Another income tax hike . . .
baited with another lie
Sen.
Sonia Chang-Diaz and Rep. James O’Day led a coalition of Democratic
lawmakers and advocates on Thursday in pushing for an income tax and
capital gains tax increase to avoid the risk of deep cuts to
education and social services even as the economy shows signs of
rebounding.
The
legislation, which has drawn 19 co-sponsors from both the House and
Senate, would generate $1.37 billion in additional revenue,
supporters said, by shifting the tax burden from the middle class to
wealthier residents.
While
Gov. Deval Patrick and leaders in the House and Senate have pledged
not to increase taxes this budget cycle, supporters vowed victory on
Thursday, and the chair of the Revenue Committee Rep. Jay Kaufman,
said it was “time to have this conversation.” ...
Offering
testimony at the State House, advocates said the bill authored by
Chang-Diaz and O’Day would create a more fair and progressive tax
system by asking the wealthy to pay more of their income while
increasing deductions for lower and middle class families.
Detractors, however, called in unfathomable that lawmakers would
consider a tax increase at a time when the unemployment remains at 8
percent and residents are paying significantly higher prices at the
gas pump....
The bill,
filed by Chang-Diaz, of Boston, and O’Day, of Worcester, would raise
the state’s income tax rate back to 5.95 percent, from its current
5.3 percent level. It would also increase the personal tax exemption
from $4,400 to $7,900 to offset the impact of the increase on middle
class families.
The bill
(H2553/S1416)
would also increase the long-term capital gains tax from 5.3 percent
to 8.95 percent, and set the same rate for less common short-term
capital gains that are currently taxed at 12 percent. Low-to-middle
income seniors would be granted a tax exemption on capital gains tax
if they earn less than $40,000....
From the
outset of the hearing, supporters of the legislation, dubbed “An Act
to Invest in Our Communities,” crowded Gardner Auditorium as panel
after panel offered testimony in support raising revenue to pay for
services that faced cuts in the fiscal 2012 budget.
Advocates
from Neighbor to Neighbor, the Massachusetts Senior Action Council
and other organizations waved yellow placards that read, “Invest In
Our Communities,” as speakers testified in lieu of applause.
Supporters greatly outnumbered anti-tax advocates....
Kaufman,
a Lexington Democrat and co-chair of the Revenue Committee, said
during the House budget debate last week that he intended to do a
top-down review of all tax code details with an eye on producing a
“comprehensive” legislative proposal next year.
“I want
to thank you for framing this for us in a very comprehensive kind of
way and a straight-forward kind of way making it abundantly obvious
that’s it’s time to have this conversation,” Kaufman said.
Not all
agreed.
“I think
it’s outrageous that in this climate when people are unemployed,
when gas is four bucks a gallon, there is a proposal on the table to
take more money out of their pockets,” said Chip Faulkner,
associate director of Citizens for Limited Taxation.
Faulker
called Massachusetts a “heavily taxed state” that has led to slow
population growth, and identified the tax climate as the reason
Massachusetts is losing a Congressional seat....
Sen.
Bruce Tarr, the Senate Minority Leader, said the debate Thursday
highlighted the philosophical differences between some Democrats and
the GOP caucus. Senate Republicans have filed bills to create a
commuter tax deduction, a mortgage insurance tax deduction for
first-time homebuyers and a rollback of the income tax to 5 percent.
“Taxpayers shouldn’t be lulled into a false sense of complacency
just because the House passed a budget with no new taxes. The
reality is that some legislators are intent on pursuing every
available avenue to raise taxes,” Tarr said in a statement.
While
Faulkner said Massachusetts ranked fourth in the country in taxes
paid per capita, supporters of the tax increase said Massachusetts
was in the bottom third of states in taxes as a percent of income.
Faulkner
also attacked the ease with which supporters of the bill asserted
that the wealthiest could afford to pay more, and suggested the
legislation was an end-run around voters who have rejected a
progressive income tax five times at the ballot box.
“Let’s
get the rich. Let’s get the people who have more money. Well, this
reeks of class warfare,” Faulkner said.
