CLT UPDATE
Friday, December 16, 2011
Five One-Hundredths of One Percent Tax Reduction:
45 more years before voters, taxpayers prevail?
|
Congratulations, taxpayers. The state
of Massachusetts is handing out a tax break beginning
Jan. 1, about enough for many couples to buy dinner at
Applebee’s, provided they do not go wild with the
appetizers.
The income tax reduction, from 5.3
percent to 5.25 percent, is the first in 10 years.
It comes more than a decade after
voters approved a plan to cut the income tax to 5
percent within three years....
“It’s .05 percent; I don’t want to
oversell this,’’ said Robert Bliss, spokesman for the
Department of Revenue.
Bliss said an average family of four
people that owns a home and makes a combined $100,000
would see a reduction of $39 a year. A single parent
with two children living in a rented home would get
about $9 in relief....
“It’s a good sign for our economy,’’
Senate President Therese Murray, a Democrat, said in a
statement. “We put those benchmarks in place many years
ago, and we’re keeping our commitment. . . . Now we need
to make sure we keep this recovery going.’’
Keeping the commitment is a matter of
interpretation. Republicans, who have pushed for a
faster reduction in taxes, say the state has not
fulfilled the mandate of the referendum.
“We should be at 5 percent; that’s
what the voters approved,’’ said Representative Bradley
H. Jones Jr., the Republican leader from North Reading.
“It is kind of amazing that it’s taken nine years to get
five hundredths of a point drop.’’ ...
Michael J. Widmer, president of the
Massachusetts Taxpayers Foundation, said the small
reduction announced yesterday is a positive step toward
meeting the 5 percent promise, but acknowledged there is
a price to be paid.
“On the other hand, given the
realities of 2013, this will likely mean additional
budget cuts,’’ he said....
Social service advocates say the
state should skip the tax cut, given that many of the
neediest are expected to be hit hard in next year’s
budget....
But Citizens for Limited Taxation,
which campaigned for the 2000 ballot measure, said that
however paltry, the relief is overdue.
“We’ll take it,’’ said Barbara
Anderson, the group’s executive director. “Every
little bit helps. At least they’re still showing some
respect that the voters told them to go back to 5
percent in 3 years back in 2000.’’
The Boston Globe
Friday, December 16, 2011
Mass. taxpayers to gain bit of relief
starting Jan. 1
In a sign that the economy is
improving -- if ever so slowly -- Massachusetts cutting
the income tax from 5.3 percent to 5.25 percent. Don't
scoff at the microcut, though. As the Boston Globe
reports, it's the first income tax reduction in a
decade.
Robert Bliss, spokesman for the
Department of Revenue, told the Globe that with the cut,
an average family of four people that owns a home and
makes a combined $100,000 would see a reduction of $39 a
year. Yay.
The Boston Business Journal
Friday, December 16, 2011
Bay State shaves a bit off income tax
Revenue Commissioner Amy Pitter has estimated that
the .05 percent reduction in the rate will cost the state about $54
million during the remainder of the current fiscal year, and about $114
million in the fiscal year that starts on July 1, 2012.
Pitter, as had been expected, certified the tax cut
on Thursday in a letter to Secretary of Administration and Finance Jay
Gonzalez, explaining that state tax revenues had reached a series of
thresholds required to trigger the reduction in the rate.
Massachusetts voters approved a ballot question in
2000 to gradually lower the income tax rate from 5.95 percent to 5
percent. In 2002, the Legislature froze the rate at 5.3 percent, but
also added a mechanism that would allow the rate to fall in increments
of .05 percent if growth in annual revenues meets certain benchmarks.
The cut on Jan. 1 would be the first since the 2002
law.
Associated Press
Thursday, December 15, 2011
Mass. income tax rate cut by .05 percent
The income tax rate stood at 5.95 percent in 2000
when voters approved a ballot question to cut the rate to 5.6 percent in
2001, to 5.3 percent in 2002 and to 5 percent in 2003. But lawmakers
froze the rate at 5.3 percent in 2002 and have resisted repeated
efforts, primarily by Republicans, to reduce the rate further.
