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CLT UPDATE
Friday, January 2, 2015
The Bacon Hill Balance
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The Massachusetts income tax rate dropped from
5.2 percent to 5.15 percent Thursday when the new year dawned.
A goodbye gift from Governor Deval Patrick? A
parting favor from Senate President Therese Murray? No. It’s the
legacy of voters’ outcry from 14 years ago.
In 2000, voters passed a ballot initiative
incrementally knocking the rate down from 5.85 percent to 5 percent.
The first ticks downward took place at the beginning of 2001 and
2002. But then the Legislature, facing tough economic times, froze
the final tax cut....
State Representative Jay R. Kaufman, a Lexington
Democrat and the House chairman of the Joint Committee on Revenue,
said he understands that the cuts are embedded in the law but also
is cognizant of the costs.
“Taxes equal public services; therefore, tax cuts
equal a cut in services,” he said, adding that the decrease in
revenue will translate into less money for items such as
transportation infrastructure, youth jobs programs, and aid to
cities and towns.
“There’s basically no free tax cut,” Kaufman
said, and, one way or another, “this one will be paid for.”
Advocates of lower taxes see it very differently.
Barbara Anderson, president of Citizens
for Limited Taxation, a Massachusetts group that strongly
advocated the 2000 ballot initiative, said the cut was part of a
25-year push to return the income tax rate to 5 percent.
In 1989, the state Legislature voted to increase
the tax rate above 5 percent, triggering a long quest to bring it
back down to that round number.
“At least they are still trying to honor a
quarter-century promise to get it back to 5 percent. We’re not going
to thank them,” she said Tuesday. “We’re going to say, ‘It’s about
time!’”
The Boston Globe
Thursday, January 1, 2015
Mass. tax rate takes slight dip
The personal income tax is dropping from 5.2
percent to 5.15 percent, saving the average taxpayer about $19 and
costing the state an estimated $70 million in lost revenue in fiscal
2015.
However, the tax cut comes as the state
government is scrambling to make up a revenue shortfall. The
Massachusetts Taxpayers Foundation projects a total state budget
deficit of more than $1 billion.
A state law aimed at incrementally decreasing the
income tax to 5 percent is the reason behind the tax cut. When the
state hits certain economic benchmarks, the income tax is
automatically reduced by 0.05 percent. One benchmark, for example,
was reached when state tax revenue for the previous fiscal year grew
2.5 percent faster than inflation. The automatic trigger also
resulted in decreases in fiscal 2012 and 2014....
Barbara Anderson, executive director of
Citizens for Limited Taxation, said the tax cut is about holding
lawmakers responsible. She referenced a 1989 tax hike that was
pitched as a temporary measure to overcome a budget deficit.
In 2000, voters approved a ballot question
calling for the state to drop the income tax from 5.85 percent to 5
percent over a three-year span.
During the recent fiscal crisis the income tax
froze at 5.2 percent with legislators promising to continue lowering
it when the economy rebounded.
“We objected to that. And here we wait for the
promise of 1989 that it would be brought back to 5 percent,”
Anderson said.
The Brockton Enterprise
Tuesday, December 30, 2014
State income tax cut kicks in Thursday
These are the times that tempt legislators’
souls. They are in the closing days of a lame-duck session. The
public is tuned out because of the holidays. And visions of pay-hike
sugar plums are dancing in their heads, the result of a special
commission report recommending a large boost for the House speaker
and Senate president, as well as a more favorable formula for
determining the base pay of rank-and-file members....
Lawmakers need to resist any temptation for
lame-duck action.
That really shouldn’t need to be said. And yet,
it’s easy to envision how this could play out. Using the special
commission report as both cover and contrast, lawmakers could put
together a smaller pay-hike package that looks more reasonable. They
could then come back into a brief formal session, pass the raise,
and hope their lightning lame-duck strike will quickly be
overshadowed as Governor-elect Charlie Baker takes office....
But if the legal guidance is murky, the good
government imperative is clear. There should be no lame-duck pay
raise. Any legislative action on a pay hike should await the new
session, when there will be plenty of time for public comment and
debate. Further, if any increase for legislative leaders or
lawmakers themselves does pass, it shouldn’t take effect until 2017,
by which time voters will have had a chance to render their verdict
in the 2016 elections.
Yes, that will mean contending with a new
governor who is a pay-hike skeptic and waiting two years for any
raise that becomes law. But the dictates of good government are
important, regardless of the inconvenience they present to elected
officials.