Take note
of these names and remember them well: Sen. Sonia Chang-Diaz, Rep.
James O’Day, Somerville Mayor Joseph Curtatone. They are the folks
who want to hike our taxes by an additional $1.37 billion a year.
The trio
— accompanied by a cast of the usual can’t-get-enough-government
money crowd that included the Massachusetts Teachers Association,
nurses and local officials — yesterday introduced “An Act to Invest
in Our Communities.” Don’t you just love the way lawmakers try to
disguise the worst possible kind of legislation with the most
innocent names? Guess “An Act to Pick the Pockets of Honest
Taxpayers” really wouldn’t go over very well.
The
would-be tax hikers insist they would ease the burden of their
proposed rate hike on wage and investment income for “the middle
class and seniors” by increasing the personal exemption from $4,400
to $7,900 even as they reach into our pockets for that extra $1.37
billion....
“We need
a fair tax system that provides enough revenue to sustain
high-quality public schools and colleges for our students and to
ensure a good quality of life for everyone in our communities,” said
Paul Toner, president of the Massachusetts Teachers Association — as
if the state hasn’t been throwing billions of dollars at education
for over a decade....
But, hey,
what people are really, really clamoring for is a tax hike. That
will fix everything!
[Rep.
Jim] O’Day, along with Sen. Sonia Chang-Diaz (D-Boston), has
proposed “An Act to Invest in Our Communities,” a bill that would
raise the income-tax rate from 5.3 percent to 5.95 percent while
simultaneously increasing the personal exemption enough to create
tax savings for Massachusetts residents who make just under the
state’s median income. Unsurprisingly, while counting community
leaders, unions and left-wing politicians as supporters, the bill
has met some vocal opposition especially among Tea Party and
anti-tax groups....
According
to the independent, nonpartisan Massachusetts Budget and Policy
Center, despite its “Taxachusetts” nickname, Massachusetts has a
lower percentage than the national average in personal income taken
through taxes. Like the federal government’s tax code, however,
because of Massachusetts’ reliance on a high sales tax, it tends to
be a “regressive” state – or one where poorer residents spend a
higher percent of their income on taxes than wealthier residents)
when it comes to taxation.
“The
income tax is the one tax that tends to be more progressive,” says
Noah Berger, president of the Massachusetts Budget and Policy
Center, since everyone can deduct the same amount of money ($4,400)
yearly. With that exemption, someone who earns only $30,000 saves a
larger percentage of his or her money than someone who earns
$100,000....
“It
allows us the flexibility to make it more progressive than making it
a graduated income tax,” O’Day says, something that would require a
change in the state’s constitution. “When you’re looking at tax
policy, it’s important that it’s as fair as it can be.”
To CLT's slogan, "37 years as the
Voice of Massachusetts Taxpayers," we've just added — "and
their Institutional Memory" — because here
comes the Gimme Lobby and its henchmen,
trying to resurrect an old ploy to rip-off taxpayers, and we've been
here before. Another
income tax hike trap baited with a promised increase in the personal
exemption is an old bait-and-switch scam, foisted on taxpayers
by the insatiable Takers before.
“Those who fail to learn from history are doomed to repeat it.”
Yesterday, representing us Chip
Faulkner attended
the Revenue (formerly Taxation) Committee's hearing on the latest bills to hike the income tax up
to 5.95 percent. His report follows:
After-Action Debriefing by Chip Faulkner
Taxation Committee Hearing on Bills to Increase the Income Tax
Thursday, May 5, 2011
The
Gimme Lobby came out in droves yesterday filling Gardner
Auditorium in the basement of the Statehouse. They were there to
take more money from your wallets by hiking the state income tax
to 5.95%.
Of course there was almost no mention of a tax hike, but rather
an “invest in our communities” theme. We “need more revenues”
was another popular phrase from what looked like a mature
Woodstock crowd 40 years removed. A few of the women, not far
from Medicare eligibility, had gray hair descending to the
middle of their backs. I felt like shouting to them, “the 60s
are over, Arlo Guthrie is so passé!”