State House News Service
Thursday, December 15, 2011
State poised to certify first income tax reduction
since 2002
|
|
Chip Ford's CLT
Commentary
Twenty-two years after the "temporary, 18-month"
income tax hike from 5 percent, eleven years after the voters'
overwhelmingly demanded it be rolled back to its historic rate, it
will be reduced to 5.25 percent on January 1st. Twenty-two years
after the promise that the hike would be only "temporary,"
that promise remains broken.
Nine years ago the Legislature
unilaterally "froze" the voters' mandate that it be rolled back to 5
percent, giving taxpayers another Beacon Hill middle-finger salute.
Instead of returning the income tax rate to its historic 5 percent
in 2003, as 60% of the voters ordered in 2000, next month the
"freeze" will thaw for the first time —
a whole five one-hundredths of one percent.
When it comes to defrosting a tax cut “freeze” we
Massachusetts taxpayers have no fear of global warming; polar bears
don't live long enough to be effected.
Five one-hundredths of one percent. That
equates to 5/100ths of a penny on every dollar we pay in state
income tax. Pardon me for not popping the champagne cork yet.
As the Boston Business Journal concluded in its closing
understatement, "Yay."
At this rate — five
one-hundredths of one percent over nine years
— the celebration won't happen for another 45 years.
The champagne can continue to age until 2057, when the "temporary"
tax hike will turn 68-years old.
If you're wondering how to spend your .05 percent
income tax cut, just apply it toward the 25 percent sales tax
hike of 2009.
 |
|
Chip Ford |
Complete
Letter with Attachments
Requires Adobe Reader
|
|
|
|
The Boston Globe
Friday, December 16, 2011
Mass. taxpayers to gain bit of relief starting Jan. 1
By Noah Bierman
Congratulations, taxpayers. The state of Massachusetts is handing
out a tax break beginning Jan. 1, about enough for many couples to
buy dinner at Applebee’s, provided they do not go wild with the
appetizers.
The income tax reduction, from 5.3 percent to 5.25 percent, is the
first in 10 years.
It comes more than a decade after voters approved a plan to cut the
income tax to 5 percent within three years. But lawmakers soon
stalled the measure when the economy grew grim.
Yesterday’s announcement, triggered by a set of positive economic
indicators, is a sign that the state is recovering, albeit at a
glacial pace.
“It’s .05 percent; I don’t want to oversell this,’’ said Robert
Bliss, spokesman for the Department of Revenue.
Bliss said an average family of four people that owns a home and
makes a combined $100,000 would see a reduction of $39 a year. A
single parent with two children living in a rented home would get
about $9 in relief.
Because the state’s income tax is flat, those who earn more and pay
more in taxes will save more.
The tax rate was 5.95 percent in 2000, when voters agreed in a
referendum to gradually reduce it to 5 percent by 2003. But the
economy soured, and in 2002 lawmakers froze the tax at 5.3 percent.
The 2002 law set a series of conditions tied to tax collections,
which would bring the rate down to 5 percent at a much slower pace.
This year, tax revenue grew by 7.2 percent, setting in motion the
tax cut.
Some Democrats lauded their good work yesterday in making the cut
happen.
“It’s a good sign for our economy,’’ Senate President Therese
Murray, a Democrat, said in a statement. “We put those benchmarks in
place many years ago, and we’re keeping our commitment. . . . Now we
need to make sure we keep this recovery going.’’
Keeping the commitment is a matter of interpretation. Republicans,
who have pushed for a faster reduction in taxes, say the state has
not fulfilled the mandate of the referendum.
“We should be at 5 percent; that’s what the voters approved,’’ said
Representative Bradley H. Jones Jr., the Republican leader from
North Reading. “It is kind of amazing that it’s taken nine years to
get five hundredths of a point drop.’’
Even the relative good economic news is tempered.
Despite higher tax collections this year, the Department of Revenue
predicted earlier this week that the rate of revenue growth would
slow in the coming year, increasing between 2.7 percent and 3.2
percent. That may or may not be enough to allow another tax cut in
2013, which depends on a growth rate of 2.5 percent, adjusted for
inflation.
State budget-writers have also said that such growth will not keep
up with demands for social services, which are still rising quickly.
The tax cut is worth about $114 million to taxpayers, meaning an
equivalent loss in the state budget.
Michael J. Widmer, president of the Massachusetts Taxpayers
Foundation, said the small reduction announced yesterday is a
positive step toward meeting the 5 percent promise, but acknowledged
there is a price to be paid.
