CLT UPDATE
Saturday, March 6, 2010
Tax wars and salvation
We had one of those “ah-ha” moments recently
when talking to a local consultant about affordable housing who
– during part of the interview when asked about Prop. 2˝ and
“new growth” he replied — “That was a long time ago – I was only
one (year old) in 1980.”
It’s hard to believe that more than a generation of
Massachusetts residents have been born since Proposition 2˝
became law some 30 years ago.
Many of those, now homeowners, either take the property-tax cap
legislation for granted because they won’t have known life any
differently – or mistakenly believe that Prop. 2˝ is the source
of our budget problems....
A taxpayer rebellion had been boiling just below the surface for
some time when Citizens for Limited Taxation took the
ball and ran with it....
Today, nearly 30 years later, taxes have still gone up but
clearly not at the same soaring rate they would have without the
law....
It is easy to demonize Prop. 2˝ as an enemy of local government
and problem for budgets. But the facts are without the tax-cap
limit, fewer people would be able to afford to live in Hingham
and Massachusetts.
A Hingham Journal editorial
Thursday, March 4, 2010
Tax law came from the people
Along with more contested races than there
have been in years, voters will likely get to consider a
referendum in November to cut the state sales tax in half. It
will take little more than 11,000 signatures to get the
petitioned question on the ballot, which should be easy to get.
Will the sales tax cut be this year's Proposition 2˝? Count on
it.
Since an entire generation has been born, grown up and, if
they're lucky, bought houses since Proposition 2˝ was passed in
1980, some history is in order....
Because the law was considered so "draconian," legislators
didn't think it would pass, but it did - by a 59 percent margin
statewide and close to 70 percent in The Sun Chronicle area. As
a result property tax increases have been held down ever since.
The broader result was that local aid was increased and the tax
burden was shifted more to income and consumption. In any case,
Proposition 2˝ was considered a success and there has never been
a serious effort to repeal it.
The (Attleboro) Sun Chronicle
Sunday, February 28, 2010
Shades of Prop. 2˝
By Ned Bristol
The last decade has been lucrative for
public-sector workers, as salaries have risen steadily --
despite two recessions -- particularly for those who oversee
school districts, colleges and universities....
"There's no question public salaries are out of control," said
Barbara Anderson, executive director of Citizens for
Limited Taxation, a 35-year-old organization that bills
itself as "The Voice of Massachusetts Taxpayers."
The steady rise in local public-sector salaries also mirrors the
national trend, according to the Cato Institute. Citing U.S.
Bureau of Labor Statistics figures, public-sector compensation
averaged $39.66 per hour in 2009, 45 percent higher than the
private-sector average for the same period, $27.42.
The Cato Institute also found that state and local governments
cover significantly higher shares of health insurance,
retirement benefits, life insurance and paid sick leave.
"Aside from the monetary benefits of public sector employment,
government workers enjoy very high job security," Chris Edwards,
Cato's director of tax study policies, wrote in a Cato bulletin.
"During good times and bad, 'layoffs and discharges' in the
public sector occur at just one-third the rate of the private
sector. Public sector workers are rarely terminated for
cost-cutting or job performance reasons."
Anderson traces the roots of the wage and benefit problem to the
early- and mid-1990s, when state and local coffers overflowed
with revenue and permit fees. Rolling in cash, legislators --
whether at the state or local level -- did not say no to the
public-sector unions.
Plus, she said, many municipal negotiating bodies, like boards
of selectman and school committees, are no match for
professional negotiators hired by municipal unions.
"They come in like Sylvester Stallone in F.I.S.T. and it's
over," said Anderson.
The Lowell Sun
Sunday, February 7, 2010
Despite recessions, public-sector pay rises
As part of an effort to make Concord more
affordable and diverse, local officials want to shift the tax
burden off most property owners and onto the town’s wealthiest
residents.
The long-shot proposal, which some say is unconstitutional,
calls for imposing a local income tax to help offset the town’s
dependence on property taxes to fund its operations.
“It’s not a tax increase, but a shifting of the burden,’’ said
Jonathan Keyes, chairman of the town’s Local Option Local Income
Tax Committee, which has drafted a proposal that will go before
residents at Town Meeting this spring. “It all adds up to the
same amount.’’ ...
The idea is that instead of raising money for the town only
through property taxes, a community with a local income tax
could collect only about half of its revenues through the levy
on real estate, Keyes said. To make up the difference, Concord’s
draft proposal calls for the town to impose a 2 percent income
tax on residents....
Barbara Anderson, the head of
Citizens for Limited
Taxation, said while reducing property taxes sounds like a
good idea, a local income tax would only mean one more tax on
residents.
“We have plenty of taxes in Massachusetts and it’s wasted enough
already,’’ Anderson said. “We certainly don’t want to open this
Pandora’s box.’’ ...
But even [Keyes] admits any immediate change is unlikely.
“If we’re lucky, this could happen in 15 to 20 years. But if you
don’t start somewhere, it would never ever happen.’’
The Boston Globe
Sunday, February 14, 2010
Push starts for a local income tax
Advocates say measure would help homeowners
A plan to pursue a local option local income
tax struck a nerve with some Concordians during Monday night’s
Finance Committee hearing on warrant articles.
The line stretched from the center of the Town House Hearing
Room out the door Feb. 22 as residents took turns talking down
and poking holes in a proposal the Local Option Local Income Tax
Committee says would replace a portion of the residential
property tax.
Article 33, as presented Monday, seeks a Town Meeting vote
requesting the Board of Selectmen ask representatives “to file
and seek passage of legislation that would permit cities and
towns the option of adopting a local income tax on residents.”
...
“I think this is a great idea,” said Finance Committee member
Jill Appel, adding that she’s seen too many people being “priced
out of town” by property taxes....
When the audience was invited to join the discussion, the
majority of residents who spoke questioned, if not opposed, the
idea of starting down the road toward a local option local
income tax.
