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CLT UPDATE
Wednesday, December 4, 2013
Threat of "Tax Fairness" Looms
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Though it was not a part of his original
transportation financing plan, Gov. Deval Patrick on Monday said it
would be a “mistake” to block automatic gas tax increases in the
future and criticized unnamed opponents of the law for accepting
money from the gas tax in their hometowns....
Calling the indexing measure a “forever tax,”
opponents have argued it inappropriately absolves elected lawmakers
from having to vote on and justify future tax increases. The
question critics hope to put to voters in 2014 would not touch the
three-cent gas tax increase that was also part of the broader
transportation financing package approved by the Legislature. That
tax increase went into effect in August, increasing the state gas
tax to 24 cents....
“While it was not my first choice, the
Legislature in their due authority selected the gas tax and a way
not to have to come back to it every 15 minutes. It hasn’t been
updated in many, many years, so I think the indexing is wise. I
think it was done in the right way, and I think those that are
advocating that the indexing be undone need to answer for why it is
they keep showing up for all the ribbon-cuttings every time there’s
a new bridge or a new road project done, but don’t seem to want to
participate in how to pay for it,” Patrick said....
Patrick press aides were not able to tell the
News Service who the governor was referring to.
Steve Aylward, a Republican State Committee
member and the lead petitioner, said he had no idea who the governor
might have been talking about.
“I don’t really know the last time I was at a
ribbon-cutting. I don’t think I’ve ever been to one. I think
indexing can never be done the right way because indexing is an
automatic tax increase. Any time you get into automatic tax
increases you’re getting into a situation that can’t take into
account the economic conditions at the time, so for him to say that
is blatantly absurd,” Aylward said....
The administration estimates that over the next
decade inflation adjustments to the gas tax starting in 2015 will
generate a total of $890.6 million for transportation, starting with
$5.7 million next year and compounding over time to $182.6 million
in fiscal 2024....
During the brief media availability before
Patrick left the State House to have lunch down the street at Carrie
Nation with his former top education advisor and Bridgewater State
University President Dana Mohler-Faria, the governor also addressed
his decision to begin accepting his full $151,800 salary, portions
of which he had foregone in recent years.
“We’re running a surplus. I think it’s fair,”
Patrick said.
State House News Service
Monday, December 2, 2013
Patrick objects to gas tax indexing opponents
A Republican lawmaker pushing the ballot
initiative to undo the handcuffing of future gas tax increases to
inflation took up Gov. Deval Patrick on his challenge to stay home
when there are ribbon-cuttings for new bridges and roads made
possible by the tax.
“I don’t plan on showing up to his ribbon-cutting
for his
$9 million office, so I’ll gladly forgo any
ribbon-cuttings, so long as he listens to the people instead of his
advisers,” said state Rep. Geoffrey Diehl, a Whitman Republican. “A
lot of people feel that it’s taxation without representation.” ...
Supporters say the opposition is about the state
increasing a tax without a vote every year, not about what the taxes
will pay for.
“It’s not about ribbon-cuttings” said state Rep.
Shauna O’Connell, a Taunton Republican. “This is about giving back
to taxpayers their rights that were stolen from them when a ‘forever
tax’ was instituted.”
The Boston Herald
Tuesday, December 3, 2013
Rep revved up over gas tax
A sure sign that Gov. Deval Patrick is
trapped inside the Beacon Hill bubble: Asked this week about the
effort to repeal the linking of the state gasoline tax to
inflation — or what amounts to an annual gas tax hike, in
perpetuity — Patrick focused not on the drivers who will be
forced to pay more but on the politicians who are backing
repeal.
Calling the ballot campaign to repeal the gas
tax indexing “a mistake,” the governor defended the decision to
link the gas tax to inflation so that lawmakers don’t have to
revisit the issue “every 15 minutes.” ...
The governor refers constantly to the folks
he chats with who are clamoring for the chance to pay higher
taxes in exchange for better services.
The next time he runs into one when he’s
filling up at the gas station he should ask whether they’re also
agreeable to having their taxes go up every year — and whether
lawmakers should be spared the inconvenience of voting on it.