They were determined to soak "the rich” and all those evil
corporations for the additional revenue. Their solemn, anguished
faces spouted this gibberish constantly over the three hours I
was there. A plethora of college professors testified – all of
them seemed to be from UMass–Amherst or some other state
college. What a surprise. The testimony, unlike other hearings,
came not from individuals but rather from 3- to 5-person panels
with names like, “People United to Save Civilization.”
Several speakers talked about how Massachusetts is under-taxed;
I pointed out we had the 4th highest per capita tax burden in
the country. Many bemoaned the fact that we didn’t have a
graduated income tax in this state. During my testimony I
demanded to know, “What planet are you people on? The grad tax
has been voted down five times in this state!” I then turned to
the committee and said, “I dare you to put the grad tax on the
ballot. Not only will you triple CLT’s membership, but we’ll
beat you again.”
I ended my testimony by pointing out that Rep. O’Day, the chief
sponsor of the tax hike bill, was from West Boylston. West
Boylston voters gave the income tax rollback ballot question a 70
percent "Yes" vote in 2000. This little nugget of information
much annoyed Sen. Gale Candaras (D-Wilbraham), the Senate
Chairman of the Revenue Committee, who considered it a personal
attack on a tax-hiking legislator.
— For an idea of how well-organized and determined the
Gimme Lobby and its union allies are
to steamroll this tax hike through,
CLICK HERE —
Chip Faulkner did a great job against
an overwhelming swarm of parasites as the only citizen to testify in
defense of taxpayers. The Revenue Committee hearing was a dog-and-pony show with even
its first-come-first-speak sign-up sheet disregarded, him ignored
until he asserted himself demanding to be heard. The mob just kept
vomiting up more and more tax-hike "panelists" to wear down committee
members.
In 1998, while we fought for the rollback of the 1989
"temporary" income tax hike, the Legislature instead did its
own version of a tax cut. In response to a CLT news release
(Mar. 5, 1998, "Finneran
Tax Relief Plan"), then-Senate President
Tom Birmingham wrote us a letter. I responded to him on
Mar. 10 ("An
Open Response to the Senate President"), in part:
Birmingham: "While Governor Cellucci and
your organization have proposed a tax cut targeted at upper
income taxpayers, I have made a proposal that would direct
much more of the tax cut to middle income taxpayers. While
not as large as your proposal, my proposed income tax cut
would still be the largest of its kind in the history of the
Commonwealth. Rather than reducing the tax rate gradually
over several years, my proposal would immediately double the
personal exemption."
Ford: Senator, we "target" nobody. That is
your
game. We apply our proposed tax rate rollback equally to
every taxpayer who had his or her tax rate raised
"temporarily." We intend to restore the income the
Legislature took away, period. However, we also support an
increase in the personal exemption -- like the one you
helped take away from middle-income taxpayers last year when
you increased the stabilization fund.
On May 18, 1998 the Senate President's office issued a news
release which in part stated:
The largest component of the tax cut package is doubling the
exemption on earned income and making this tax cut effective
for the 1998 tax year. "This tax cut returns $443 million to
working men and women in an equitable and straightforward
way," said Birmingham. "This is a progressive, responsible
way to help all taxpayers enjoy our economic good times.
Collectively produced wealth ought to be recognized as
such."
In her op-ed criticism of our position against
this scam, on July 17, 1998 Boston Herald editorial page editor
Rachael Cohen wrote ("Tax cut politics can be a killer"):
For [CLT's] Anderson and Ford it's a quest for
the perfect tax cut. They no doubt forget that adage
about the best often being the enemy of the good.
They note, "If the Legislature does nothing but allow the
present rainy-day fund law to work as promised, the tax cut
will be bigger than if you pass this personal exemption
increase." Doubling the exemption gives taxpayers back $443
million. Anderson and Ford insist taxpayers would get back
$475 million if the rainy-day fund were not tinkered with.
However, they conveniently forget that a legislative
increase in the personal exemption is for this year, next
year and for all the years after that. The give-back via the
rainy-day fund is for one year only. And it only continues
if the good economic times keep rolling and if
the Legislature doesn't find more ways to spend tax dollars.