The Concord Journal
Thursday, February 25, 2010
Local income tax proposal elicits outcry
Thirty years ago, she was a noisy voice from
the sidelines, a bleacher-creature heckler in Massachusetts
politics. She was loud and raucous and far too easily dismissed
by people in the state’s political establishment who should have
felt the ground shifting beneath their feet, but who had been
standing in the same place so long that their legs had gone
numb. She was pounding away on the subject of taxes -- not
merely on how much they cost, but on what they had come to
represent -- in the same relentless catechism with which William
Lloyd Garrison once blessed himself here: She was in earnest;
she would not equivocate; she would not excuse; she would not
retreat a single inch. And, Lord knows, she would be heard. In
this, Barbara Anderson probably has affected
Massachusetts politics more than anyone ever has who’s never
been elected to anything.
“To me,” she says, “taxes have never been about the money. It’s
been about power and who’s in charge and who’s in control.”
A native of western Pennsylvania, where her
parents ran a hardware store, the former Barbara Hervatin
enrolled in the DuBois campus of Penn State, where friends
introduced her to the work of Ayn Rand. By 1980 and two husbands
later, she found herself here, working as the executive director
of Citizens for Limited Taxation. . . .
The Boston Globe Magazine
Sunday, February 7, 2010
Our love-hate relationship with taxes
By Charles P. Pierce
|
|
Chip Ford's CLT Commentary
The tax battles
continue, but at least some of our successes are still recognized
and appreciated. CLT's Proposition 2˝ reaches 30-years old this
year, a cause for celebration. Though property taxes continue to
increase, today that's due to voters passing overrides, choosing to
tax themselves and their neighbors -- not unilaterally imposed by
insatiable town selectmen, city councilors, mayors and town
managers. The annual auto excise tax is still $25/per $1,000
valuation -- not the $66/$1,000 where it was before Prop. 2˝. And
the renter's deduction still provides some relief to tenants like me
on our state income tax returns.
But More Is Never
Enough (MINE) for many if not most local "leaders." Some, like those
in Concord, are now pitching a local income tax, have
actually proposed it!
"If we’re lucky, this
could happen in 15 to 20 years," one pol noted, adding, "But if you
don’t start somewhere, it would never ever happen."
Chris Edwards, of the
Cato Institute, notes that public employee compensation represents
"half of total state and local spending." At the rate negotiations
with teachers and other public employee unions have been going, that
cost will continue to take bigger and bigger bites out of us, as
simultaneously public services our taxes are supposed to fund
continue to diminish. Remember when trash pickup was a given, paid
through property taxes? Then "Pay As You Throw" was introduced,
swept the commonwealth, and many of us are now charged additionally
for the traditional service.
Unless this fiscal
crisis and Revolution 2010 bring about the critical reforms we've
been fighting for, more and new taxes will be demanded, "for the
children" or for increasingly more "unmet needs" -- as more of our
money is siphoned off to further benefit and pad the pockets of hacks of all stripes
and standing.
This is the year to
throw off the yoke, to take back our government, to toss out the
oppressors. Revolution 2010 is upon us. Pick up your pitchfork
and join the revolution!
 |
|
Chip Ford |
|
| |
|
The Hingham Journal
Thursday, March 4, 2010
A Hingham Journal editorial
Tax law came from the people
We had one of those “ah-ha” moments recently when talking to a local
consultant about affordable housing who – during part of the
interview when asked about Prop. 2˝ and “new growth” he replied —
“That was a long time ago – I was only one (year old) in 1980.”
It’s hard to believe that more than a generation of Massachusetts
residents have been born since Proposition 2˝ became law some 30
years ago.
Many of those, now homeowners, either take the property-tax cap
legislation for granted because they won’t have known life any
differently – or mistakenly believe that Prop. 2˝ is the source of
our budget problems.
In light of this, it is good time to turn the clock back to the mid-
to late-1970s, when Massachusetts was known as “Taxachusetts” and
important industries and jobs were headed south to warmer climes and
friendlier tax policy.
A taxpayer rebellion had been boiling just below the surface for
some time when Citizens for Limited Taxation took the ball
and ran with it. The grassroots group garnered enough signatures to
get the tax-limitation question put on the November 1980 state
ballot — on that same ballot Republicans Ronald Reagan and George
Bush challenged President Jimmy Carter and Vice President Walter
Mondale for the keys to the White House. Prop. 2˝ took effect on
July 1, 1981.
Today, nearly 30 years later, taxes have still gone up but clearly
not at the same soaring rate they would have without the law.
However, under 2˝, for taxes to increase beyond allowed limits — the
people have to be asked permission. Voters must approve “overriding”
the 2˝ tax cap at the polls. This can be a cumbersome task and
oftentimes, the resulting debate pits interest groups such as
parents of schoolchildren and senior citizens against one another.
But nevertheless, we think Prop. 2˝ is a good thing because it makes
government fiscally accountable.
We also think, as citizens and homeowners, it is crucial that we
understand Prop. 2˝ is not an enemy to government but a control
mechanism.
What has complicated matters this year is the downturn in “new
growth.” Proposition 2˝ allows a community to increase its levy
limit annually over the 2˝ limit by an amount based on the increased
value of new development and other growth in the tax base that is
not the result of revaluation. The purpose of this provision is to
recognize that new development results in additional municipal
costs; for instance, the construction of a new housing development
may result in increased school enrollment, public safety costs, and
so on. “New growth” during good economic times has provided the
cushion to allow for salary increases, for example, over 2˝ percent.
For many of us, a substantial portion of our hard-earned dollars
pays for the privilege of living in our town. So it’s incumbent on
us to understand the laws that govern our property taxes, so we can
make educated decisions.
It is easy to demonize Prop. 2˝ as an enemy of local government and
problem for budgets. But the facts are without the tax-cap limit,
fewer people would be able to afford to live in Hingham and
Massachusetts.