A Boston Herald editorial
Wednesday, December 4, 2013
Gov’s full of hot air
Is the Massachusetts Tax Fairness Commission
an oxymoron?
It’s difficult to conclude otherwise about a
commission that appears to view fairness exclusively through the
lens of redistributing revenue from the productive sectors of
the economy to the government. When the primary conversation
about tax fairness starts with “How progressive is the tax?” you
know the analysis is fraught with bias and ready to veer from
math towards politics.
Put another way, commission debates seem to
reflect the classic aphorism that a fair tax is one I don’t have
to pay....
The ideas put forward by the commission so
far range from a graduated income tax, which has been rejected
on multiple occasions by Massachusetts voters, to increasing tax
rates and the personal exemption, to extending the sales tax to
all business services and creating a “Household Income Tax
Credit” available to taxpayers below a certain income who file a
return.
The commission plans to discuss “remedies” to
the tax system at its next meeting tomorrow at 1:30 pm in the
Comptroller’s Office, One Ashburton Place, Ninth Floor. The
meeting notice is instructive: “The Tax Fairness Commission is
charged with making recommendations for how to make the
commonwealth’s tax system fairer. The commission, thus far, has
identified areas in the tax system that add to its overall
regressivity.” ...
Here is an initial list of “remedies”
compiled thus far by the commission ...
Associated Industries of Massachusetts
Monday, December 2, 2013
AIM Business Insider
What is Tax Fairness in Massachusetts?
In theory, if not always in practice, the
federal income tax system is progressive, with varying tax rates
so that the wealthier pay a higher percentage of their income in
taxes. The Massachusetts Constitution prohibits such a system;
all must pay the same income tax rate. Governors and
legislatures have written rules over the years aimed at making
the tax system more progressive, but a report released this week
shows they’ve fallen far short of that goal....
The Tax Fairness Commission was created
through an amendment Sen. Karen Spilka, D-Ashland, attached to
transportation finance legislation enacted this year. As part of
his more ambitious transportation and education proposal, Gov.
Deval Patrick had proposed making the tax code more progressive
by cutting the sales tax, increasing the income tax and
adjusting deductions. Legislative leaders dismissed that attempt
without serious consideration – Democratic leaders of the House
and Senate have been tax-phobic for years – but the work of the
new commission at least keeps the discussion of tax fairness
open.
There are other things the commission needs
to look at, including the property tax burden and how
Massachusetts compares to other states in terms of tax fairness.
Its work dovetails with that of the Tax Expenditure Commission,
which has studied the impact of corporate tax policies on
fairness and economic development.
A MetroWest Daily News editorial
Saturday, October 5, 2013
Unfairness in the state tax code
For more information
see:
Taxing times on Beacon Hill
by Barbara Anderson (The Salem News, Oct. 30, 2013)
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Chip Ford's CLT
Commentary
Oh boy, Governor Patrick is peeved. Can you
imagine that the hoi polloi have the temerity to take the law into
their own unwashed hands. Don't the ingrates realize, he huffs, that
he and the enlightened Legislature know what's best for the ignorant
masses? How dare these peons rise up and try to assert themselves?
“I think the ballot initiative to undo the
indexing of the gas tax is a mistake. Everywhere around the
Commonwealth people understand that we’ve got to reinvest in our
transportation system in order to sustain and, indeed, accelerate
growth,” Gov. Patrick asserted on Monday.
Why then is His Excellency so exorcised? If he
believes his own public relations then he should be confident that
the voters will reject the ballot question. Why the unseemly display
of angst?
Yeah, rhetorical questions. He knows all too well
what will happen to the Perpetual Automatic Tax Hike come November,
when the voting citizenry finally have their say.
Meanwhile, the so-called "Tax Fairness
Commission" is moving ahead to reinvent the state's tax structure ―
and you just know that doesn't mean we actual taxpayers
will be paying less into the state's maw.
Already it's looking at again adjusting (hiking,
no doubt) the income tax rate, changing Proposition 2½ or just
killing it, trying for the sixth time to impose a graduated
income tax (limitless divide-and-conquer tax hikes, one bracket at a
time), applying the sales tax to services (now exempt), eliminating
the exemption on clothing, "graduating" the sales tax, increasing
the Earned Income Tax Credit (a state check provided to those who
pay little or no taxes), and a plethora of other "remedies" (see
AIM's full report below for the initial list being considered).
