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CLT UPDATE
Friday, April 14, 2017
Spring tax hikes talk is
blooming on Beacon Hill
|
Jon Hurst, president of the Retailers
Association of Massachusetts, is about to inject an X factor
into the state’s fiscal and political debate.
Beacon Hill Democrats have been proceeding
upon the assumption that they’ll have a popular measure — a
tax hike on million-dollar earners — on the ballot in
November 2018. That proposed constitutional amendment should
bring progressives to the polls. And, depending on how
tax-increase-averse Governor Charlie Baker plays it, may
give the eventual Democratic gubernatorial nominee an issue
to use against the GOP incumbent.
That plan faces an impending legal
challenge, and needs a second legislative vote before it
lands on the ballot. But if it clears those hurdles and
passes, lawmakers will have another $1.9 billion or so
flowing annually into state coffers.
Now come Hurst and his 4,000-member
association with a tax scheme of their own: A possible 2018
ballot question to lower the state sales tax from 6.25
percent to 5 percent or less....
It’s all a debate the state needs to have.
And one that should make campaign 2018 a lively and
multi-faceted fiscal affair.
The Boston Globe
Friday, April 7, 2017
A duel between tax plans
The tax collectors for Massachusetts’ state
coffers caught Amazon in their web in 2013. Now, they’re
going after the other big e-commerce companies.
The state Department of Revenue just issued
a directive telling out-of-state vendors to start collecting
sales taxes on Massachusetts purchases on July 1. The
requirement would kick in for many companies that sell more
than $500,000 of goods annually here, effectively capturing
out-of-state Internet retailers.
The Boston Globe
Tuesday, April 4, 2017
Mass. officials make move to capture online sales taxes
Where would we be without state Senate
President Stan Rosenberg beating the drum for new taxes!
Yes, you can take the Democrat out of
Amherst, but ... well, you know.
“It has been many years since we’ve been
able to balance our budget without resorting to gimmicks and
one-time revenue fixes — Band-aids that result in
structurally imbalanced budgets the following years,”
Rosenberg told the Greater Boston Chamber of Commerce on
Wednesday [read
his speech here]. “In effect, we’ve been propping up a
sagging house without ever addressing the real problem — its
shaky foundation.”
Rosenberg insisted that despite a stellar
economic performance and an unemployment rate of 3.4
percent, the state’s solid economy simply isn’t translating
into sufficient revenue — well, sufficient revenue to
support all of the never-ending spending priorities that
Rosenberg and his Democratic colleagues in the Senate can
come up with, that is.
Of course, the Senate president is all
gung-ho for the so-called “fair share” tax that would impose
a 4 percent income surtax on those with incomes of $1
million or more — a constitutional amendment expected to
make it to the 2018 ballot. (Its approval would pretty much
demolish current constitutional prohibitions on a graduated
income tax.)
But clearly that’s not enough for Rosenberg
who this week also raised the horrifying specter of a sales
tax on services. If that’s not a back-to-the-future moment,
we don’t know what is.
But clearly that’s not enough for Rosenberg
who this week also raised the horrifying specter of a sales
tax on services. If that’s not a back-to-the-future moment,
we don’t know what is.
He recalled that the Legislature did indeed
pass such a tax in the waning days of the Dukakis
administration only to repeal it before it ever went into
effect after Gov. William Weld took office.
“So it’s very controversial, but our economy
is even more reliant now than it was then on services and it
is certainly worth looking at,” Rosenberg told the chamber.
A Boston Herald editorial
Sunday, April 9, 2017
Taxachusetts redux?
“After delivering 3.4 billion in tax
reductions in the 80s and 90s – cuts we could afford at the
time; cuts that helped us shed the title Taxachusetts
forever – the bill is finally coming due. It has been many
years since we’ve been able to balance our budget without
resorting to gimmicks and one time revenue fixes – band-aids
that result in structurally imbalanced budgets the following
years.”
—Senate
President Stan Rosenberg
"Since the $12 billion FY1990 budget annual state spending
has more than tripled to a proposed $40.5 billion. During
that period the “temporary” income tax hike of 1989 still
lingers, the sales tax was increased by 25%, the gas tax has
been hiked, and other revenue-raising gimmicks have been
relentlessly imposed. In 1994 a graduated income tax
scheme was comfortably defeated for the fifth time by
voters; in 2000 the voters mandated a rollback of the
“temporary” income tax hike; in 2014 the voters repealed the
automatic gas tax increase. On Beacon Hill More Is
Never Enough (MINE) from taxpayers. The state has an
insatiable spending problem, not a revenue problem."