A Boston Globe editorial
Friday, January 2, 2015
No lame-duck pay hike for Mass. lawmakers
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Chip Ford's CLT
Commentary
The New Year kicks off on a good if very modest
note, with another five one-hundreds of one percent drop in the
25-year old "temporary" income tax hike. Keeping Bacon Hill promises
is like pulling teeth when it comes to the pols parting with tax
revenue taken from us.
However, the change will not have a
particularly wallet-fattening effect on average
taxpayers.
A single person with two children who rents and makes
$45,000 a year will see an average $12 cut in taxes,
according to estimates from the state Department of
Revenue.
A married couple who owns a home, has two toddlers and
$100,000 in income will keep $39 more than they would
have under the 2014 rate, the department estimated.
But the change will have a more pronounced impact on the
$36 billion-plus state budget.
For the rest of this fiscal year, which ends June 30,
Massachusetts will not collect an estimated $70 million
in revenue that it would have had the rate stayed the
same.
It may not be much, but as CLT's slogan goes:
"Every Tax is a Pay Cut — A Tax Cut is
a Pay Raise" We'll take it and keep fighting for our
full
rollback to 5 percent, as mandated by an overwhelming majority of
voters in 2000 — over fourteen years
ago.
But the more things change, the more they remain
the same when it comes to spending our money.
But Patrick could use an entirely
different method, like the one proposed by the committee
studying state pay that included Widmer. It urged moving
to federal data that would bump lawmakers’ pay by 6.6
percent, or nearly $4,000 a year.
The Boston Herald — Dec.
30, 2014 — "Baker
decries raises for state lawmakers; Deval to boost
payday before he leaves office"
For taxpayers, a married couple with two children
who own a home and earn $100,000 in joint income will realize a $39
increase in annual discretionary spending, the average taxpayer $19;
a "pay raise" of .05 percent.
That's apparently not good enough for our
legislators though. According to the compensation commission
they are entitled to more, more, ever more for their part-time job,
and as we know — More Is Never Enough
(MINE) and never will be. If the outgoing governor uses the
commission's unvetted (and unconstitutional) recommendations,
legislators will receive a 6.6 percent salary increase, an annual
pay raise of nearly $4,000.
We taxpayers get to keep about $20 more a year;
legislators would see their $60,032 base salaries increased by an
additional $4,000.
I can't remember the last pay raise I got; it was
a very long time ago — and it sure
wasn't in the thousands of dollars! Can you remember your
last pay raise? If you can, I'll bet it wasn't $4,000 either.
A few days remain for something sneaky and
underhanded to happen like a flash of lightning over Beacon Hill.
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Chip Ford |
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The Boston Globe
Thursday, January 1, 2015
Mass. tax rate takes slight dip
By Joshua Miller
The Massachusetts income tax rate dropped from 5.2 percent to 5.15
percent Thursday when the new year dawned.
A goodbye gift from Governor Deval Patrick? A parting favor from
Senate President Therese Murray? No. It’s the legacy of voters’
outcry from 14 years ago.
In 2000, voters passed a ballot initiative incrementally knocking
the rate down from 5.85 percent to 5 percent. The first ticks
downward took place at the beginning of 2001 and 2002. But then the
Legislature, facing tough economic times, froze the final tax cut.
Instead, legislators set a series of economic growth thresholds
which would — much more slowly than voters intended — lower the tax
rate to 5 percent, but only if the state economy was humming along.
Those triggers have been met twice in recent years and were met
again in 2014, thus the tax rate drop on Thursday.
However, the change will not have a particularly wallet-fattening
effect on average taxpayers.
A single person with two children who rents and makes $45,000 a year
will see an average $12 cut in taxes, according to estimates from
the state Department of Revenue.
A married couple who owns a home, has two toddlers and $100,000 in
income will keep $39 more than they would have under the 2014 rate,
the department estimated.
But the change will have a more pronounced impact on the $36
billion-plus state budget.
For the rest of this fiscal year, which ends June 30, Massachusetts
will not collect an estimated $70 million in revenue that it would
have had the rate stayed the same.
And in the next fiscal year, it will reduce revenue by about $145
million, according to projections from the Patrick administration.
It is important to follow the will of the voters, “but there are
serious consequences from a budgetary point of view,” said Michael
J. Widmer, president of the Massachusetts Taxpayers Foundation.
The drop in revenue contributes to a significant budget gap —
estimated by some outside specialists at a whopping $750 million —
that Charlie Baker will face when he becomes governor on Jan. 8.