“On the other hand, given the realities of 2013, this will likely
mean additional budget cuts,’’ he said.
Social service advocates say the state should skip the tax cut,
given that many of the neediest are expected to be hit hard in next
year’s budget.
“We are concerned that this move could end up hurting the 1 in 10
individuals who receive vital human services from our state,’’
Michael Weekes, president and chief executive officer of the
Providers’ Council, said in a statement. “But we must not mislead
taxpayers that we have more than enough revenue in a sector where
nearly 60 percent of organizations have had cumulative deficits on
their state activities since 1993.’’
But Citizens for Limited Taxation, which campaigned for the
2000 ballot measure, said that however paltry, the relief is
overdue.
“We’ll take it,’’ said Barbara Anderson, the group’s
executive director. “Every little bit helps. At least they’re still
showing some respect that the voters told them to go back to 5
percent in 3 years back in 2000.’’
Associated Press
Thursday, December 15, 2011
Mass. income tax rate cut by .05 percent
Massachusetts revenue officials said Thursday that tax collections had
grown sufficiently in recent months to trigger an automatic cut in the
state income tax, albeit a small one.
The cut, from 5.3 percent to 5.25 percent, will go into effect on Jan.
1. The savings to the average taxpayer would be minimal - most would
pocket less than $50 a year under the change - but the impact on the
state budget could be significant.
Revenue Commissioner Amy Pitter has estimated that the .05 percent
reduction in the rate will cost the state about $54 million during the
remainder of the current fiscal year, and about $114 million in the
fiscal year that starts on July 1, 2012.
Pitter, as had been expected, certified the tax cut on Thursday in a
letter to Secretary of Administration and Finance Jay Gonzalez,
explaining that state tax revenues had reached a series of thresholds
required to trigger the reduction in the rate.
Massachusetts voters approved a ballot question in 2000 to gradually
lower the income tax rate from 5.95 percent to 5 percent. In 2002, the
Legislature froze the rate at 5.3 percent, but also added a mechanism
that would allow the rate to fall in increments of .05 percent if growth
in annual revenues meets certain benchmarks.
The cut on Jan. 1 would be the first since the 2002 law.
Pitter said inflation-adjusted revenues grew 7.2 percent in fiscal 2011
compared to the previous year, easily meeting the threshold of 2.5
percent under the law. Additional thresholds were met over the next
several months, resulting in Thursday’s certification of the tax cut.
State officials and outside budget experts warned that the tax cut does
not signal the end of tight fiscal times for Massachusetts, pointing out
that the state still took in less revenue last year than it did in
fiscal 2008, prior to the recession.
Michael Weekes, president and CEO of the Provider’s Council, a group
representing human services agencies in Massachusetts, said he was
concerned the tax cut could lead to less funding for social programs.
"We understand state residents need tax relief - many of those who are
struggling with low wages are direct care workers in the human services
system," Weekes said. "But we must ensure that cutting the state’s tax
rate does not hurt our most vulnerable who receive essential supports
from this chronically underfunded sector."
State House News Service
Thursday, December 15, 2011
State poised to certify first income tax reduction since 2002
By Kyle Cheney
On New Year's Day, the Massachusetts income tax rate will fall for
the first time in 10 years.
State revenue officials confirmed to the News Service that they plan
to certify the tax cut Thursday afternoon, providing Bay State
residents with an estimated $111 million to $117 million in annual
tax relief.
The rate, currently at 5.3 percent, will fall to 5.25 percent on
Jan. 1, 2012 because state tax collections rose at a sufficient rate
to trigger the reduction, according to the Department of Revenue.
The income tax rate stood at 5.95 percent in 2000 when voters
approved a ballot question to cut the rate to 5.6 percent in 2001,
to 5.3 percent in 2002 and to 5 percent in 2003. But lawmakers froze
the rate at 5.3 percent in 2002 and have resisted repeated efforts,
primarily by Republicans, to reduce the rate further.
The income tax brings in more revenue to state coffers than any
other tax. Lawmakers have long foreshadowed the slight reduction in
the tax and have made no effort to prevent it, despite warning of
spending needs that will outpace tax revenue growth next fiscal
year. |
| |
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
|