We've been following the progress of this "Tax
Fairness Commission" and its evolving laundry list of "progressive"
longtime dreams and wishes policies. It must be watched closely and
taxpayers must be prepared to react quickly to its final
recommendations, due to be presented on March 1.
What is "Tax Fairness"?
To me, it means everyone pays a fair share
of what it costs to run basic government; if the costs increase as
government expands, everyone pays more
― or resists together.
God only asks his followers and adherents to
tithe ― give Him 10 percent of
their income. He doesn't adjust the rate according to income
brackets ― just a straight percentage
of income.
If ten percent from each and all is good enough
for God, it should be good enough for Government.
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Chip Ford |
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State House News Service
Monday, December 2, 2013
Patrick objects to gas tax indexing opponents
By Matt Murphy
Though it was not a part of his original transportation financing
plan, Gov. Deval Patrick on Monday said it would be a “mistake” to
block automatic gas tax increases in the future and criticized
unnamed opponents of the law for accepting money from the gas tax in
their hometowns.
Proponents of repealing the law indexing future gas tax increases to
the rate of inflation starting in 2015 are confident that they have
cleared the initial signature hurdle to place a question on the 2014
ballot. They plan to turn in roughly 90,000 certified signatures to
the Secretary of State on Wednesday afternoon.
“I think the ballot initiative to undo the indexing of the gas tax
is a mistake. Everywhere around the Commonwealth people understand
that we’ve got to reinvest in our transportation system in order to
sustain and, indeed, accelerate growth,” Patrick said on Monday,
after attending an award ceremony for State Police officers.
Opponents of the law, including a number of Republican lawmakers,
mounted a volunteer signature-gathering effort to start the repeal
process, and collected over 120,000 signatures.
Calling the indexing measure a “forever tax,” opponents have argued
it inappropriately absolves elected lawmakers from having to vote on
and justify future tax increases. The question critics hope to put
to voters in 2014 would not touch the three-cent gas tax increase
that was also part of the broader transportation financing package
approved by the Legislature. That tax increase went into effect in
August, increasing the state gas tax to 24 cents.
“While it was not my first choice, the Legislature in their due
authority selected the gas tax and a way not to have to come back to
it every 15 minutes. It hasn’t been updated in many, many years, so
I think the indexing is wise. I think it was done in the right way,
and I think those that are advocating that the indexing be undone
need to answer for why it is they keep showing up for all the
ribbon-cuttings every time there’s a new bridge or a new road
project done, but don’t seem to want to participate in how to pay
for it,” Patrick said.
Patrick press aides were not able to tell the News Service who the
governor was referring to.
Steve Aylward, a Republican State Committee member and the lead
petitioner, said he had no idea who the governor might have been
talking about.
“I don’t really know the last time I was at a ribbon-cutting. I
don’t think I’ve ever been to one. I think indexing can never be
done the right way because indexing is an automatic tax increase.
Any time you get into automatic tax increases you’re getting into a
situation that can’t take into account the economic conditions at
the time, so for him to say that is blatantly absurd,” Aylward said.
The Legislature enacted its transportation financing plan over the
veto of Gov. Patrick, estimating that by 2018 it would generate up
to $800 million in new revenue for transportation. Patrick said at
the time he found the investments authorized by the bill
insufficient to meet the state’s needs, and since then another $160
million a year has been eliminated by the repeal of a sales tax on
software services that tech business leaders revolted against.
Democrats in the Legislature rejected a Republican-backed plan,
pitched as an alternative to tax hikes, to invest in transportation
by dedicating a portion of state tax collection growth and patching
together existing revenues and savings from government reform
measures.
The administration estimates that over the next decade inflation
adjustments to the gas tax starting in 2015 will generate a total of
$890.6 million for transportation, starting with $5.7 million next
year and compounding over time to $182.6 million in fiscal 2024.
Asked whether another proposed ballot question that would make
casino gambling illegal created budgetary worries for his
administration, Patrick said his last budget due in January would be
unlikely to count on any gaming revenue.