A Baker spokesman, Billy Pitman, said the fact that the economy is
growing is a good sign for the state.
However, “the massive budget deficit facing the administration
points to an underlying spending problem in state government. The
governor-elect looks forward to implementing fiscally responsible
budget policies to ensure Massachusetts’ economy continues to grow
and taxpayers get the breaks they deserve,” Pitman said.
The complicated economic formula for triggering the tax rate drop
includes five steps related to state tax revenue growth.
A key one: whether those revenues, adjusted for inflation, increase
more than 2.5 percent from one fiscal year to the next.
Former House speaker Thomas M. Finneran, who was at the center of
efforts to right the state budget in the early 2000s, said he and
fellow legislators grappled to balance the prospect of draconian
cuts to a wide array of services and respecting the will of the
voters.
Freezing the tax cut ballot initiative law “was an attempt to find
the right calibration between those two things,” Finneran said this
week.
“We decided to let the income tax come down as the economy
stabilizes and grows,” he said.
State Representative Jay R. Kaufman, a Lexington Democrat and the
House chairman of the Joint Committee on Revenue, said he
understands that the cuts are embedded in the law but also is
cognizant of the costs.
“Taxes equal public services; therefore, tax cuts equal a cut in
services,” he said, adding that the decrease in revenue will
translate into less money for items such as transportation
infrastructure, youth jobs programs, and aid to cities and towns.
“There’s basically no free tax cut,” Kaufman said, and, one way or
another, “this one will be paid for.”
Advocates of lower taxes see it very differently.
Barbara Anderson, president of Citizens for Limited
Taxation, a Massachusetts group that strongly advocated the 2000
ballot initiative, said the cut was part of a 25-year push to return
the income tax rate to 5 percent.
In 1989, the state Legislature voted to increase the tax rate above
5 percent, triggering a long quest to bring it back down to that
round number.
“At least they are still trying to honor a quarter-century promise
to get it back to 5 percent. We’re not going to thank them,” she
said Tuesday. “We’re going to say, ‘It’s about time!’”
The Brockton Enterprise
Tuesday, December 30, 2014
State income tax cut kicks in Thursday
By Gerry Tuoti and Edward Donga
It might be a week after Christmas, but the Legislature has one last
gift for taxpayers – a tax cut that will take effect Jan. 1.
The personal income tax is dropping from 5.2 percent to 5.15
percent, saving the average taxpayer about $19 and costing the state
an estimated $70 million in lost revenue in fiscal 2015.
However, the tax cut comes as the state government is scrambling to
make up a revenue shortfall. The Massachusetts Taxpayers Foundation
projects a total state budget deficit of more than $1 billion.
A state law aimed at incrementally decreasing the income tax to 5
percent is the reason behind the tax cut. When the state hits
certain economic benchmarks, the income tax is automatically reduced
by 0.05 percent. One benchmark, for example, was reached when state
tax revenue for the previous fiscal year grew 2.5 percent faster
than inflation. The automatic trigger also resulted in decreases in
fiscal 2012 and 2014.
“It will be good for people to spend money and spur on the economy
or just have more money in their pockets,” said state Rep. Michael
Brady, D-Brockton.
However, Brady said the flip side of the situation is what the lost
revenue could mean for municipalities such as Brockton that rely on
state money to help buoy their budgets.
“We don’t want to see any local aid cuts or other revenue cuts for
the city of Brockton,” Brady said.
Brady added that the Legislature will have a better picture of what
the deficit will look like when the new administration takes office
in January.
Barbara Anderson, executive director of Citizens for
Limited Taxation, said the tax cut is about holding lawmakers
responsible. She referenced a 1989 tax hike that was pitched as a
temporary measure to overcome a budget deficit.
In 2000, voters approved a ballot question calling for the state to
drop the income tax from 5.85 percent to 5 percent over a three-year
span.
During the recent fiscal crisis the income tax froze at 5.2 percent
with legislators promising to continue lowering it when the economy
rebounded.
“We objected to that. And here we wait for the promise of 1989 that
it would be brought back to 5 percent,” Anderson said.
While the $19 taxpayers will save might seem insignificant now, Rep.
Geoff Diehl, R-Whitman, said that ballot questions, like the one
reducing the income tax or the one that voters passed this November
to undo a law tying the gas tax to inflation, will add up for
taxpayers.
