and the
Citizens Economic Research Foundation

Monday, May 12, 2008

Income tax rate – Color me surprised

For Immediate Release
May 12, 2008

Contact  Barbara Anderson

To:  Members of the General Court
         May 12, 2008

When the Legislature "froze" the voters’ income tax rollback in 2002, it said it would defrost it slowly when the revenues reached a certain point. We taxpayer cynics did not believe this for a minute. We had heard these promises before.

In his first administration, Governor Dukakis created a "temporary" income tax surtax. Ten years later, CLT put its repeal on the ballot, and the Legislature quickly repealed it before the voters could do it themselves.

In his second administration, Governor Dukakis, after running for President on the "Massachusetts Miracle," returned from the campaign trail to demand the Legislature pass a billion dollar tax increase. Angry legislative Democrats who had been misled about state revenues revolted, and joined with Republicans in refusing to pass the tax hike. In the end, most Democrats gave in, but only when they could assure their even angrier constituents that the income tax rate increase would be "temporary."

After waiting eleven years for this promise to be kept, CLT put a question on the ballot, phasing down the rate from 5.85 percent to its traditional 5 percent over three years. The question passed 59-41 percent. But in 2002, the Legislature froze the rate at 5.3 percent with the promise to let it happen sometime in the future. Not believing it this time, voters almost passed Carla Howell’s repeal of the income tax that November.

Six years later, the rate is still 5.3 percent. But this year the "trigger" to "defrost" the freeze was reached, and to our surprise, so far the Legislature has not moved to stop this first step in its promised decrease, allowing the rate to drop to 5.25 percent now.

It’s a tiny step for taxpayers, who should have been paying at 5 percent since 2003, but a bigger step for the Legislature – finally keeping a "temporary" income tax promise.

I hope this memo isn’t premature, and that you do intend to allow the rate decrease to happen; I’ll apply my $18 to my property tax since Governor Patrick hasn’t kept his campaign promise for property tax relief (and thank you for not confusing a meals tax hike with property tax relief).

But I must note that the state actually owes me roughly $500 from the income tax rollback that voters passed in 2000. Since state revenues are $1.2 billion higher than last year, you could take a giant step and really surprise everyone by finally keeping that 1989 legislative promise and doing what the voters demanded in 2000. Thank you for your consideration.

Barbara Anderson
Executive Director

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