“Our budgets have not relied on the state’s portion of casino
revenues. They have relied on the licensing fees, so it’s not
something we’re speculating about and we’re not going to start
that,” Patrick said.
The Repeal the Casino Deal campaign said Monday it was on track to
turn in 75,000 certified signatures on Wednesday, more than the
68,911 to qualify for the ballot. The Supreme Judicial Court is also
expected to hear the group’s appeal in early 2014 of Attorney
General Martha Coakley’s ruling disqualifying the question from the
ballot, according to organizers.
Following President Barack Obama’s declaration that his
administration’s healthcare.gov website “will work smoothly for the
vast majority of users,” Patrick said the state Health Connector’s
site, which had been beset with similar technical problems, was also
on the mend.
“If you’re not eligible for a subsidy, it’s a pretty simple
experience right now and it has been for a while. If you’re a small
business shopping for your employees, end-to-end it’s not a problem.
Because of the variety of different subsidies, that’s where the
complexity comes on the back end and that’s getting better every day
too,” Patrick said.
During the brief media availability before Patrick left the State
House to have lunch down the street at Carrie Nation with his former
top education advisor and Bridgewater State University President
Dana Mohler-Faria, the governor also addressed his decision to begin
accepting his full $151,800 salary, portions of which he had
foregone in recent years.
“We’re running a surplus. I think it’s fair,” Patrick said.
The Boston Herald
Tuesday, December 3, 2013
Rep revved up over gas tax
By Jack Encarnacao
A Republican lawmaker pushing the ballot initiative to undo the
handcuffing of future gas tax increases to inflation took up Gov.
Deval Patrick on his challenge to stay home when there are
ribbon-cuttings for new bridges and roads made possible by the tax.
“I don’t plan on showing up to his ribbon-cutting for his
$9
million office, so I’ll gladly forgo any ribbon-cuttings, so long as
he listens to the people instead of his advisers,” said state Rep.
Geoffrey Diehl, a Whitman Republican. “A lot of people feel that
it’s taxation without representation.”
Patrick yesterday called “a mistake” the ballot initiative — 87,000
verified signatures strong as of yesterday, enough for a spot on the
2014 ballot — that would do away with a legal provision that
automatically raises the gas tax at the rate of inflation after a
3-cent hike takes effect in July, the first increase in two decades.
Patrick said not allowing the stepped increases would compromise
revenue for needed public improvements.
“I think those who are advocating that the indexing be undone need
to answer for why it is they keep showing up for all the
ribbon-cuttings every time there’s a new bridge or a new road
project done, but don’t seem to want to participate in how to pay
for it,” Patrick said. “Everywhere around the commonwealth, people
understand that we’ve got to reinvest in our transportation system
in order to sustain and, indeed, accelerate growth.”
Supporters say the opposition is about the state increasing a tax
without a vote every year, not about what the taxes will pay for.
“It’s not about ribbon-cuttings” said state Rep. Shauna O’Connell, a
Taunton Republican. “This is about giving back to taxpayers their
rights that were stolen from them when a ‘forever tax’ was
instituted.”
As for the renovations of Patrick’s Corner Office, the work is part
of an ongoing $110 million project around the State House.
The Boston Herald
Wednesday, December 4, 2013
A Boston Herald editorial
Gov’s full of hot air
A sure sign that Gov. Deval Patrick is trapped inside the Beacon
Hill bubble: Asked this week about the effort to repeal the linking
of the state gasoline tax to inflation — or what amounts to an
annual gas tax hike, in perpetuity — Patrick focused not on the
drivers who will be forced to pay more but on the politicians who
are backing repeal.
Calling the ballot campaign to repeal the gas tax indexing “a
mistake,” the governor defended the decision to link the gas tax to
inflation so that lawmakers don’t have to revisit the issue “every
15 minutes.”
“It hasn’t been updated in many, many years,” he said, “so I think
the indexing is wise ... and I think those that are advocating that
the indexing be undone need to answer for why it is they keep
showing up for all the ribbon-cuttings every time there’s a new
bridge or a new road project done, but don’t seem to want to
participate in how to pay for it.”