And would you really like to bet $700 million on that
premise?
.
. . In addition to freezing the income tax cut and
postponing the charitable deductions, the Senate tax package
reinstates taxes on capital gains, tacks another 75 cents
onto the cigarette tax, and halves the 1998 doubling of
the personal exemption.
Senate President Thomas F. Birmingham (D-Chelsea) made a
rare descent from the rostrum to fend off GOP accusations
that he was reneging on the personal exemption, which he
championed and routinely touts on the gubernatorial campaign
trail.
With the state facing a growing deficit now pegged at $2.5
billion, Birmingham said the $500 million personal exemption
was a necessary tradeoff to protect education and health
care.
"This is not a tax increase I would have chosen," Birmingham
said. "But we are in a true fiscal crisis." . . .
The Legislature doubled the personal exemption in
1998 — then halved it in 2002, gaining
taxpayers nothing, not a cent. But 1998-2002 wasn't the first time this
scam was perpetrated. As Barbara recognized in her Patriot Ledger
column of May 23, 1998 ("Massachusetts-Land
of Broken Promises"):
When he released his tax cut proposal this month, Senate
President Tom Birmingham gave the package its own slogan,
unaccountably calling it "Five Easy Pieces" after the
film about an unfaithful wastrel who chases easy women. The
five pieces include: 1) an increase in the same personal
exemption that the Legislature decreased just last year
. . .
"The good news is that while this merry band of
tax hikers lives on their own little planet, the grown-ups who
happily are in charge on Beacon Hill, like House Speaker Robert
DeLeo, have already pledged not to raise taxes," the Boston Herald
editorialized today. "And Senate President Therese Murray,
acknowledging that tax bills must originate in the House, indicated
she was fine with that. We remain grateful for their common sense."
This was the same stage set back in 1989
— during the final days of "The
Massachusetts Miracle" — just before we
taxpayers were whacked with the huge Dukakis "temporary" income tax
hike that still burdens us twenty-two years later.
We certainly hope this latest tax hike proposal
is universally received as Dead On Arrival, absurd especially during
The Great Recession we're suffering, but at the moment we lean
toward yesterday's advice from Senate Minority Leader Bruce Tarr
(R-Gloucester):
“Taxpayers shouldn’t be lulled into a false sense of
complacency just because the House passed a budget with no
new taxes. The reality is that some legislators are intent
on pursuing every available avenue to raise taxes.”
Tax bill supporters press for "adult conversation" of revenues,
services
By Matt Murphy
Sen. Sonia Chang-Diaz and Rep. James O’Day led a coalition of
Democratic lawmakers and advocates on Thursday in pushing for an
income tax and capital gains tax increase to avoid the risk of deep
cuts to education and social services even as the economy shows
signs of rebounding.
The legislation, which has drawn 19 co-sponsors from both the House
and Senate, would generate $1.37 billion in additional revenue,
supporters said, by shifting the tax burden from the middle class to
wealthier residents.
While Gov. Deval Patrick and leaders in the House and Senate have
pledged not to increase taxes this budget cycle, supporters vowed
victory on Thursday, and the chair of the Revenue Committee Rep. Jay
Kaufman, said it was “time to have this conversation.”
“We are jeopardizing the future of our communities if we try to
close this budget gap by cuts alone,” said Chang-Diaz, a former
school teacher from Boston.
Offering testimony at the State House, advocates said the bill
authored by Chang-Diaz and O’Day would create a more fair and
progressive tax system by asking the wealthy to pay more of their
income while increasing deductions for lower and middle class
families.
Detractors, however, called in unfathomable that lawmakers would
consider a tax increase at a time when the unemployment remains at 8
percent and residents are paying significantly higher prices at the
gas pump.
“If we care about children and we care about education then we have
to care about revenue,” Chang-Diaz said at a press conference held
before she and seven other lawmakers offered testimony before the
Joint Committee on Revenue.
The bill, filed by Chang-Diaz, of Boston, and O’Day, of Worcester,
would raise the state’s income tax rate back to 5.95 percent, from
its current 5.3 percent level. It would also increase the personal
tax exemption from $4,400 to $7,900 to offset the impact of the
increase on middle class families.
