CLT
UPDATE
Monday, September 25 2006
MetroWest's Rick Holmes is sadly
mistaken
So it looks like we’re going to have another
gubernatorial campaign dominated by posturing over taxes. But can we at
least advance the discussion beyond "gimme back my money" and "gimme
back my money because the people voted for it"? ...
But the payoff would be much higher than $200 for a millionaire. On a $1
million salary, the rollback would be worth more like $3,000. Maybe
that’s why the well-heeled interests that bankroll CLT are more
committed to cutting income taxes than controlling property taxes....
The MetroWest Daily News
Sunday, September 24, 2006
Taxes: A lesson in history and math
By Rick Holmes/Opinion Editor
Rick Holmes' recent column, "Taxes: A lesson in
history and math" (Sep. 24), needs some balance and especially
some factual corrections. The difficulty is in where to begin, so let's
start with facts.
He wrote: "Maybe that’s why the well-heeled interests that bankroll CLT
are more committed to cutting income taxes than controlling property
taxes." He couldn't be any more inaccurate, ignorant, or perhaps even
disingenuous.
Throughout his column, he quotes "facts" provided by the
Massachusetts Taxpayers Foundation. If he instead had applied "well-heeled
interests that bankroll" to MTF he'd have been quite accurate.... Mr. Holmes
somehow failed to mention that. MTF opposed CLT's Proposition 2½ in 1980 -- the
now-institutional definition of property tax relief -- CLT's tax rollback
in 2000, and about every other tax cut for average taxpayers. [MTF's]
interests are with what's best for its fat-cat sponsors, period.
By comparison, Citizens for Limited Taxation is funded by voluntary
contributions from pretty much regular taxpayers: its annual membership is
$35; its average membership contribution this year is $62.19....
The MetroWest Daily News
Letters to the Editor
Submitted Sep. 25, 2006
By Chip Ford
Chip Ford's CLT Commentary
A revised 250-word version of my response (below) is
supposed to be published as a letter to the editor, and I've been
invited to submit an expanded version to MetroWest Daily News as an
op-ed column. Rick Holmes, the editorial page editor, was most
gracious and hospitable; a professional who was a pleasure to work with.
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Chip Ford |
The MetroWest Daily News
Sunday, September 24, 2006
Taxes: A lesson in history and math
By Rick Holmes/Opinion Editor
So it looks like we’re going to have another gubernatorial campaign
dominated by posturing over taxes. But can we at least advance the
discussion beyond "gimme back my money" and "gimme back my money because
the people voted for it"?
Before we get to the math, let’s have some history, beginning with the
referendum of 2000, when the people voted to roll back the state’s
income tax rate to 5 percent. Those were the good old days, when the
state treasury was flush with cash, mostly from year-end bonuses and
capital gains tax receipts from the technology stock boom.
The stock bubble began bursting in the spring of that year, but tax
revenue lags behind economic activity. So when Gov. Paul Cellucci and
the Citizens for Limited Taxation took to the campaign trail to push
their income tax cut plan, they could point to state budget surpluses
from the prior year and project them out as far as the eye could see.
We can afford to cut taxes, they said, with no reduction in services.
Besides, it’s our money.
It sounded like all gain and no pain to the voters, and the referendum
passed. If you ask people whether they want more money, what do you
expect them to say?
But almost overnight, the surpluses vanished. The stock market tanked,
capital gains were replaced by capital losses, and state revenues fell
through the floor.
The state legislature did what it usually does in such crises: It cut
local aid to cities, towns and school districts. Before you knew it,
police and teachers were being laid off, road repairs were postponed,
class sizes grew.
That’s not exactly what the people thought they were buying when they
voted for the rollback, but they voted for it, and the vote of the
people is sacred, right?
But think of it this way: If the people vote to have their cake and eat
it too, who gets stuck with the bakery bill?
Answer: the property taxpayer.
For a typical family, the income tax bill over has held steady over the
last six years. As a percentage of gross earnings, according to the best
guess of the number-crunchers at the Massachusetts Taxpayers Foundation,
state income taxes paid by a typical family dropped from 4.5 percent in
1999 to 3.9 percent in 2005.