Now, the taxpayers don’t much care about Patrick’s political opinion
of the tiny number of Republicans in the Legislature — or the even
tinier number who are affiliated with the repeal campaign.
And his effort to muddy the waters notwithstanding, the lawmakers
showing up for those ribbon-cuttings aren’t calling for a repeal of
the gas tax itself. Their effort would have zero impact on
the 3 cents per gallon gas tax increase enacted last summer
(thus bringing state taxes per gallon to 26.5 cents).
The question now on the table — which must clear several procedural
hurdles before it would go on the ballot — is only whether all
future gas tax increases should be automatic — or whether the
state’s elected leaders should be forced to take a vote on them.
The governor refers constantly to the folks he chats with who are
clamoring for the chance to pay higher taxes in exchange for better
services.
The next time he runs into one when he’s filling up at the gas
station he should ask whether they’re also agreeable to having their
taxes go up every year — and whether lawmakers should be spared the
inconvenience of voting on it.
Associated Industries of Massachusetts
Monday, December 2, 2013
AIM Business Insider
What is Tax Fairness in Massachusetts?
By Brad MacDougal
Is the Massachusetts Tax Fairness Commission an oxymoron?
It’s difficult to conclude otherwise about a commission that appears
to view fairness exclusively through the lens of redistributing
revenue from the productive sectors of the economy to the
government. When the primary conversation about tax fairness starts
with “How progressive is the tax?” you know the analysis is fraught
with bias and ready to veer from math towards politics.
Put another way, commission debates seem to reflect the classic
aphorism that a fair tax is one I don’t have to pay.
The Tax Fairness Commission has a broad charge to “review and
evaluate the equity of historical tax rates and methods in relation
to the changing income and wealth of residents of the commonwealth
since 1990.” The panel has already voted on guiding principles,
discussed the definitions of a “fair tax” and “adequate” tax
revenues, and digested tax data. Those conversations will become the
body of a report due by March 1, 2014.
The ideas put forward by the commission so far range from a
graduated income tax, which has been rejected on multiple occasions
by Massachusetts voters, to increasing tax rates and the personal
exemption, to extending the sales tax to all business services and
creating a “Household Income Tax Credit” available to taxpayers
below a certain income who file a return.
The commission plans to discuss “remedies” to the tax system at its
next meeting tomorrow at 1:30 pm in the Comptroller’s Office, One
Ashburton Place, Ninth Floor. The meeting notice is instructive:
“The Tax Fairness Commission is charged with making recommendations
for how to make the commonwealth’s tax system fairer. The
commission, thus far, has identified areas in the tax system that
add to its overall regressivity.”
Employers fear that good intentioned but misguided tax prescriptions
will sicken an economy already weakened with an unemployment rate
that surged from 6.4 to 7.2 percent between April and October. Jobs
and economic opportunity, after all, occupy the center of the tax
debate because only a vibrant, private-sector economy creates
opportunity that binds the social, governmental, and economic
foundations of the commonwealth.
AIM stands for jobs, fiscal predictability, business formation,
innovation, education and a government that acknowledges that the
private sector has the unique ability and responsibility to create
the common wealth for the people of Massachusetts. The creation of a
job and a person’s ability to do it weaves together every important
aspect of social and economic stability – the desire for a better
life, the ability to support a family, the confidence to start a
business, and the need to support efficient government management of
services such as education, health care, and public safety.
But the Tax Fairness Commission’s definition of equity threatens to
upend the delicate balance of person, employer and job and
ultimately push job opportunities to other locations - or eliminated
them altogether.
A flat world economy where capital is increasingly mobile leaves no
room for miscalculation. Excessive “Massachusetts-only” regulations
and costs of doing business are unsustainable and put jobs at risk.
And when the job is gone, the economic hope of the person and the
prospect of economic security for his or her family go with it.
That’s tax fairness.