The bill (H2553/S1416)
would also increase the long-term capital gains tax from 5.3 percent
to 8.95 percent, and set the same rate for less common short-term
capital gains that are currently taxed at 12 percent. Low-to-middle
income seniors would be granted a tax exemption on capital gains tax
if they earn less than $40,000.
O’Day, of Worcester, said the time had come to have “an adult
conversation” about tax policy, offering and then rebutting the
notion that filing this legislation somehow amounted to an act of
courage.
“I don’t think there’s one thing courageous at all about taking this
step forward. This is just clearly the right thing to do,” O’Day
said.
From the outset of the hearing, supporters of the legislation,
dubbed “An Act to Invest in Our Communities,” crowded Gardner
Auditorium as panel after panel offered testimony in support raising
revenue to pay for services that faced cuts in the fiscal 2012
budget.
Advocates from Neighbor to Neighbor, the Massachusetts Senior Action
Council and other organizations waved yellow placards that read,
“Invest In Our Communities,” as speakers testified in lieu of
applause. Supporters greatly outnumbered anti-tax advocates.
Kaufman, a Lexington Democrat and co-chair of the Revenue Committee,
said during the House budget debate last week that he intended to do
a top-down review of all tax code details with an eye on producing a
“comprehensive” legislative proposal next year.
“I want to thank you for framing this for us in a very comprehensive
kind of way and a straight-forward kind of way making it abundantly
obvious that’s it’s time to have this conversation,” Kaufman said.
Not all agreed.
“I think it’s outrageous that in this climate when people are
unemployed, when gas is four bucks a gallon, there is a proposal on
the table to take more money out of their pockets,” said Chip
Faulkner, associate director of Citizens for Limited Taxation.
Faulker called Massachusetts a “heavily taxed state” that has led to
slow population growth, and identified the tax climate as the reason
Massachusetts is losing a Congressional seat.
Sen. Bruce Tarr, the Senate Minority Leader, said the debate
Thursday highlighted the philosophical differences between some
Democrats and the GOP caucus. Senate Republicans have filed bills to
create a commuter tax deduction, a mortgage insurance tax deduction
for first-time homebuyers and a rollback of the income tax to 5
percent.
“Taxpayers shouldn’t be lulled into a false sense of complacency
just because the House passed a budget with no new taxes. The
reality is that some legislators are intent on pursuing every
available avenue to raise taxes,” Tarr said in a statement.
While Faulkner said Massachusetts ranked fourth in the country in
taxes paid per capita, supporters of the tax increase said
Massachusetts was in the bottom third of states in taxes as a
percent of income.
Faulkner also attacked the ease with which supporters of the bill
asserted that the wealthiest could afford to pay more, and suggested
the legislation was an end-run around voters who have rejected a
progressive income tax five times at the ballot box.
“Let’s get the rich. Let’s get the people who have more money. Well,
this reeks of class warfare,” Faulkner said.
Under the current tax structure, the lowest income bracket earning
less than $19,600 a year pay 9.7 percent of their income to state
and local taxes, while the highest 1 percent of earners pay just 6
percent of their income, according to the Institute on Taxation and
Economic Policy
“That’s not what a fair tax system looks like,” said Peter Enrich, a
professor of law at Northeastern University, who testified before
the committee
Enrich also told lawmakers that taxes are a “very small factor” for
business leaders making decisions about where to locate and expand,
naming infrastructure, access to a skilled workforce and customers
and infrastructure and public safety as more relevant
considerations.
AFL-CIO President Robert Haynes said even with the tax increases,
Massachusetts would not rank above the national average for
taxation. He credited the Legislature with stopping the income tax
rollback at 5.3 percent because “you saw the devastation.”
“There are over 137,000 millionaires right here in Massachusetts.
Surely we can expect a modest amount more from them to help offset
some of the drastic service cuts that are devastating our
communities and families,” Haynes said.
Prior to testifying, supporters of the bill held a press conference
where Chang-Diaz and O’Day were joined by Sen. Daniel Wolf, Sen.