Meanwhile, the average single-family property tax bill grew by 36
percent between 2000 and 2005. In lots of MetroWest towns, it went up a
lot more than that.
You’d have to be willfully blind -- or a self-interested Beacon Hill
insider -- to believe there’s no relation between cutting income taxes
at the state level and rising property taxes at the local level.
There are some important differences between property taxes and income
taxes. If you lose your job, for instance, you stop paying income taxes.
But the property tax bill doesn’t care whether you’re a wealthy CEO or a
frail senior dependent on Social Security.
Tom Reilly obscured the discussion in the last days of the Democratic
primary campaign. Noting that the income tax rollback would mean about
$200 in the pocket of the average taxpayer, he said, "$200 doesn’t mean
much to millionaires like Chris (Gabrieli) or Deval (Patrick)."
But the payoff would be much higher than $200 for a millionaire. On a $1
million salary, the rollback would be worth more like $3,000. Maybe
that’s why the well-heeled interests that bankroll CLT are more
committed to cutting income taxes than controlling property taxes.
That brings us to the current standoff. Republican nominee Kerry Healey
promises to roll back the income tax rate to 5 percent. Democrat Deval
Patrick wants to keep the rate where it is, arguing that property tax
rates, not income tax rates, are the problem. He hasn’t proposed a
property tax solution, arguing instead that deferring the rollback will
support local aid levels that will help keep property tax rates in
check.
Meanwhile, there’s already an income tax rollback on the books. Almost
nobody knows it, but at the time the legislature froze the rate at 5.3
percent, it wrote into law an increase in the personal exemption, phased
in over four years, to be followed by a reduction of the rate from 5.3
percent to 5 percent, phased in over six years. Those rate cuts are
dependent on state revenues meeting specific goals, similar to the
compromise Chris Gabrieli pushed on the primary campaign trail.
That’s not nearly fast enough for Kerry Healey and the
give-us-back-our-money crowd. They want the rollback and they want it
now. Not that the rollback is the governor’s to give. Mitt Romney has
wanted the rollback for four years, but he couldn’t get the Legislature,
dominated by anti-rollback Democrats, to go along.
And the rollback comes at a price, estimated at $675 million. Where’s
that money going to come from, local aid?
Healey, still working from old campaign scripts, says the state has a
billion-dollar surplus. You can have tax cuts without cuts in services,
she says.
But there is no surplus, argues Mike Widmer of the Taxpayers Foundation.
Last year’s budget was built on conservative revenue projections, and
receipts beat the estimates for several months this spring -- once
again, mostly because of capital gains and stock-market-related bonuses,
not rising salaries. But no sooner did those surpluses appear than the
legislature spent them, approving $800 million for an economic stimulus
bill and a supplemental budget.
The budget for the year that started July 1 was built on less
conservative revenue assumptions, Widmer says, and the early returns
show much less growth than the state was seeing last spring. Even with
the growth, the current budget relies on $600 million from the state’s
reserve funds.
So if a surplus appears, the first $600 million of it is already
promised to replenish the reserves. Things don’t get any rosier in the
long run. In a report to be released tomorrow, the MTF sees trouble
ahead:
"Despite the better-than-expected revenue performance in fiscal 2006,
the state’s leaders will soon have to grapple with a large and rapidly
growing disparity between available resources and the costs of a broad
array of important priorities," the report states. "Dealing with this
challenge is likely to dominate the financial decision making of the
next Governor and Legislature for the foreseeable future."
A hotly-contested campaign is no time for lessons in either history or
math. Candidates are more likely to promise lower taxes and higher
spending than share frank talk about balancing the books.
But the least we voters can do is to keep reminding the candidates that
income taxes aren’t the only things eating at our wallets. It’s no
coincidence that kids now have to pay hundreds of dollars to ride the
school bus or play on the basketball team. Massachusetts trails almost
every other state when it comes to state aid to local school districts.
What the Legislature won’t support, parents and property taxpayers must
make up.
Everybody hates taxes. We ought to make the candidates discuss which
taxes they hate the most -- and tell us what are they going to do about
it.