—Chip
Ford
Executive Director
Citizens for Limited Taxation
Response for Beacon Hill Roll Call
Friday, April 7, 2017
Acknowledging just how controversial of a
proposal it would be, Senate President Stanley Rosenberg on
Wednesday said Massachusetts should discuss imposing a tax
on services.
Speaking over the din of clinking coffee
cups and silverware at a Greater Boston Chamber of Commerce
breakfast in Boston's seaport, Rosenberg said the state's
tax structure is not working -- pointing to tax revenues
that have fallen short of projections in recent years as
evidence that the state's tax code is not bringing in enough
revenue to support state spending....
The state's last attempt at establishing a
sales tax on services was the Legislature's short-lived 2013
law subjecting certain computer services to the sales tax.
Lawmakers wound up repealing their so-called tech tax amid
an outcry from businesses.
Though the Republican has taken a dim view
of new taxes, Gov. Charlie Baker has refused to take a
non-new-taxes pledge, saying in 2014 that he did not want to
be boxed into a position should a proposal arise to simplify
the tax code. And in House Speaker Robert DeLeo, a Democrat
and author of the 2009 sales tax rate hike to 6.25 percent,
Baker for at least the first half of his term has found an
ally in resisting higher tax proposals....
Rosenberg, who noted in his speech Wednesday
. . . "We should sit down and take a look at our property
tax, our sales tax, our income tax and figure out what makes
sense, our corporate tax," he told reporters after his
remarks.
But to do so through the legislative
process, the more conservative House would have to be the
genesis of any such legislation because bills that raise
revenue, so-called money bills, can only originate in the
House.
State House News Service
Wednesday, April 5, 2017
Tax overhaul should include consideration of service tax,
Rosenberg says
Stan Rosenberg visited the Greater Boston
Chamber of Commerce with high hopes that he could change
some minds.
It was a tough sell. Ever try to tell a
six-year-old to eat her veggies? That’s what the mood in the
room felt like, as the Senate president made an impassioned
case for the “Fair Share Tax,” aka the “Millionaires Tax,”
on Wednesday. The state, Rosenberg said, has implemented
many tax cuts over the years, and now the bills are coming
due as lawmakers wrestle with a perennially out-of-balance
state budget. Rosenberg sees some salvation in this new tax.
It’s a potential 2018 ballot question, a constitutional
amendment, that would add 4 percentage points to the state’s
income tax rate (currently 5.1 percent) for all personal
earnings over $1 million, to raise funds for transportation
and education.
The Boston chamber has not taken a position
yet. So Rosenberg saw an opening.
Other business groups – such as the Mass.
High Tech Council and Mass. Taxpayers Foundation – are
already strategizing about a legal challenge.
The Boston Globe
Thursday, April 6, 2017
A case for the millionaires tax
President Donald J. Trump and Senate
President Stanley C. Rosenberg may finally have a common
interest: tax reform.
While that may be the point where their
shared agendas start to diverge, the topic that Beacon Hill
leaders largely like to avoid may soon become something they
can't escape.
The federal debate over tax reform appears
headed toward a package of tax cuts, while Massachusetts
voters will almost certainly be asked to decide in 2018
whether households should pay a surtax on incomes over $1
million to generate additional revenue for state government.
Enter Rosenberg, who in a speech to the
Greater Boston business leaders this week pleaded with the
community not to embrace the Retailers Association of
Massachusetts's pitch for a sales tax cut as he took a stab
at explaining a conundrum that has vexed budget writers for
years now....
Gov. Charlie Baker may not be chomping at
the bit to entertain straight tax hikes, but the possibility
of more comprehensive tax revamp is exactly the reason he
refused to take a no-new-taxes pledge in 2014 when he was
running for governor, and may be the opening Democrats need
to start the debate, if not for now than perhaps the years
to come.
State House News Service
Friday, April 7, 2017
Weekly Roundup
Two Things Are Certain
Democratic leaders of the Massachusetts
House put forward a
$40.3 billion spending plan for fiscal 2018 that Ways
and Means Chairman Brian Dempsey said focused "first and
foremost on the fundamentals" - health care, pensions and
local aid....