Jamie Eldridge, Rep. Frank Smizik, Rep. Peter Kocot, Rep. Jason
Lewis, Sen. Patricia Jehlen, Rep. Carl Sciortino, Rep. Alice Wolf,
Rep. Ellen Story, Rep. Carlos Henriquez, Massachusetts Teachers
Association President Paul Toner, Worcester Mayor Joseph O’Brien,
and Somerville Mayor Joseph Curtatone.
Rep. Denise Provost and Sen. Kenneth Donnelly later joined their
colleagues at the hearing to testify.
“I support smart taxation. Our property taxes are skyrocketing
through the roof,” said Curtatone, adding that political leaders
have been “afraid” to have a debate about taxes. “This system is
making those with the weakest ability to pay bear the burden.”
Wolf, a freshman senator from Cape Cod and the owner of Cape Air,
said he supported the bill to restore a level of equity to the tax
code and allow the state to invest in things like education, roads,
and bridges.
“As someone who has created 1,000 jobs over the last decade or so, I
welcome the investment that this bill will bring,” Wolf said.
While the hearing focused nearly exclusively on the bills filed by
Chang-Diaz and O’Day, other bills on the docket included one (H
1702) filed by Rep. David Linsky.
Linsky’s bill would create an income tax deduction for municipal and
schools fees that are being levied by cities and towns for services
like athletics and trash pick-up that used to be covered by property
taxes.
“This would end the practice of effectively double taxation,” Linsky
said.
Take note of these names and remember them well: Sen. Sonia
Chang-Diaz, Rep. James O’Day, Somerville Mayor Joseph Curtatone.
They are the folks who want to hike our taxes by an additional $1.37
billion a year.
The trio — accompanied by a cast of the usual
can’t-get-enough-government money crowd that included the
Massachusetts Teachers Association, nurses and local officials —
yesterday introduced “An Act to Invest in Our Communities.” Don’t
you just love the way lawmakers try to disguise the worst possible
kind of legislation with the most innocent names? Guess “An Act to
Pick the Pockets of Honest Taxpayers” really wouldn’t go over very
well.
The would-be tax hikers insist they would ease the burden of their
proposed rate hike on wage and investment income for “the middle
class and seniors” by increasing the personal exemption from $4,400
to $7,900 even as they reach into our pockets for that extra $1.37
billion.
“We just can’t cut our way out of this downturn,” they insisted in a
statement released yesterday. “The cuts hurt our schools, local aid
and health care services.”
“We need a fair tax system that provides enough revenue to sustain
high-quality public schools and colleges for our students and to
ensure a good quality of life for everyone in our communities,” said
Paul Toner, president of the Massachusetts Teachers Association — as
if the state hasn’t been throwing billions of dollars at education
for over a decade.
The announcement coincided with the latest poll from MassInc,
showing that state residents remain gloomy about the economic
picture ahead, in fact more pessimistic than they were last January.
But, hey, what people are really, really clamoring for is a tax
hike. That will fix everything!
The good news is that while this merry band of tax hikers lives on
their own little planet, the grown-ups who happily are in charge on
Beacon Hill, like House Speaker Robert DeLeo, have already pledged
not to raise taxes. And Senate President Therese Murray,
acknowledging that tax bills must originate in the House, indicated
she was fine with that. We remain grateful for their common sense.
Shifting the burden
What does “an act to invest in our communities” do?
There’s never a “good” time to raise taxes, and smack in the middle
of a deep economic recession certainly doesn’t lend an exception.
With state revenues still on the decline and the end of the federal
stimulus money that plugged budget holes for the past two years,
local aid and school money for municipalities has shrunk. Same goes
for health-care services and other government programs. But because
of these woeful economic realities, if there was a “right” time to
raise taxes, community advocates and some politicians argue, this is
it.
“The numbers don’t necessarily tell the story,” says Rep. Jim O’Day.
“The real gist of the issue is what type of community do we want to
live in?” O’Day forewarns that we could lose “the kind of quality
education we’ve become accustomed to in Massachusetts.”