The (Attleboro) Sun Chronicle
Sunday, February 28, 2010
Shades of Prop. 2˝
By Ned Bristol
Along with more contested races than there have been in years,
voters will likely get to consider a referendum in November to cut
the state sales tax in half. It will take little more than 11,000
signatures to get the petitioned question on the ballot, which
should be easy to get.
Will the sales tax cut be this year's Proposition 2˝? Count on it.
Since an entire generation has been born, grown up and, if they're
lucky, bought houses since Proposition 2˝ was passed in 1980, some
history is in order.
The law capped the real estate tax at 2˝ percent of the total
assessed valuation of all the property in a city or town. This was
so much less than the practice at the time that the cut had to be
phased in over three years in some communities, one of them being
Attleboro.
Because the law was considered so "draconian," legislators didn't
think it would pass, but it did - by a 59 percent margin statewide
and close to 70 percent in The Sun Chronicle area. As a result
property tax increases have been held down ever since. The broader
result was that local aid was increased and the tax burden was
shifted more to income and consumption. In any case, Proposition 2˝
was considered a success and there has never been a serious effort
to repeal it.
Flash forward 30 years and voters will have the opportunity to cut
the sales tax from 6.5 to 3 percent at the ballot box on Nov. 2,
assuming the petition drive succeeds. Given the populism of the
moment, I wouldn't bet against the referendum, even if legislators
and candidates of all stripes speak out against it. The most any of
them will say just now is that it goes too far.
Besides the conservative resurgence touched off by Sen. Scott Brown,
voters are naturally upset at the Legislature's increase in the
sales tax to 6.25 percent less than a year ago. Those with long
memories will also be thinking about the Legislature's refusal to
fully roll back the sales [sic - income] tax increases of 1989 and
1990 that were ordered at a voter initiative in 2000. The tax was
supposed to revert to 5 percent but the Legislature stopped at 5.3
percent.
Now comes the proposed sales tax cut to 3 percent. Just like
Proposition 2˝, it's being pushed by small-government libertarians.
They are not worried about the fact the lower sales tax would reduce
state budget revenue by $2 billion. In fact money isn't the real
issue. It's the size and purpose of government. Some say this is a
page right out of the playbook of the national Republican Party's
campaign against big government that goes back decades. When
Republicans get into office they cut taxes and run up the deficit in
order to handcuff the Democrats when they get in.
It exasperates Democrats that the Republicans get credit for the tax
cuts without being held accountable for either the budget cuts or
the mountains of debt. It's doubly exasperating in Massachusetts
which is as liberal a state as you'll find but which has a tax
burden that is ranked 23rd nationally, as Charles Pierce pointed out
in a recent Boston Globe Magazine article. It's not really
Taxachusetts anymore.
So now in Massachusetts voters are almost certain to have what might
be called a Scott Brown moment to make a powerful statement against
government by the simple act of voting.
If they do cut the sales tax in half the Legislature could repeal
the law, but the reps and senators didn't dare do that after voters
passed Proposition 2˝. They amended it to phase in the tax cut.
Whether they would do that this time will probably depend on how
much support Republicans get up and down the ballot.
Ned Bristol is a member of The Sun Chronicle editorial board and
a former editor of the newspaper.
The Lowell Sun
Sunday, February 7, 2010
Despite recessions, public-sector pay rises
By Christopher Scott
The last decade has been lucrative for public-sector workers, as
salaries have risen steadily -- despite two recessions --
particularly for those who oversee school districts, colleges and
universities.
A random survey by The Sun of state and local public-sector salaries
found, for example, that the minimum increase over the period for a
local school superintendent, in Westford, was nearly 30 percent.
The top increase was seen at University of Massachusetts Lowell,
where the chancellor's salary rose about 83 percent during the last
decade.
Of more than 50 positions surveyed, the second-highest increase --
nearly 67 percent -- was seen at Middlesex Community College.
The superintendent salaries at the three local vocational schools,
Greater Lowell Regional Technical High School, Nashoba Valley
Technical High School and Shawsheen Valley Technical High School,
also rose significantly during the 10-year period: about 50, 65 and
57 percent, respectively.
"There's no question public salaries are out of control," said
Barbara Anderson, executive director of Citizens for Limited
Taxation, a 35-year-old organization that bills itself as "The
Voice of Massachusetts Taxpayers."
The steady rise in local public-sector salaries also mirrors the
national trend, according to the Cato Institute. Citing U.S. Bureau
of Labor Statistics figures, public-sector compensation averaged
$39.66 per hour in 2009, 45 percent higher than the private-sector
average for the same period, $27.42.
The Cato Institute also found that state and local governments cover
significantly higher shares of health insurance, retirement
benefits, life insurance and paid sick leave.
"Aside from the monetary benefits of public sector employment,
government workers enjoy very high job security," Chris Edwards,
Cato's director of tax study policies, wrote in a Cato bulletin.
"During good times and bad, 'layoffs and discharges' in the public
sector occur at just one-third the rate of the private sector.
Public sector workers are rarely terminated for cost-cutting or job
performance reasons."
The Cato Institute also divided the country into nine regions. Using
Labor Department statistics, it found that in New England public
employees's compensation averaged $43.22 an hour in 2009, compared
to $33.29 for private-sector workers in the same year. New England
was third behind the Pacific region ($49.02 to $30.78) and Middle
Atlantic, ($48.53 to $31.69). At the bottom of the list was West
South Central ($30.73 to $24.35).
Anderson traces the roots of the wage and benefit problem to the
early- and mid-1990s, when state and local coffers overflowed with
revenue and permit fees. Rolling in cash, legislators -- whether at
the state or local level -- did not say no to the public-sector
unions.
Plus, she said, many municipal negotiating bodies, like boards of
selectman and school committees, are no match for professional
negotiators hired by municipal unions.