As with all budgets, some interests were
pleased with how they fared in the Ways and Means budget,
while others were left wanting. The plan landed amidst
another period of budget uncertainty with state tax
collections trailing estimates this fiscal year by $220
million despite a relatively healthy economy....
MONEY, MONEY, MONEY BILL: While Speaker
Robert DeLeo eschewed broad-based tax increases with his
budget proposal, there are provisions in the bill that make
it a "money bill," opening the door for the Senate to
consider taxes next month when it takes a turn producing a
budget. The House bill includes a $2,000 tax credit for
businesses that hire veterans, as well as reforms to how
sales taxes are collected and remitted to the state. "I
think we'll see what they do," Dempsey said about the
possibility of the Senate adding tax increases to the budget
to generate new revenue. Senate President Stanley Rosenberg
last week raised the idea of a sales tax on services, which
was briefly contemplated and abandoned in the early 1990s.
"Any new expansion to something that it is currently not
taxed is always a challenge...," Dempsey said. "Personally,
I would have some concerns."
State House News Service
Monday, April 10, 2017
Budget dynamics gain clarity with release of House's $40
billion plan
House leaders unveiled a $40.3 billion state
budget Monday that significantly tempered two controversial
plans by Governor Charlie Baker to tackle the cost of health
care. Lawmakers slashed his proposed fee on businesses to
fund state medical costs, and they rejected a plan to cap
the prices charged by hospitals.
The budget proposal comes as state tax
revenue has failed to meet projections. It effectively
maintains spending levels in many areas, including the
University of Massachusetts system, and cuts funding for
lawyers for poor defendants....
The House plan also rejected the governor’s
effort to impose a tax on people who use short-term rental
services like Airbnb from landlords who have a high-volume
rental business....
The most significant move by House leaders,
though, was the dent they want to put in Baker’s attempt to
address rising health costs....
The House budget does not include a
controversial proposal by the governor to shrink the number
of people eligible for a program that provides cash to the
state’s neediest families. Baker spokesman Billy Pitman said
the administration was concerned the House dropped that
welfare “reform” measure....
The plan comes as the state grapples with
flagging tax revenue.
Through March, tax revenues are up just 1.7
percent — about $220 million less than Beacon Hill expected
to take in. That could mean more emergency budget-tightening
measures from Baker in the coming weeks. And that could
impinge on the new budget House leaders are proposing for
fiscal year 2018, which begins July 1.
In his January spending plan, Baker proposed
several ideas for bringing in additional tax revenue to the
state, including more aggressive efforts at collection. The
House budget proposal embraces some of those plans.
The Boston Globe
Tuesday, April 11, 2017
House unveils $40.3 billion state budget
The call came in to the Citizens for
Limited Taxation (CLT) office in the summer of 1979. The
woman on the phone was irate over the huge auto excise bill
she had received after moving to Massachusetts. She
explained that this tax didn’t exist where she had lived in
the Midwest.
I explained that she had to pay this onerous
tax within 30 days or face a fine. That was the bad news.
The good news was that CLT was preparing to
collect signatures that fall for its Proposition 2½ ballot
question, which included reducing the auto excise from $66
per $1,000 assessed value to $25 — a 62 percent reduction.
The main purpose of the ballot question, of
course, was the reduction of property taxes. It stipulated
that every Massachusetts community had to get its spending
down to 2.5 percent of assessed valuation. Once that level
was achieved, then it could increase its property tax levy
by not more than 2.5 percent annually. If the taxpayers felt
they needed more revenue, their selectmen or city council
could schedule a Proposition 2½ override election....
This system exists to this day — 38 years
after the ballot question passed by an almost 60-40 percent
margin....
When speakers, including the late Barbara
Anderson and I, fanned out to sell our ballot question
to the voters, we discovered something startling: Of the
several sections within the ballot question, the most
popular was the decrease in the car tax.
Our private polling indicated support for it
was about 80 percent “Yes” to 12 percent “No.” Armed with
these results, we emphasized the auto excise part of the
ballot question as much as the property tax limitation as
the election approached....
For example, my 2013 Toyota Scion for which
I paid more than $20,000 in 2014 had an auto excise bill
that year of $362.50. (I avoided the $957 bill that would
have been due under the old rate.) My latest bill for 2017
was for $60....
Many Bay State residents don’t mind being
driven, but nobody likes to be taken for a ride.
