and the
Citizens Economic Research Foundation

Thursday, December 8, 2005

CLT Celebrates Win for Governor, Taxpayers

Citizens for Limited Taxation celebrates at least one taxpayer victory this year, as Governor Romney signs the Romney-Creem compromise on the capital gains issue today.

CLT has been fighting to return the income tax rate to its historic 5% for sixteen years. But we were the first group to argue, when the Peterson case was decided last spring, that the money shouldn’t come from innocent taxpayers with a retroactive capital gains tax! Not only was this tax unfair, it would have sent a message to investors everywhere that the Commonwealth of Massachusetts had lost its collective mind.

The two issues are connected from birth in the Bay State. The income tax rollback freeze and the capital gains tax hike were part of the same tax package in 2002. We opposed that package, even to running radio ads in support of sustaining acting Governor Swift’s veto.

CLT also opposed the other taxes in the 2002 package, and has filed a bill to repeal the outrageous nursing home tax which is as unfair as the retroactive capital gains tax, albeit on a smaller scale. We hope Governor Romney will also support its repeal as part of the coming health care reform bill.

Let us gratuitously note that the so-called Massachusetts Taxpayers Foundation was supporting a further hike in the income tax rate at that time. So if by any chance Michael Widmer shows up at the Governor’s news conference today, remember that he praised the original package and was, according to news clips, reluctant to attack the retroactive capital gains tax this year as well – until recently. Do you suppose he heard from some of his big-business backers? According to The Boston Globe on Dec. 2, "Michael Widmer . . . said his group has "received more e-mails on this than on any subject since I came to the foundation, 15 years ago."

But according to The Boston Globe on just Jun. 11, 2005:

Michael Widmer, president of the Massachusetts Taxpayers Foundation, a business-backed watchdog group, agreed that rolling the effective date of the capital gains rate change to Jan. 1, 2002, was "unfair." He said that Romney's plan, however, would do damage to the fiscal health of the state and that the money would have to come from reserve accounts.

Widmer added that he has strong doubts Democratic leaders in the House and Senate have any intention or desire to go in the same direction as Romney in response to the SJC ruling.

"There's talk of [higher funding for] early childhood education, higher education fund restoration, and healthcare coverage expansion," Widmer said. "There's enormous pressure and a lot of important needs to be addressed."

Barbara Anderson, executive director of the antitax group Citizens for Limited Taxation, saw it differently.

"Massachusetts voters don't elect Republican governors to get things done: We choose them to defend ourselves against things being done to us!" Anderson said yesterday in an e-mail. "This cap gains issue is a perfect example of that."

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