"They come in like Sylvester Stallone in F.I.S.T. and it's over,"
said Anderson.
There's no doubt, said Thomas Scott, executive director of the
Massachusetts Association of School Superintendents, that school
heads enjoy a strong bargaining position -- primarily because so few
of them are willing to do the job.
If a superintendent's job opened up a decade ago, it would be
customary for more than 50 candidates to apply.
"Today, a school district is lucky to get 25," said Scott, the
former Concord-Carlisle Regional School District superintendent.
"Search consultants will tell you the pools (of candidates) are now
puddles and the puddles are muddy. Consequently, those in the market
are in the driver's seat when negotiating." Unlike many of their
counterparts who are unionized, superintendents are not, and
negotiate individually with their school committees.
There are currently 277 superintendents in the state. In Western
Massachusetts, the average salary is less than $100,000. In eastern
communities, the average salary is "well over $200,000."
Steve Poftak and Andrew Bagley, research directors for the Pioneer
Institute and Massachusetts Taxpayers Foundation, respectively, have
followed the escalation of public salaries and agree with Edwards.
However, both researchers said salaries don't comprise the full
picture, as the cost of public-sector benefit packages also strain
government budgets.
According to federal labor statistics, state and local governments
pay significantly higher shares of employee health insurance,
retirement, life insurance and sick leave costs than the private
sector.
Suspecting that some benefit packages are cash cows, Poftak said
some municipal leaders in Massachusetts are carefully looking in the
"the nooks and crannies" of benefit packages to save money.
Edwards, of the Cato Institute, wrote that state and local
governments across the nation face "huge fiscal challenges.
"Spending on Medicaid is soaring, debt is rising rapidly and many
governments have massive gaps in their pension and healthcare
funding," he wrote. "To solve these problems, governments need to
make major budget cuts. And with employee compensation representing
half of total state and local spending, large savings could be found
by freezing wages and overhauling excessive benefit packages."
Council 93 of the American Federation of State, County and Municipal
Employees, represents nearly 40,000 state, county and municipal
workers in Massachusetts. Spokesman James Durkin, said rank and file
are well aware of constraints on municipal budgets and have done
their part to help.
"Many of our members have taken zero raises," said Durkin. Others
have made concessions on health care and other benefit packages.
Durkin suggested that if more private-sector workers were unionized,
there would be less disparity between public- and private-sector
wages.
The Boston Globe
Sunday, February 14, 2010
Push starts for a local income tax
Advocates say measure would help homeowners
By Jennifer Fenn Lefferts
As part of an effort to make Concord more affordable and diverse,
local officials want to shift the tax burden off most property
owners and onto the town’s wealthiest residents.
The long-shot proposal, which some say is unconstitutional, calls
for imposing a local income tax to help offset the town’s dependence
on property taxes to fund its operations.
“It’s not a tax increase, but a shifting of the burden,’’ said
Jonathan Keyes, chairman of the town’s Local Option Local Income Tax
Committee, which has drafted a proposal that will go before
residents at Town Meeting this spring. “It all adds up to the same
amount.’’
The article, slated for discussion during a Finance Committee
meeting at 7:30 p.m. Feb. 22, asks selectmen to work with lawmakers
to adopt enabling legislation that would give communities the option
of approving a local income tax. Keyes said it’s an idea that would
likely be more attractive to affluent communities that don’t receive
much state aid, and rely largely on property taxes for revenues.
The idea is that instead of raising money for the town only through
property taxes, a community with a local income tax could collect
only about half of its revenues through the levy on real estate,
Keyes said. To make up the difference, Concord’s draft proposal
calls for the town to impose a 2 percent income tax on residents.
Citing the cost of real estate in town, and the size of local tax
bills, Keyes said, “It’s getting difficult for young people to come
and for older people to stay, so we’re trying to respond to that
problem.’’
The average value of a single-family home in Concord is $835,697,
and the average tax bill is $10,128.
While a number of municipalities across the country, including New
York City, enact local income taxes, Massachusetts does not grant
that right to its cities and towns. Some state lawmakers say a local
income tax would be unconstitutional, and also question whether the
public would support the change.
State Representative Jay Kaufman, a Lexington Democrat who serves as
the House chairman of the Legislature’s Committee on Revenue, said
he’s sympathetic to the plight of communities with tight budgets and
few means of raising revenue. But while a local income tax may have
some merit, he said, legal authorities have said that the state
constitution would have to be amended in order for one to be
created.
“The bigger question, though, is would there be any appetite among
the public to do it?’’
Kaufman said there have been five ballot attempts to change the
state’s income-tax structure to a graduated system, and each has
been rejected.
“Change for any of us is difficult, change on a large scale is
difficult, and change in taxes is more difficult still,’’ he said.
Despite his lack of optimism for the proposal, Kaufman said, it’s
still worth looking at ways communities can raise revenue beyond
property taxes.
“We need to have that conversation, and a local income tax is one of
the ideas we should be considering,’’ Kaufman said.
State Representative Cory Atkins, a Concord Democrat who has advised
town officials on the proposal, also said she thinks there’s little
hope of the idea going anywhere quickly. She said the only way it
could move forward is if residents get behind it.
“It’s an interesting concept and I’m delighted towns are taking it
upon themselves to experiment,’’ she said.
Atkins said residents would not support such a change if it was
suggested by politicians.
“Most people would think it’s an added tax,’’ Atkins said.
She said the state’s wealthier communities, such as Acton, Carlisle,
Dover, Lexington, Lincoln, Sherborn, and Wellesley, need to work
together to gain support, hold informational meetings, and try to
spread the word. She said some officials in Harvard have expressed
interest, but there appears to be little momentum elsewhere.
Daniel Keyes, Sherborn’s town administrator, said the idea hasn’t
come up and he’s not sure residents would support it.
Hans Larsen, Wellesley’s executive director, said he doesn’t think
the idea would go over well in his town.