The Providence Journal
Wednesday, April 12, 2017
How Massachusetts slashed its car tax
By Chip Faulkner
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Chip Ford's CLT
Commentary
"Where would we be without state Senate
President Stan Rosenberg beating the drum for new taxes!"
the Boston Herald editorial asked. Without question
this leftwing liberals' liberal extremist is a piece of
work. Besides spending our money faster than the state
can extract it, taking more from taxpayers is his primary
purpose for existence.Last week, in his speech to
the Greater Boston Chamber of Commerce, not only did he
promote his long-lusted for graduated income tax (aka, the
"Millionaires Tax," aka, "The Fair Share Amendment"), but
attempted to turn the Chamber against the retail business
community's push to reduce the state sales tax. He
went on to describe his ultimate ambition; to rearrange the
entire tax system to his liking!
"We should sit down and take a look at our property tax,
our sales tax, our income tax and figure out what makes
sense, our corporate tax," Senate President Stan Rosenberg
pontificated to reporters after his speech.
Senate President Rosenberg most immediately is advocating
for the repeal of the exemption from the sales tax on
services (again).
"But to do so through the legislative process, the more
conservative House would have to be the genesis of any such
legislation because bills that raise revenue, so-called
money bills, can only originate in the House," the State
House News Service reported on April 5 ("Tax overhaul
should include consideration of service tax, Rosenberg
says"). This is an important point.
On Monday, the State House News Service reported:
"Democratic leaders of the Massachusetts
House put forward a
$40.3 billion spending plan for fiscal 2018 that Ways
and Means Chairman Brian Dempsey said focused 'first and
foremost on the fundamentals' - health care, pensions and
local aid...."
We spent a couple days pouring over the "outside
sections" of the
proposed House budget, where the sneaky stuff is usually
buried. Except for the
extension of charging a tax on those who pay for their own
nursing home care, we found nothing more directly attacking
taxpayers — especially no
removal of the sales tax exemption on services.
But that won't stop the tax-insatiable
Sen. Rosenberg and the more liberal chamber from sticking it
into the Senate's version of next fiscal year's budget
— and apparently the House made
this possible.
The State House News Service reported on Monday ("Budget
dynamics gain clarity with release of House's $40 billion
plan"):
While Speaker Robert DeLeo eschewed broad-based tax increases
with his budget proposal, there are provisions
in the bill that make it a "money bill," opening
the door for the Senate to consider taxes next
month when it takes a turn producing a budget.
The House bill includes a $2,000 tax credit for
businesses that hire veterans, as well as
reforms to how sales taxes are collected and
remitted to the state. "I think we'll see what
they do," Dempsey said about the possibility of
the Senate adding tax increases to the budget to
generate new revenue. Senate President Stanley
Rosenberg last week raised the idea of a sales
tax on services, which was briefly contemplated
and abandoned in the early 1990s. "Any new
expansion to something that it is currently not
taxed is always a challenge..." [House Ways and
Means Committee Chairman Brian] Dempsey said.
"Personally, I would have some concerns."
We saw this battle between the House and Senate just two
years ago over which chamber can initiate a tax
— and
on similar grounds the Senate won the state Supreme Judicial
Court's advisory opinion.
In the spring of 2015 the House and Senate fought
aggressively over
a similar dispute. At question was whether the Senate's
proposed tax changes in its version of the fiscal
year 2016 budget was authorized under the constitution; whether what the House had
proposed in its version of a $38.1 billion state budget made
it
a "money bill" subject to Senate changes in tax policy.
At that time, Senate President Stanley Rosenberg in the
Senate's budget bill proposed increasing the Earned Income
Tax Credit for low-income families by $140 million, funding
it from a freeze on our "temporary" income tax (from working
families) rollback, then at
5.15 percent.
Because of small tweaks to tax policy within the House
budget, the state Supreme Judicial Court deemed the House
bill to be a "money bill" subject to the Senate's proposed
changes. Fortunately for taxpayers, the final budget
bill did not surrender to Senate President Rosenberg's
insatiable appetite.
For
more information see:
CLT Update, June 17,
2015, ("The
Senate vs. Taxpayers")
"The legal battle between the Massachusetts House and Senate
over the constitutional authority to raise taxes in this
year's budget hinges on interpretations of a 137-year-old
Supreme Judicial Court advisory opinion...."
CommonWealth Magazine, June 11, 2015, "What's
a money bill?" by Bruce Mohl
The state's top court ruled in favor of the Senate on
Monday, finding that proposed House policies had in fact
made the fiscal 2016 budget bill a "money bill" and allowed
the Senate to attach major tax reforms, including a
suspension of the income tax rollback and an increase in tax
credits for low-income families....
