusetts
State House, Room 360
Boston, MA 02133
Dear Governor Romney:
On behalf of the over 6,900 members of the National Taxpayers Union (NTU), I write to offer our support for your plan – as outlined in your proposed FY 2006 budget – to reduce the personal income tax rate from 5.3 percent to 5.0 percent, which amounts to a six percent tax cut. As you know, the Massachusetts economy is creating revenues at a much faster pace than expected, in part due to the tax cuts enacted at the federal level in recent years. Thus, with five months remaining in the fiscal year, Massachusetts has collected $158 million more than state budget forecasters thought it would have at this point.
Massachusetts places a heavy burden on its productive citizens. According to the most recent data (2003) from the U.S. Census Bureau, Massachusetts collects more money from its personal income tax on a per-person basis than any other state in the nation. In fact, in 2003, Massachusetts displaced New York as the state with the heaviest income tax burden. Now, the average person in Massachusetts pays $1,247.65 to the state, compared to the $1,180.22 owed by each New Yorker.
Tax relief for Massachusetts workers is long overdue. In 1989, taxpayers were told that the income tax hike from 5.0 percent to 5.3 percent was “temporary.” In 2000, by a 59-41 percent margin, voters reaffirmed their support for lower income taxes by passing Question 4, which would have returned the income tax rate to five percent had the tax cuts not been frozen in 2002. Economic evidence indicates that voters may have a better grasp on the tax effects of economic policy than the representatives they elect. According to data from the Beacon Hill Institute, cutting the income tax to 5.0 percent would produce an immediate rise in employment of 3,683 jobs and a rise in investment of $7.3 million. Real (inflation-adjusted) disposable income would also rise, by $243 million.
Although much time has passed and the state has collected and spent millions of tax dollars against the will of Massachusetts voters – and our preference is for an immediate rate reduction this year – NTU looks forward to working with you to return the income tax to 5.0 percent. Our members in Massachusetts likewise stand ready to assist you on this important issue.
Paul J. Gessing
Director of Government Affairs
– 30 –