“I think people would be resistant to a new form of taxation,’’ he
said. “It’s another tax mechanism and taxation is a contentious
topic.’’
Barbara Anderson, the head of Citizens for Limited
Taxation, said while reducing property taxes sounds like a good
idea, a local income tax would only mean one more tax on residents.
“We have plenty of taxes in Massachusetts and it’s wasted enough
already,’’ Anderson said. “We certainly don’t want to open this
Pandora’s box.’’
Keyes said towns wouldn’t have to adopt the income tax, but it would
give them another option, similar to the Community Preservation Act.
He said the law gives communities the option to apply a surcharge on
property taxes to raise money for certain local projects, but
residents choose whether to participate.
Keyes said the property tax system was adopted when the country was
formed because real estate was a measure of a person’s wealth.
But times have changed and taxes should reflect those changes, he
said.
But even he admits any immediate change is unlikely.
“If we’re lucky, this could happen in 15 to 20 years. But if you
don’t start somewhere, it would never ever happen.’’
The Concord Journal
Thursday, February 25, 2010
Local income tax proposal elicits outcry
By Patrick Ball
Concord — A plan to pursue a local option local income tax struck a
nerve with some Concordians during Monday night’s Finance Committee
hearing on warrant articles.
The line stretched from the center of the Town House Hearing Room
out the door Feb. 22 as residents took turns talking down and poking
holes in a proposal the Local Option Local Income Tax Committee says
would replace a portion of the residential property tax.
Article 33, as presented Monday, seeks a Town Meeting vote
requesting the Board of Selectmen ask representatives “to file and
seek passage of legislation that would permit cities and towns the
option of adopting a local income tax on residents.”
See: http://www.concordma.gov/pages/ConcordMA_BComm/local%20option
Identifying herself as a Hispanic who grew up in New Jersey, Adriana
Cohen said, as a minority, she never felt entitled to live in “one
of the wealthiest communities in the country,” so she worked her way
up, living in apartments in places like Somerville until she could
afford to move here.
“The wealthy residents you want to slap with this extra penalty tax
have worked all of their lives,” said Cohen, a Ripley Hill Road
resident. “Why should they pay for people who have less money? …
It’s socialism and I’m against it.”
Blueberry Lane resident Jennifer Clarke asked the income tax
committee if it had considered what kind of impact levying a local
income tax would have on local, donation-dependent organizations
such as the Concord-Carlisle Community Chest and the arts groups in
town.
“When you tax the people who have the income and contribute to other
endeavors … you’re biting the hands that fee you,” Clarke said,
eliciting scattered cheers from the back of the room.
First step in the process
If Town Meeting passes Article 33, the selectmen would formally
request the state Legislature to consider allowing the local option
local income tax. The Legislature would then consider the
legislation, and potentially approve it pending an option from the
Massachusetts Supreme Judicial Court, as the state constitution may
have to be amended to pass this legislation. And if the legislation
passed, the town would have several meetings and votes to an income
tax locally.
“This is a first step in a rather long process,” said income tax
committee member Pat Sinnot. “The first step is to get Town Meeting
to indicate up or down, whether this is a good idea. … It would
take, we’re figuring, a good decade to get through this.”
According to statistics provided at the meeting, Concord’s
residential property tax raises about $60 million, while the taxable
income reliably exceeds $1.5 billion. A 2 percent local income tax
would reduce the property tax by about 50 percent, the committee
said.
Since the town so heavily relies on property taxes for its budget,
it’s not a bad idea to provide a little bit of diversity there,
income tax committee member Jonathan Keyes said.
The proposal would preserve existing local controls, keeping the
budget process the same is it is now. Proposition 2˝ still would be
enforced, with the tax lowering the levy limit by the amount of the
local income tax.
“I think this is a great idea,” said Finance Committee member Jill
Appel, adding that she’s seen too many people being “priced out of
town” by property taxes.
Reaction
When the audience was invited to join the discussion, the majority
of residents who spoke questioned, if not opposed, the idea of
starting down the road toward a local option local income tax.
Some asked about the impact the tax would have on renters, on small
business owners who have multiple corporations and on elderly
residents living in long-term care who would be forced to fork over
social security.
With so much still unanswered, is it wise to put the wheels in
motion on an initiative that could take another decade before it’s
enacted, asked Sven Olson, a Caterina Heights resident who only got
half-way through his list of questions.
Richard Wenzel, a Hillcrest Road resident, pointed out the
once-a-year income tax collection would present a cash flow problem
as property taxes are collected quarterly. He also said “income tax
is not exactly an indicator of ability to pay” because healthcare
costs are not accounted for in the state income tax.
“I think you have to look carefully at using the Mass. tax code,”
Wenzel said.
“This seems like an overly complicated solution to the property tax
problem,” said Becky Shannon of Commerford Road. Since the driver of
the property taxes in town is health insurance and education costs,
Shannon suggested lobbying to the federal government to make good on
its promises to offset those costs.
Some residents spoke in support of the local option local income
tax.
Fairhaven Road resident Charles Phillips thought exploring this
option was an excellent idea, but said “a careful explanation” of
how the levy limit would work would be helpful at Town Meeting.
Income tax committee member Reinier Beeuwkes said the suggestions
that rich Concordians would pack up their checkbooks and go home was
an insult to many who’ve given time and money to make Concord the
town it is.
“It’s not just bankers and architects and lawyers” who work 70 hours
a week to live here, Beeuwkes said, adding that the goal of this
initiative is to make it possible for “teachers, firefighters, old
people and young people” to live in Concord.
The Boston Globe Magazine
Sunday, February 7, 2010
Our love-hate relationship with taxes
The fight over taxes -- in Massachusetts and across the country
-- is as furious as ever.
But what is the battle really about?