To pay for the $140 million tax plan, the Senate voted to
halt the gradual rollback of the state's income tax to 5
percent. The income tax is currently 5.15 percent, but is
expected to decrease to 5.1 percent in January if certain
economic triggers are hit. It could fall further in 2017 and
potentially hit the 5 percent mark in 2018....
The court, in its opinion signed by all seven justices,
found that the House's decision in its version of the budget
to delay the implementation of a business tax deduction,
known as FAS 109, opened the door for the Senate to propose
additional tax policy changes.
State House News Service, June 15, 2015, "Court's
tax opinion adds clarity, complexity to budget talks"
The Boston Globe reported on Tuesday, April 11 ("House unveils $40.3 billion state budget"): "Through March, tax
revenues are up just 1.7 percent — about $220 million less
than Beacon Hill expected to take in. That could mean more
emergency budget-tightening measures from Baker in the
coming weeks. And that could impinge on the new budget House
leaders are proposing for fiscal year 2018, which begins
July 1."
The important takeaway from this goes back to what I've
noted often: On Beacon Hill a budget crisis is
declared when revenues don't meet or exceed "expectations"
and revenues, for some reason, rarely do meet those
"expectations." Rather than threatening the need for
more revenues — why not simply
just lower expectations realistically, so often proven to be
inaccurate?
If you must make a monthly mortgage payment or lose your
home, would you over-estimate your anticipated income and
hope you have enough to pay that mortgage
— or would you realistically
estimate your family budget, even project conservatively to
allow for unexpected expenses that might arise (car repair,
new refrigerator, higher taxes), to insure that you could
pay it?
Rhode Island is considering legislation to phase-out its
"car tax" — similar to the
"excise" on our vehicles here in Massachusetts. CLT
communications director Chip Faulkner was asked to write an
op-ed column for the Providence Journal relating for
its readers what
happened here in Massachusetts when CLT reduced our annual municipal excise
on vehicles by 62% under our Proposition 2½
in 1980. It's an interesting perspective for Rhode
Islanders — and is also an important reminder for Bay State
motorists.
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Chip Ford
Executive Director |
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The Boston Globe
Friday, April 7, 2017
A duel between tax plans
By Scot Lehigh
Jon Hurst, president of the Retailers
Association of Massachusetts, is about to inject
an X factor into the state’s fiscal and
political debate.
Beacon Hill Democrats have been proceeding upon
the assumption that they’ll have a popular
measure — a tax hike on million-dollar earners —
on the ballot in November 2018. That proposed
constitutional amendment should bring
progressives to the polls. And, depending on how
tax-increase-averse Governor Charlie Baker plays
it, may give the eventual Democratic
gubernatorial nominee an issue to use against
the GOP incumbent.
That plan faces an impending legal challenge,
and needs a second legislative vote before it
lands on the ballot. But if it clears those
hurdles and passes, lawmakers will have another
$1.9 billion or so flowing annually into state
coffers.
Now come Hurst and his 4,000-member association
with a tax scheme of their own: A possible 2018
ballot question to lower the state sales tax
from 6.25 percent to 5 percent or less. The 25
percent hike in the sales tax, which took effect
in 2009, has been a lasting burr under the
retail saddle, as is the tax-free treatment of
online purchases from out-of-state companies.
Given the federal political and legal hurdles to
broader taxation of Internet sales, the latter
situation isn’t likely to change anytime soon.
Meanwhile, Beacon Hill policy makers haven’t
been particularly attentive to the retailers’
other state concerns. Last year, they failed to
authorize a sales-tax holiday.
All of that has prompted Hurst’s group to
rethink their approach.
“For two decades, we have been trying to get the
Internet guys to collect the sales tax,” Hurst
says. “But there are two ways to skin this cat.
The other way is to lower the tax rate for our
local retail businesses.” Given the relatively
regressive nature of the sales tax, what would
be good for merchants would also be good for
low-income residents, Hurst says.
Hurst’s group hasn’t yet made up its collective
mind to go forward with a ballot question; if
they win favorable consideration on Beacon Hill,
they probably wouldn’t. Nor have they decided
upon their proposed sales tax rate, though Hurst
says it would likely be in the 4.5 to 5 percent
range. But imagine if the two tax measures are
both on the 2018 ballot. The millionaire’s tax
would raise about $1.9 billion. A sales tax
reduction to 5 percent would cost the state $1.2
billion, while a 4.5 percent rate would mean a
$1.7 billion revenue loss, according to the
Massachusetts Taxpayers Foundation.
