and the
Citizens Economic Research Foundation

April 25, 2005

Memo to Members of the House of Representatives
Regarding Today's House Budget Debate

Memo to the Massachusetts House
April 25, 2005
Re:  House Budget

It has been sixteen years since the Legislature passed a “temporary” income tax rate increase. During the strong revenue years of the 90's, with their annual budget surpluses, legislators refused to honor the promise that the rate would be restored to 5 percent. Finally, in November 2000, voters passed the income tax rollback by 59-41 percent.

In early 2002, having spent itself into another fiscal crisis – the state budget doubled since the “temporary” tax passed in 1989 – the Legislature “froze” the rate at 5.3 percent, insisting that voters hadn’t realized in 2000 how much the extra money was needed. But in November 2002, 45 percent of voters tried to repeal the income tax entirely.

As state revenues once again increase, and the state carries yet another surplus, it is long past time to “keep the promise” and restore the income tax rate to its traditional 5 percent. Citizens for Limited Taxation, which collected signatures and campaigned for the 2000 rollback, has filed a bill to restore the rate for the present tax year. However, we support Governor Romney’s proposal to restore the rate for tax year 2006.

We hope you will vote for Rep. Jeff Perry’s budget amendment #774 to keep the promise, respect the voters, and restore the income tax rate to 5 percent for this new fiscal year.

We also support Rep. Perry’s amendment #126, to remove language giving taxpayer-subsidized in-state tuition to illegal immigrants. By definition, there are not supposed to be illegal immigrants. Law-breaking certainly should not be rewarded, as that will only invite more. We too support legal immigration and are happy to welcome newcomers who play by the rules. But while we understand that millions of people all over the world would like to live here and send their children to college at taxpayers’ expense, this is obviously not possible: a line must be drawn somewhere. It should be drawn with a vote for #126.

Aside from this issue, the Ways & Means Committee budget is commended for not using outside sections to initiate policy issues during the budget debate.

We are opposed to any amendment that will create a new tax, such as applying the sales tax to electronically transferred software.

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