Return to top
To: MetroWest Daily News
Letters to the Editor [submitted Sep. 25, 2006]
Re: "Taxes: A lesson in history and math," by Rick Holmes (Sep.
24)
Dear editor:
Rick Holmes' recent column, "Taxes: A lesson in history and math" (Sep.
24), needs some balance and especially some factual corrections.
The difficulty is in where to begin, so let's start with facts.
He wrote: "Maybe that’s why the well-heeled interests that
bankroll CLT are more committed to cutting income taxes than controlling
property taxes." He couldn't be any more inaccurate, ignorant, or
perhaps even disingenuous.
Throughout his column, he quotes "facts" provided by the
Massachusetts
Taxpayers Foundation. If he instead had applied "well-heeled
interests that bankroll" to MTF he'd have been quite accurate.
It's funded entirely by the largest corporations, public utilities,
insurance companies, health care interests, and public relations firms
in the state. Mr. Holmes somehow failed to mention that. MTF
opposed CLT's Proposition 2½ in 1980 -- the now-institutional definition
of property tax relief -- CLT's tax rollback in 2000, and about
every other tax cut for average taxpayers. Its interests
are with what's best for its fat-cat sponsors, period.
By comparison, Citizens for Limited Taxation is funded by voluntary
contributions from pretty much regular taxpayers: its annual
membership is $35; its average membership contribution this year is
$62.19.
In a July fundraising letter to our membership, we freely disclosed the
salaries of CLT's four staffers: "In case you’ve ever wondered,
CLT’s after-tax weekly salaries are $675 for Chip Ford, $557 for Chip
Faulkner, $489 for Loretta, our admin. assistant, and $471 for me
[Barbara Anderson]." To most folks in that income range, a
voter-mandated tax rollback which puts almost half a week's pay back
into our pockets is significant and welcome.
CLT operates on a shoestring budget. It has survived for three
decades by existing literally hand-to-mouth. At the time of that
letter, the staff was working with two weeks of no salaries whatsoever.
"Well-heeled" indeed. Too bad he didn't check the facts before
making wild and inaccurate accusations so easily disproved.
"But can we at least advance the discussion beyond 'gimme back my money'
and 'gimme back my money because the people voted for it'?" Mr. Holmes
asked in his opening. That's like asking if we can begin
negotiating peace in the Middle East without bringing up Israel!
Failure to discuss "because the people voted for it" only adds to the
unacceptable disrespect the Legislature has demonstrated for those
voters, its alleged constituents, and democracy itself.
When the Legislature decided to overturn the voters' "Clean Elections"
law which it despised, it rightfully put it back on the ballot for them
to reconsider, where it failed on the second go-around. That was
at least proper, if unfitting and self-serving. The Legislature
knows better than to put the rollback of its 17-year old "temporary"
income tax hike back on the ballot: A recent poll of likely
primary voters taking a Democrat ballot indicated that 57% of them still
support the rollback, down only 2% from the 2000 ballot question vote.
Holmes in passing at least did recognize, "But no sooner did those
surpluses appear than the legislature spent them, approving $800 million
for an economic stimulus bill and a supplemental budget." But
somehow he failed to see the taxpayers' position or chose to ignore it;
that if our money's on its table, the Legislature will squander it. One
Boston daily identified some of that profligate pork spending, "such as
$200,000 to install Victorian-style street lights in Melrose and
$100,000 to build a gazebo on Sunset Lake in Braintree."
"Meanwhile, there’s already an income tax rollback on the books," Holmes
naïvély observed, as though it will happen. There's always been
one -- but the Beacon Hill pols simply keep moving the goal post further
down the field when it's within reach, with new "triggers."
Remember, this has been ongoing for 17 years.
If Holmes honestly believes that voters have changed their minds, if he
truly believes the results would be different today than they were six
years ago, then let him lead the charge for putting it back on the
ballot -- without us citizens having to do all the heavy lifting of
signature collecting this time, only to have the democratic process, the
election results, again overthrown.
Chip Ford --
Director of Operations
Citizens for Limited Taxation
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