Manage money from previous tax
hikes first
By Barbara Anderson
There they go again, the hordes of
tax-hike advocates, spreading out across the Commonwealth to urge
support for Governor Patrick’s $1.9 billion tax package.
I’ve met these kinds of advocates on
the tax trail before, beginning in 1980 with their opposition to
property tax limits in Proposition 2½. Today, though, I offer
“institutional memory” on just the income tax.
In 1989, Governor Michael Dukakis
returned from the presidential campaign trail and demanded tax hikes to
fund a billion-dollar budget increase; supporters rallied at the State
House, some of them dressed as giant crayons, to protest potential cuts
to the arts. The legislative leadership was able to get the votes for
the tax package only after promising that the new income tax rate,
increased from 5 percent to 5.75 percent, would be temporary. The
Legislature raised the rate again the next year, “temporarily,” to 6.25
percent.
In 1990, a coalition, calling itself
the Tax Equity Alliance for Massachusetts, defeated a ballot question to
repeal the Dukakis tax hikes. However, Bill Weld, who supported it, was
elected governor, and oversaw a reduction in the rate to 5.95 percent in
1992.
In 1998, despite opposition from a
group now called the Campaign for Massachusetts’ Future, voters approved
a reduction of the investment income rate to the same rate as wage
income, and in 2000 they approved a rollback of the income tax rate to 5
percent over three years. Two years later the Legislature “temporarily”
froze rollback and investment rates at 5.3 percent after heavy lobbying
by pro-tax groups. Then Campaign for Our Communities was formed, and
called for a return to the 5.95 percent income tax rate.
Governor Patrick’s offset offer of a
reduction in the sales tax rate is hard to credit from the governor who
raised that rate from 5 percent to 6.25 percent just two years ago.
Instead, in 2011 a formula created in
2002 dropped the rate to 5.25 percent, where it remains — 24 years after
the first “temporary” increase, and 12 years after the voters demanded a
rollback to 5 percent.
Now Governor Patrick is proposing to
increase the income tax rate to 6.25 percent again, as part of a $1.9
billion tax package. The Campaign for Our Communities has been fanning
out across the state in support, and held a huge rally this week at the
State House.
Who are these teams and campaigns for
equity, our future, and communities? The list is long, made up of the
many public employee unions, both national and statewide with their
local affiliates, various human service providers, individual Democratic
town committees and city councils. For them, it seems, taxes will never
be high enough.
Patrick’s offset offer of a reduction
in the sales tax rate is hard to credit from the governor who raised
that rate from 5 percent to 6.25 percent just two years ago. Come the
next fiscal crisis, the sales tax will likely be hiked again.
Personal exemptions have been
increased in the past to sell a rate increase, only to disappear at the
next fiscal crisis. Deductions come and go, depending on what
special-interest lobbyists are doing on Beacon Hill.
The Massachusetts tax burden is the
fourth highest in the nation per capita, eighth highest relative to
personal income. The state is not suffering from a lack of taxes; it is
suffering from a lack of accountability for the taxes already paid. The
ongoing scandal over electronic-benefits cards is a maddening example of
this.
With cuts coming from our
dysfunctional federal government, there will be many pleas for revenue
increases to address not only transportation but the operating budget
and local aid. Eventually the easy “new revenue solution” will be
exhausted, and a better-managed state will be essential. Why not do the
better management now?
Tax advocates carry signs saying
“invest” to hearings on new taxes. First we need to invest in respect
for voters and taxpayers, who have been awaiting the return of the 5
percent income tax rate they were promised in 1989 and voted for in
2000. If they ever find reason to respect their government again, we as
a commonwealth will benefit.
— Barbara Anderson is executive director of Citizens for
Limited Taxation.
Like the New Deal, this plan shows
leadership
By James Roosevelt Jr.
I imagine that most people, at some
point in their lives, have wished that they had a crystal ball to see
into the future. There are many moments where a little prescience would
be useful, but it seems that it would come in especially handy when
faced with a tough choice. It wouldn’t surprise me if my grandfather,
President Franklin D. Roosevelt, longed for a sneak peek into the months
and years ahead as he crafted the New Deal to pull America out of the
Great Depression. Nor would it surprise me if the representatives and
senators on Capitol Hill at that time lay awake at night wondering how
it would all turn out. Would this plan create jobs? Would this new
infrastructure lead to growth? Only history, not a crystal ball, would
show that the New Deal would lead to the greatest expansion of
opportunity and growth in the history of the world.
At the time it was impossible to know
that, and legislators had to decide how to vote in an atmosphere that
was filled with resistance to Roosevelt’s proposal. Naysayers were vocal
and visible. Boldfaced names like Charles Lindbergh and William Randolph
Hearst came out against the New Deal, and were joined by the heads of
corporate giants such as General Motors, Sun Oil Company, and DuPont.
They criticized my grandfather for overreaching and overspending. Even
by the time of the Second New Deal, the opposition remained ardent. The
Republican Party platform of 1936 said that the New Deal was “guilty of
frightful waste and extravagance.”
And yet, the New Deal came to pass,
and relief, recovery, and reform followed. Legislators, many of whom may
have been skeptical at first, and almost all of whom undoubtedly faced
extreme pressure to reject this “extravagance,” joined the president in
investing in America. They embraced their responsibility, not just to
their current constituents who were so desperate for opportunity, but
also to the generations to come who would benefit from their foresight
and sacrifice.
Legislators on Beacon Hill might also
be longing for a sneak peek into the months and years ahead as they
wrestle with Governor Patrick’s 2014 budget. They have been asked to
make a sizeable investment in education, transportation, and innovation
in Massachusetts, while countless critics are making the case that the
investments are too generous and the amount of revenue required too
jarring.
The legislators may not have a crystal
ball to tell them how a yea or nay vote will impact their districts, but
they do have a rearview mirror. In it they will see that throughout our
nation’s and our Commonwealth’s history, investments in education,
transportation, and innovation have led to growth and opportunity. The
New Deal is just one example of that. A glance into the past will also
show that history favors those with an eye to the future. We celebrate
President Eisenhower for his advancement of the highway system and
President Kennedy for propelling us into space. Sustainably funding the
MBTA may not be the moon landing, but it is a vital contribution to the
economic future of the generations to come.
They embraced their responsibility,
not just to their current constituents but also to the generations to
come who would benefit from their foresight and sacrifice.
The governor is looking to fund early
education, extend the school day in gateway cities, and make college
more affordable for our young people so that Massachusetts will continue
to have the brain power that has been our secret weapon for so long. He
is calling for us to restore our roads and infrastructure, and expand
mass transit to forgotten corners of the Commonwealth. A recent study
released by the Massachusetts Taxpayers Foundation and the Massachusetts
Business Roundtable makes the critical link between investments in
transportation and the state’s economic competitiveness. This is about
quality of life and economic growth.
President Roosevelt and his colleagues
in government made a choice to give Americans the resources they needed
to succeed, both in the immediate aftermath of the Great Depression and
for generations to come. With no crystal ball in their arsenal, some may
call what they did taking a leap of faith. I call it leadership.
Whatever you call it, the Massachusetts Legislature shouldn’t let this
opportunity to make history pass by.
—
James Roosevelt Jr., the grandson of Franklin D. Roosevelt, is CEO of
Tufts Health Plan.