Here is an initial list of “remedies” compiled thus far by the
commission:
Income Taxes:
•
Raise the Commonwealth’s EITC match, which
is currently 15% of the Federal EITC
•
Adjusting the different rates for various
sources of income
•
Graduated income tax structure
•
Increase rates and increase personal
exemption/standard deduction
•
Create more refundable tax credits/make
more current credits refundable
•
Expand the Circuit Breaker to all
homeowners and renters, not just seniors
•
Increase the dependent exemption
•
Increase the renter’s deduction
•
Create a “Household Income Tax Credit”,
which would be available to taxpayers below a certain income who
file a return. Credit could vary by income and family size and
could be refundable.
•
Create a “Sales Tax Relief Credit” to
offset sales tax burden on low income taxpayers
Sales & Excise Taxes:
•
Selective sales tax
•
Luxury item tax
•
Taxing services
•
Graduated sales tax
•
Eliminate sales tax exemption on clothing,
and offer an offsetting “Household” income tax credit to low and
moderate income households
•
Online sales tax
•
Modernize the sales tax to treat all
comparable products equally regardless of the manner or medium
in which they are sold, ie. Expand base to include digital
products
•
Eliminate sales tax expenditures that have
only a few recipients
•
Recommend that the Legislature act upon
CPAT’s recommendations on the TEB [Tax Expenditure Budget]
•
Tax marijuana
•
Self-reporting sales tax on items over a
certain amount
Property Taxes:
•
Homestead exemption
•
Prop 2½
•
Extend work off program beyond seniors
•
Administrative Changes
Compliance fixes:
•
Are there any taxes that bring in
insignificant amounts and that also bring in less than they cost
to administer? If so, recommend repeal.
Other Taxes Impacting Individuals:
•
Raise estate tax exemption from $1M
•
Taxation of students
•
Wealth Tax
•
Vehicle miles driven tax
•
Higher education surcharge
The MetroWest Daily News
Saturday, October 5, 2013
A MetroWest Daily News editorial
Unfairness in the state tax code
In theory, if not always in practice, the federal income tax system
is progressive, with varying tax rates so that the wealthier pay a
higher percentage of their income in taxes. The Massachusetts
Constitution prohibits such a system; all must pay the same income
tax rate. Governors and legislatures have written rules over the
years aimed at making the tax system more progressive, but a report
released this week shows they’ve fallen far short of that goal.
The Department of Revenue’s report, presented to the newly-created
Tax Fairness Commission, found that the highest 20 percent of
earners pay 5.7 percent of their income in income, sales and excise
taxes. But the lowest 20 percent pay 12.2 percent of their income to
the tax man.
The pattern holds in the middle income ranges. The next quintile up
the income ladder pays 8 percent in taxes; those in the middle
quintile pay 6.68 percent and the fourth quintile, the 20 percent
closest to the top earners, pay 6.25 percent.
That is a starkly regressive system: The lower your earnings, the
larger a share of them goes to the government. Even those who
advocate a flat tax should be disappointed that, however you measure
fairness, the Massachusetts tax system is unfair.
That unfairness comes despite efforts Massachusetts leaders have
made to make the tax code progressive. Unlike most states,
Massachusetts exempts food and clothing from the sales tax,
considered the most regressive because poorer households spend a
larger percentage of their income on necessities. Legislators have
tried to make the income tax more progressive by raising exemptions.
As the DOR numbers show, it hasn’t worked.
The Tax Fairness Commission was created through an amendment Sen.
Karen Spilka, D-Ashland, attached to transportation finance
legislation enacted this year. As part of his more ambitious
transportation and education proposal, Gov. Deval Patrick had
proposed making the tax code more progressive by cutting the sales
tax, increasing the income tax and adjusting deductions. Legislative
leaders dismissed that attempt without serious consideration –
Democratic leaders of the House and Senate have been tax-phobic for
years – but the work of the new commission at least keeps the
discussion of tax fairness open.
There are other things the commission needs to look at, including
the property tax burden and how Massachusetts compares to other
states in terms of tax fairness. Its work dovetails with that of the
Tax Expenditure Commission, which has studied the impact of
corporate tax policies on fairness and economic development.
The Tax Fairness Commission is due to present recommendations next
March. Here’s hoping its findings will be picked up by the
candidates for governor who are already out on the campaign trail.
The income gap between Massachusetts’ wealthiest and poorest
families is among the largest in the country. The state’s tax system
should help mitigate that inequality, not make it worse.
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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
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