To offset these cuts, O’Day, along with Sen. Sonia Chang-Diaz
(D-Boston), has proposed “An Act to Invest in Our Communities,” a
bill that would raise the income-tax rate from 5.3 percent to 5.95
percent while simultaneously increasing the personal exemption
enough to create tax savings for Massachusetts residents who make
just under the state’s median income. Unsurprisingly, while counting
community leaders, unions and left-wing politicians as supporters,
the bill has met some vocal opposition especially among Tea Party
and anti-tax groups.
According to a handout at a recent meeting held by O’Day, Worcester
Mayor Joe O’Brien and various other community leaders, the bill has
its sights on high-income earners and investors paying more in
taxes. The handout stated that “By asking more from high-income
households and investors who received large windfalls from the Bush
tax cuts, while raising the personal exemption as a way to hold down
the tax increase for middle-class families, the bill raises needed
revenue primarily from those who can best afford to pay.”
Individuals who make less than $62,600 per year would see some sort
of tax break, ranging from $17 to $50. Those right over the state’s
median-income line, making $62,600 to $103,800 would see their
income tax rise $99. The top 1 percent earners in the state, making
$580,000 per year, would see their income taxes jump $22,146, a
figure the bill’s advocates say they can afford with the extension
of the Bush tax cuts at the federal level.
If put into law, the bill estimates it could raise $1.2 billion in
revenue for the state, enough to nearly wipe out the current FY 2012
deficit.
But how does this change the state’s tax code?
According to the independent, nonpartisan Massachusetts Budget and
Policy Center, despite its “Taxachusetts” nickname, Massachusetts
has a lower percentage than the national average in personal income
taken through taxes. Like the federal government’s tax code,
however, because of Massachusetts’ reliance on a high sales tax, it
tends to be a “regressive” state – or one where poorer residents
spend a higher percent of their income on taxes than wealthier
residents) when it comes to taxation.
“The income tax is the one tax that tends to be more progressive,”
says Noah Berger, president of the Massachusetts Budget and Policy
Center, since everyone can deduct the same amount of money ($4,400)
yearly. With that exemption, someone who earns only $30,000 saves a
larger percentage of his or her money than someone who earns
$100,000.
This is why O’Day and Chang-Diaz have singled out the income tax,
rather than raising other taxes – other tax increases would fall
disproportionally on lower income households, are difficult to
change or, like property taxes, are controlled at the local level.
“It allows us the flexibility to make it more progressive than
making it a graduated income tax,” O’Day says, something that would
require a change in the state’s constitution. “When you’re looking
at tax policy, it’s important that it’s as fair as it can be.”
The Massachusetts Taxpayers Foundation and the separate Tax
Foundation did not respond to reporter inquiries.
Tax cut politics can be a killer
by Rachelle G. Cohen
Life must be so gosh-darn simple when you know you are *right,* when
the world is black or white and not all those messy shades of gray,
when all you have to do is talk, not act, and certainly never worry
about the consequences of those actions....
But there aren't 12 people in the entire state who understand the
concept, which makes it a little hard to explain in a 30-second
spot.
Of course, two of those 12 people are Barbara Anderson and
Chip Ford of Citizens for Limited Taxation and
Government, who . . . think Cellucci should veto the tax cut.
For Anderson and Ford it's a quest for the perfect tax cut.
They no doubt forget that adage about the best often being the enemy
of the good.
They note, "If the Legislature does nothing but allow the present
rainy-day fund law to work as promised, the tax cut will be bigger
than if you pass this personal exemption increase." Doubling the
exemption gives taxpayers back $443 million. Anderson and Ford
insist taxpayers would get back $475 million if the rainy-day fund
were not tinkered with.
However, they conveniently forget that a legislative increase in the
personal exemption is for this year, next year and for all the years
after that. The give-back via the rainy-day fund is for one year
only. And it only continues if the good economic times keep
rolling and if the Legislature doesn't find more ways to
spend tax dollars. And would you really like to bet $700 million on
that premise?
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Citizens for Limited Taxation ▪
PO Box 1147 ▪ Marblehead, MA 01945
▪ 508-915-3665