By Charles P. Pierce
It’s hard not to wonder about them, as they drive north to New
Hampshire, blinded by plasma screens and home furnishings. As we are
all painfully aware, Massachusetts -- “Taxachusetts” to political
consultants and other public people on the dodge -- raised its sales
tax to 6.25 percent back in May. This sent folks scattering
northward, at $2.75 a gallon or more, mind you. People even told
reporters that they were going to New Hampshire to shop for
groceries, which are not taxed at all in Massachusetts, and apparel,
which is not taxed here either until the purchase goes above $175.
Nevertheless, they heard all the radio commercials asking them to
come shop in “tax-free” New Hampshire, and they were on the road
before they knew it. They were running away from ghosts.
Put simply, this state is fairly average when it comes to taxing its
citizens. According to data from the Tax Foundation, a nonpartisan
tax research group in Washington, D.C., the state and local tax
burden in Massachusetts is 9.5 percent, 0.2 points below the
national average, placing Massachusetts 23d among the 50 states. The
personal income tax system is the 29th highest. On the other hand,
the data show that the state’s corporate tax structure ranks it
fourth among those states that have corporate income taxes, and
property taxes here are the eighth highest in the country. In short,
by any empirical measure, calling this state “Taxachusetts” in 2010
is no more accurate than calling it “Massachusetts Bay.”
“That’s been the case since 1991,” says one veteran analyst who
declined to be identified and who worked on the state’s tax
structure under both Republican and Democratic administrations.
“There’ve been about 50 tax reductions enacted by governors and the
Legislature since then.”
Nevertheless, the cars still drive north, and the arguments
continue, exacerbated over the past year by the national economic
downturn and the angry, inchoate populist politics that resulted
from both the downturn itself and the occasionally erratic attempts
to solve it. The arguments were most clearly evident in the upset
victory of Republican and former state senator Scott Brown in the
race to replace the late US senator Ted Kennedy. Brown ran on the
vague, but eminently salable, notion that he would lower our taxes,
even though, as the member of a legislative minority with the least
seniority, what he could actually do about them remained unclear.
Indeed, some interviews with voters prior to the election led one to
believe that people voted for Brown because he would somehow reduce
all their taxes, state and federal.
However, we can be ambivalent about taxes. In Dedham last month,
voters passed property tax hikes totaling more than $15 million and
earmarked for a new elementary school and improvements to another
school. At the same time, the town gave 55 percent of its vote to
tax-cutting Brown. If nothing else, the results prove that, on a
local level, if a proposal to raise taxes is tightly drawn as to the
purpose of the increase, it has a better chance of succeeding, even
amidst a seismic event elsewhere on the ballot.
More clearly than ever, the issue of taxes must be seen as something
far beyond pure economics, and well beyond simple dollars and sense.
Taxes have become the way we define ourselves as a political
commonwealth, or a way of determining whether we still see ourselves
as such at all. There’s a strong -- and occasionally successful --
school of political thought that sees very little in government or
in society that belongs to us all. “Right now,” says Robert Borosage,
the president of the Institute for America’s Future, a nonpartisan
research and education center in Washington, D.C., “when you say
‘taxes,’ it’s a substitute for government, and in some contexts that
means Big Government, which is oppressive, and taxes represent the
intrusion of Big Government into our lives.”
Of course, as with so many things in our politics, in the discussion
of what taxes represent, inexactitude is everybody’s friend. Last
summer, when the Tea Party movement hit high tide, there was some
very loose and unformed talk about keeping the hands of “government”
off people’s Medicare. This is a state -- and beyond it, a country
-- that expects to be left alone while simultaneously expecting a
certain level of service from its government. One that expects, in
the words of its founding document, to provide for the common
defense and promote the general welfare, but to do it, at best, on
the cheap. Quite simply, if you love a particular government service
-- that your bridges are repaired, for example, or your emergency
calls answered -- you ought to love the taxes that pay for it. That,
however, is rarely the case.
“What I found surprising during our debate,” explains Stephen
Crawford, the Arlington-based public relations executive hired as
the spokesman for the successful opposition in 2008 to a ballot
question that would have eliminated the state income tax, “was the
other side’s refusal to identify a single thing they would cut. One
person’s cut is another person’s benefit. That’s why we were
successful.”
The drive to repeal the income tax was led by perennial libertarian
candidate for everything Carla Howell of Wayland. Her next project
takes aim at the state sales tax: This November, Massachusetts
voters will likely see a proposal on the ballot that would slash it
to 3 percent.
“Taxes” are viewed by many as “my money going to things or people of
which I disapprove,” which makes any political appeal in favor of
raising them, even for the purpose of funding people and things of
which you might approve, a dodgy matter at best. Navigating that
predicament is so tricky that, over the past 30 years or so, many
politicians -- most notably conservative ones in Washington -- have
simply declined to do so at all, relying on former vice president
Dick Cheney’s now-famous dictum that Ronald Reagan “proved deficits
don’t matter.”
“The problem is that government got so unpopular in the last few
years that the anti-tax side has an easy out,” says US
Representative Barney Frank, the chairman of the House Financial
Services Committee. “They don’t have to argue that we have to cut
services anymore.”
Part of that is the thrall that the theories of supply-side
economics have held over Republican leaders through the years of
conservative ascendancy that began with the election of Reagan in
1980. Much of supply-side theory holds that lower taxes eventually
translate to higher government revenues. Over the years, this
morphed into a kind of reflexive and general anti-tax fervor so
pronounced that Jonathan Chait, a reliably centrist senior editor at
The New Republic, wrote a book in which he called supply-siders,
among other things, “sheer loons.” Even so, they succeeded so well
politically that the entire national debate on taxes changed and,
with it, the way we looked at ourselves as a self-governing people
with certain institutions and values that we hold in common. Right
about the time Reagan brought the theory into the federal government
a similar thing was happening in Massachusetts, and, unlike in
Washington, it was happening from the ground up.