“It is a cumulative effect of keeping more dollars in the household
budget,” said Diehl.
He added that the fact that the income tax was going down was also a
sign of Massachusetts’ improving economy.
“What I think is good is that we are clearly showing the state is
bringing in the revenue we need,” Diehl said.
While Diehl acknowledged the deficit that is looming in front of the
Legislature, he characterized it as a “spending problem,” adding
that he thought the Legislature would be able to get the deficit
under control.
However, some experts believe that the tax cut could be hindering
Massachusetts’ growth.
Noah Berger, executive director of the
Massachusetts Budget and Policy Center, said tax cuts from the late
1990s and early 2000s are costing the state an estimated $3 billion
in annual revenue today.
“Since then, we’ve seen deep cuts in funding for higher education,
making it harder for students to afford college,” he said. “We’ve
seen cuts in Early Education and Care and in public health, and
we’ve seen cuts of over 40 percent of local aid.”
He favors a progressive tax code that would shift more of the tax
burden to wealthier residents. When combining all taxes, not just
the income tax, wealthier residents typically end up spending a
lower percentage of their income on total taxes, he said.
The middle 20 percent, earning an average income
of $58,000, will get an average tax cut of $19. People earning
$168,000 will save an average of $66. The top 1 percent of earners,
making an average of $2.4 million in annual income, will see an
average savings of $936, according to the Massachusetts Budget and
Policy Center.
The economic trigger that automatically lowers the income tax rate,
Berger said, can make the state budget process unpredictable.
Berger argues that strategic public investment is the way to achieve
economic growth.
“Because the state needs a balanced budget, the most effective way
to strengthen the economy is to invest in things that improve
productivity, like education and infrastructure,” he said. “These
types of investments, particularly in the short term, but also in
the long term, have a more positive impact on the economy than tax
cuts on high-income people.”
Anderson favors the flat tax, saying it spurs job creation. She said
better fiscal management and policy reform is the way to balance the
budget without raising taxes.
The Boston Globe
Friday, January 2, 2015
A Boston Globe editorial
No lame-duck pay hike for Mass. lawmakers
These are the times that tempt legislators’ souls. They are in the
closing days of a lame-duck session. The public is tuned out because
of the holidays. And visions of pay-hike sugar plums are dancing in
their heads, the result of a special commission report recommending
a large boost for the House speaker and Senate president, as well as
a more favorable formula for determining the base pay of
rank-and-file members. (The study also recommends sizable increases
for the governor and other statewide office holders.)
Lawmakers need to resist any temptation for lame-duck action.
That really shouldn’t need to be said. And yet, it’s easy to
envision how this could play out. Using the special commission
report as both cover and contrast, lawmakers could put together a
smaller pay-hike package that looks more reasonable. They could then
come back into a brief formal session, pass the raise, and hope
their lightning lame-duck strike will quickly be overshadowed as
Governor-elect Charlie Baker takes office.
House Speaker Robert DeLeo has certainly been interested in securing
a raise. Departing Senate President Therese Murray has signaled that
she’s amenable. Outgoing Governor Patrick has indicated an openness
to signing a pay raise, though he has also said he wants some
midyear budget-balancing help in exchange.
From a legislative perspective, two other considerations could add
to the impetus for immediate action. First, Baker has made clear he
doesn’t think now is the right time for a pay raise and would
probably veto one if it came to his desk.
Second, state law says that elected officials shouldn’t take part in
decisions that affect their personal interests. That can be
interpreted as meaning a pay hike voted by one legislature shouldn’t
take effect until the next is sworn in. Now, that interpretation
isn’t ironclad, and whether it would be applicable here would also
depend on how the legislative pay hike was handled. Still, to abide
by that interpretation, lawmakers would have to hike their pay in
the last days of this session to pocket the raise in 2015-2016.
But if the legal guidance is murky, the good government imperative
is clear. There should be no lame-duck pay raise. Any legislative
action on a pay hike should await the new session, when there will
be plenty of time for public comment and debate. Further, if any
increase for legislative leaders or lawmakers themselves does pass,
it shouldn’t take effect until 2017, by which time voters will have
had a chance to render their verdict in the 2016 elections.
Yes, that will mean contending with a new governor who is a pay-hike
skeptic and waiting two years for any raise that becomes law. But
the dictates of good government are important, regardless of the
inconvenience they present to elected officials.
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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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