So Campaign 2018 would present voters and
political candidates with four menu choices.
Let’s call them:
The revenue-hungry liberal: Yes on the
millionaire’s tax, no on the sales tax cut.
State revenue gain: $1.9 billion.
The pro-small-business moderate: Yes on the
millionaire’s tax, yes on the sales tax cut. Net
revenue gain: $200 million to $700 million.
The status quo: No on both; no revenue change.
The full fiscal conservative: No on the
millionaire’s tax, yes on the sales tax cut. Net
revenue loss: $1.2 billion to $1.7 billion.
Then there’s the question of how candidates
would spend whatever new tax revenue they favor
(or, for full fiscal conservatives, of what
they’d cut). The proposed constitutional
amendment mentions education and transportation.
And would they simply add it all to the budget
base, or tuck some away in the state’s rainy day
reserves?
There’s certainly a good case to be made for
more education spending. But if there is a
substantial infusion of new money, some should
come in the shape of competitive grants to
encourage things like extended learning time and
a commitment to best practices. And to fund
programs like digital literacy and computer
science education.
It’s all a debate the state needs to have. And
one that should make campaign 2018 a lively and
multi-faceted fiscal affair.
The Boston Globe
Tuesday, April 4, 2017
Mass. officials make move to capture online
sales taxes
By Jon Chesto
The tax collectors for Massachusetts’ state
coffers caught Amazon in their web in 2013. Now,
they’re going after the other big e-commerce
companies.
The state Department of Revenue just issued a
directive telling out-of-state vendors to start
collecting sales taxes on Massachusetts
purchases on July 1. The requirement would kick
in for many companies that sell more than
$500,000 of goods annually here, effectively
capturing out-of-state Internet retailers.
The agency is prioritizing major online
retailers that are not already collecting sales
taxes in the state. Governor Charlie Baker’s
administration hopes to use the new directive to
raise $30 million for the next fiscal year. It’s
worth noting that online merchants with fewer
than 100 transactions a year in the state would
be exempt.
Brick-and-mortar retailers have long complained
that Internet merchants had an unfair advantage:
A 1992 US Supreme Court decision — Quill Corp.
vs. North Dakota, aka “Quill” — meant that
retailers need a physical presence in a state to
be forced to collect sales taxes there.
Here in Massachusetts, the revenue department
had leverage to force Amazon to pay up in 2013
after it opened a substantial office in
Cambridge and acquired a local robotics firm,
Kiva Systems.
Now, the agency is saying there are reasons why
Quill applies to other Internet retailers. One
of its arguments: these sellers often put
software such as apps on customers’ computers
and phones, software that should be considered
tangible personal property.
This interpretation could take many people by
surprise. Sullivan & Worcester partner Richard
Jones said some attorneys at his Boston firm
were a bit shocked to get the news. Jones
expects this approach could be challenged in
court.
Bill Rennie, vice president at the Retailers
Association of Massachusetts, said his group
welcomes the help, even though the
administration’s approach could face a legal
fight.
“We’ve been waiting decades for a level playing
field,” Rennie said. “We need some type of sales
tax parity here. ... Times have changed. Online
retail is everywhere. You’ve got really, really
big Internet companies selling into
Massachusetts the same products that our members
sell.”
With the inaction in Congress on this issue, a
number of states are trying to take on Quill in
various ways. Now, Massachusetts is joining the
fray.
The Boston Herald
Sunday, April 9, 2017
A Boston Herald editorial
Taxachusetts redux?
Where would we be without state Senate President
Stan Rosenberg beating the drum for new taxes!
Yes, you can take the Democrat out of Amherst,
but ... well, you know.
“It has been many years since we’ve been able to
balance our budget without resorting to gimmicks
and one-time revenue fixes — Band-aids that
result in structurally imbalanced budgets the
following years,” Rosenberg told the Greater
Boston Chamber of Commerce on Wednesday
[read
his speech here]. “In effect, we’ve
been propping up a sagging house without ever
addressing the real problem — its shaky
foundation.”
Rosenberg insisted that despite a stellar
economic performance and an unemployment rate of
3.4 percent, the state’s solid economy simply
isn’t translating into sufficient revenue —
well, sufficient revenue to support all of the
never-ending spending priorities that Rosenberg
and his Democratic colleagues in the Senate can
come up with, that is.