Thirty years ago, she was a noisy voice from the sidelines, a
bleacher-creature heckler in Massachusetts politics. She was loud
and raucous and far too easily dismissed by people in the state’s
political establishment who should have felt the ground shifting
beneath their feet, but who had been standing in the same place so
long that their legs had gone numb. She was pounding away on the
subject of taxes -- not merely on how much they cost, but on what
they had come to represent -- in the same relentless catechism with
which William Lloyd Garrison once blessed himself here: She was in
earnest; she would not equivocate; she would not excuse; she would
not retreat a single inch. And, Lord knows, she would be heard. In
this, Barbara Anderson probably has affected Massachusetts
politics more than anyone ever has who’s never been elected to
anything.
“To me,” she says, “taxes have never been about the money. It’s been
about power and who’s in charge and who’s in control.”
A native of western Pennsylvania, where her parents ran a hardware
store, the former Barbara Hervatin enrolled in the DuBois campus of
Penn State, where friends introduced her to the work of Ayn Rand. By
1980 and two husbands later, she found herself here, working as the
executive director of Citizens for Limited Taxation. CLT was
six years old then, a creature of the state’s lively, if powerless,
conservative libertarian political subculture. (At the time, the
national headquarters of the John Birch Society was tucked into the
leafy streets of Belmont, across from the public library.) By the
time Anderson took over from Greg Hyatt -- who, in 1986, would
become briefly notorious for abandoning his gubernatorial campaign
when he was said to have been spotted naked in his office -- CLT was
struggling and nearly broke. But it had been paying attention to
what had been going on in California, where in 1978 a tax revolt led
by a man named Howard Jarvis had resulted in an amendment to the
state constitution severely limiting property taxes. In 1979, CLT
launched an initiative petition in Massachusetts called Proposition
2˝ that would limit a municipality’s total annual property tax
revenues to 2˝ percent of the assessed value of all the
municipality’s property and would cap a municipality’s ability to
raise its property taxes at that same 2˝ percent. It also would
reduce the excise tax on automobiles.
At the same time, a court decision in Massachusetts had stopped the
practice of taxing businesses more and more and had forced a shift
in the property tax from industrial property to residential
property. “Prop. 2˝ really was a money problem back then,” Anderson
recalls. “People were generally angry about the concept that we had
gotten sales taxes, income taxes, and the Lottery on promises to
lower the property taxes, and it didn’t happen. People saw that they
had to do it themselves.”
The campaign for Proposition 2˝ wasn’t entirely a people’s crusade.
The Massachusetts High-Tech Council, furious at the state
Legislature for ignoring a milder tax-limitation amendment in July
1980, threw itself and its money behind the CLT’s ballot question.
Anderson, however, was the public face of the campaign. She was
uncompromising. Once, when countering an argument that passing the
measure would cause the closures of public libraries all over the
state -- which it did -- she responded with a discussion of how
cheaply people could buy paperback books. Nonetheless, the message
got through, and an unlikely coalition of technology millionaires,
small-business owners, and put-upon homeowners gave the ballot
question a whopping 59 percent of the vote that November.
Making the new law work, then, became the problem. The Legislature’s
taxation committee took up the job. The underlying question remained
what the passage of Proposition 2˝ meant beyond simple budgetary
mathematics. Did it represent anything more than abandoned wrath?
Was it a plea purely for lower taxes and the devil take the
hindmost, or was it really a kind of angry call for better and more
responsive government? And if it was all of those, then its
implementation was a very complicated thing.
“The bill, as it was drafted, was really Draconian,” recalls US
Representative Michael Capuano, who at the time was chief counsel to
that committee. “Even its proponents knew that. We asked them, ‘Is
this really what you want?’ Barbara and I worked together. The
answer was that we agree that, in general, we want significant tax
cuts. If we implemented the whole thing right away, one community
could have had 50 percent tax cuts that year. The state couldn’t
command that. The internal argument was, even if you do this, you’re
not living up to the spirit of what you said you wanted -- which was
thoughtful tax policies.”
One thing the Legislature declined to do was to substitute its
judgment for that of the voters, which was in its power to do.
(Proposition 13 in California was different. It was a constitutional
amendment and not simply a new law, the way Prop. 2˝ was here.)
“Right after it passed,” Anderson says, “there were a stack of bills
to amend or repeal 2˝. The Legislature, to its credit, decided that
somebody had to do something about property taxes and we’re never
going to do it. There were some people you could trust up there
then.”
Proposition 2˝ is now an established part of how the state governs
itself. (There have been sporadic attempts to repeal it, which
rarely got beyond the talking stages.) Other tax rollback attempts
have not fared so well. In 2000, voters overwhelmingly passed
another Anderson-led petition, this time to rescind state income tax
increases that had been passed in 1989 and 1990 that would have
brought the tax rate back to 5 percent, but the Legislature froze
the rollback at 5.3 percent. The howls that greeted that action had
little to do with money. “That was the whole motivation of the
campaign in 2000, when we didn’t even talk about how they spend most
of the money,” explains Anderson. “It was, ‘Aren’t you sick of
politicians who lie to you and then break their word?’ People in
this state have long memories about ‘temporary’ taxes.”
Within the context of Prop. 2˝, the fight over what taxes really
mean has moved to Massachusetts’s cities and towns. Whenever a
municipality wants to override the provisions of the law, it must do
so at the ballot box. This can range from the $6.2 million override
for the town library that passed by eight votes last June in
Walpole, to the crowded ballot in Winthrop last May, when the town
passed eight of 10 overrides. (Up with the library and trash
collection, down with the town planning and grants office.) Between
1990 and 2005, 224 communities passed a Proposition 2˝ override. The
more affluent the community, the more often an override seems to
pass. Cape Cod seems to have been one of the more enthusiastic
spots; in that same 15-year period, Chatham passed a whopping 55
overrides and West Tisbury passed 46, while Eastham, Tisbury, and
Truro passed 34, 32, and 30, respectively.
“Government has gotten so big that it’s hard to track where the
money goes,” says Capuano. “When people know where the money’s
going, they like it better. At least you know with the gas tax that
the money is going to roads and bridges. They’re more accepting of
that than they are of general taxation.” At the very least,
Proposition 2˝ forces municipalities wishing to override it to say
precisely why they are doing so.
“Nobody likes paying taxes,” Crawford says, “but nobody likes
potholes in their roads or myriad other impacts that we’re just
starting to see in this state. The other change in our culture here
has been a deep commitment to provide local aid that was not there
before Proposition 2˝. [Prop.] 2˝ is there, but it also required the
state to provide state aid not provided at that level before.”
On the 2008 income tax ballot question, Crawford’s interpretation
prevailed, but it is significant that the campaign was fought on the
terrain that Barbara Anderson had helped define 30 years ago.
Long ago, in the days before supply-side economics and Propositions
13 and 2˝ and the supremacy of what taxes have come to mean over
what they actually are, it was a Republican named Oliver Wendell
Holmes Jr. who, when asked by a young secretary whether he hated
paying taxes, replied, “No, young fellow. I like paying taxes. With
them I buy civilization.” And it was another Republican named
Theodore Roosevelt, arguing for the implementation of what we now
call the estate tax -- and what conservative politicians frame as
the “death tax” -- who argued: “The man of great wealth owes a
peculiar obligation to the state, because he derives special
advantages from the mere existence of government.”
According to a study by the Center on Budget and Policy Priorities,
a nonpartisan institute in Washington, D.C., eliminating the estate
tax would blow a $1.3 trillion hole in the federal budget over 10
years. Meanwhile, the tax itself in 2009 only applied to an
estimated 0.24 percent of all the people who died that year. And
according to another study, this one by the Urban
Institute-Brookings Institution Tax Policy Center, more than 99.7
percent of estates owe no estate tax at all. The estate tax revenues
in the United States as a share of our gross domestic product are
below the international average for such taxes. In a country that
believed in progressive taxation, the issue likely would not even
arise. But the brawl over the estate tax is not strictly a matter of
money and percentages. It is also deeply, profoundly political.
Opponents of the estate tax have argued against it on an issue of
“fairness.” They contend that the estate tax penalizes people by
“making them pay taxes twice.” As journalist Peter Beinart pointed
out in The New Republic four years ago, they have managed to cast
the estate tax as a millstone tied to the American dream.
“Ultimately,” Beinart wrote, “the argument against the estate tax .
. . is moral. It is about right and wrong.”
Calling it the “death tax” gave its opponents a huge advantage in
perception. Through this, and through taking advantage of the
revamped terrain on which any discussion of taxes now must take
place, the people seeking the elimination of the estate tax -- and,
one can fairly conclude, the concept of progressive taxation
generally -- have managed to make allies out of people whose estates
never had a chance of being taxed at all. In Death by a Thousand
Cuts: The Fight Over Taxing Inherited Wealth, their 2005 book about
the political battle over the estate tax, Michael Graetz, a Yale
professor who worked for the Treasury Department in the first
administration of George W. Bush, and Ian Shapiro, also a Yale
professor, tell the story of Chester Thigpen, an elderly Mississippi
tree farmer who testified before Congress in favor of repealing the
tax despite the fact that his estate was too small to be taxed.
“My father recently died,” recalls Elizabeth Warren, a Harvard Law
professor and the chairwoman of the Congressional Oversight Panel
monitoring the Troubled Asset Relief Program, which bailed out banks
at the expense of (yes) the taxpayer. “He worked all of his life,
and at the end of the day he had a modest home that was paid off,
Social Security, and a few bucks in the bank, and he was worried
about paying ‘death taxes.’ That man would have had to make 100
times more than he’d made, he was so far away from ever paying a
dollar of the so-called ‘death tax.’ There was something
heartbreaking about it. Where should his interests have aligned?
Toward a much more populist notion of a progressive tax structure.
He saw his interests in avoiding ‘death taxes.’ It broke my heart.”
The battle over the estate tax -- which is ongoing in Washington --
is a nearly perfect prism through which to look at the consistently
problematic view Americans have of the concept of taxes. Ultimately,
no matter which side of the political aisle you find yourself on,
taxes are a public demonstration of the kind of political
commonwealth we desire for ourselves. Even the most radical anti-taxers
-- and they have moved far away from anything like what Barbara
Anderson was pushing in 1980 -- believe that. (Remember, the
fundamental principal behind supply-side economics was that cutting
taxes would increase government revenue.) At the same time, anyone
on the other side who believes in progressive taxation has a deep
and abiding responsibility to make sure the money is neither wasted
nor grafted away. “Taxes have become a litmus test,” says Capuano.
“Maybe they always were, I don’t know. But my argument is that what
you can’t do on the local level we can do on the national level. You
can cut taxes and then just increase the debt ceiling. Borrow and
spend is just as bad [as], if not worse than, tax and spend. You can
have anything you want and you don’t have to pay for it.”
Like them or don’t like them, taxes are the statement of what we
freely choose to be, and not what we wish we were. “We have a badly
structured society, a decrepit infrastructure, and we’re now seeing
the collapse of the university system that was our pride and joy
because tuition costs are rising so much faster than the cost of
living,” says Borosage, referring to the whole nation. “There is a
terrible price to be paid for believing that we can get something
for nothing.” The way we look at taxes is the way we look at
ourselves, even if we choose to look away.
Charles P. Pierce is a Globe Magazine staff writer. |
| |
NOTE: In accordance with Title 17 U.S.C. section 107, this
material is distributed without profit or payment to those who have expressed a prior
interest in receiving this information for non-profit research and educational purposes
only. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml
Citizens for Limited Taxation ▪
PO Box 1147 ▪ Marblehead, MA 01945
▪ 508-915-3665
|