Of course, the Senate president is all gung-ho
for the so-called “fair share” tax that would
impose a 4 percent income surtax on those with
incomes of $1 million or more — a constitutional
amendment expected to make it to the 2018
ballot. (Its approval would pretty much demolish
current constitutional prohibitions on a
graduated income tax.)
But clearly that’s not enough for Rosenberg who
this week also raised the horrifying specter of
a sales tax on services. If that’s not a
back-to-the-future moment, we don’t know what
is.
He recalled that the Legislature did indeed pass
such a tax in the waning days of the Dukakis
administration only to repeal it before it ever
went into effect after Gov. William Weld took
office.
“So it’s very controversial, but our economy is
even more reliant now than it was then on
services and it is certainly worth looking at,”
Rosenberg told the chamber.
Because why wouldn’t you kill the goose that is
providing the state with so many golden eggs in
terms of jobs and the income taxes that go with
them?
Even the 2013 sales tax on computer services
caused such a hue and cry in the state that the
Legislature repealed that too.
The only good news here — and the best check on
Rosenberg’s tax-it-till-they-scream attitude —
is that tax bills must originate in the House.
And that’s where the thus-far rather sensible
Speaker Robert DeLeo has held the line on
broad-based taxes. We remain optimistic he will
continue to do so.
State House News Service
Wednesday, April 5, 2017
Tax overhaul should include consideration of
service tax, Rosenberg says
By Colin A. Young
Acknowledging just how controversial of a
proposal it would be, Senate President Stanley
Rosenberg on Wednesday said Massachusetts should
discuss imposing a tax on services.
Speaking over the din of clinking coffee cups
and silverware at a Greater Boston Chamber of
Commerce breakfast in Boston's seaport,
Rosenberg said the state's tax structure is not
working -- pointing to tax revenues that have
fallen short of projections in recent years as
evidence that the state's tax code is not
bringing in enough revenue to support state
spending.
"It has been many years since we've been able to
balance our budget without resorting to gimmicks
and one-time revenue fixes -- Band-aids that
result in structurally imbalanced budgets the
following years," he said. "In effect, we've
been propping up a sagging house without ever
addressing the real problem -- its shaky
foundation."
Among the reasons the state's solid economic
performance -- boasting a 3.4 percent
unemployment rate and the highest business
confidence level in almost 13 years -- is not
translating into sufficient revenue, Rosenberg
said, is that Massachusetts has "a sales tax
that applies to goods, not services, in an
economy that's largely driven by services."
Asked after his speech if he was proposing that
Massachusetts begin taxing services, Rosenberg
said, "We should certainly have a discussion
about it."
"As you may remember, we had a service tax in
Massachusetts and it didn't last long," he said,
alluding to a state sales tax on business and
professional services that was passed in late
1990 in the waning days of the Dukakis
administration but repealed by the incoming Weld
administration before it ever took effect. "So
it's very controversial, but our economy is even
more reliant now than it was then on services
and it is certainly worth looking at."
The state's last attempt at establishing a sales
tax on services was the Legislature's
short-lived 2013 law subjecting certain computer
services to the sales tax. Lawmakers wound up
repealing their so-called tech tax amid an
outcry from businesses.
Though the Republican has taken a dim view of
new taxes, Gov. Charlie Baker has refused to
take a non-new-taxes pledge, saying in 2014 that
he did not want to be boxed into a position
should a proposal arise to simplify the tax
code. And in House Speaker Robert DeLeo, a
Democrat and author of the 2009 sales tax rate
hike to 6.25 percent, Baker for at least the
first half of his term has found an ally in
resisting higher tax proposals.
Rosenberg, who noted in his speech Wednesday
that he was one of six lawmakers to sign a
conference committee report authorizing the
largest tax cut in state history, said the state
was "short on cash" and should look at altering
the rest of its "regressive tax structure."
"We should sit down and take a look at our
property tax, our sales tax, our income tax and
figure out what makes sense, our corporate tax,"
he told reporters after his remarks.
But to do so through the legislative process,
the more conservative House would have to be the
genesis of any such legislation because bills
that raise revenue, so-called money bills, can
only originate in the House.
"But anybody can make a proposal," noted
Rosenberg, who mentioned in his speech that
Baker had proposed a tax on short-term rentals
and a new assessment on certain employers to
help the state meet its health care cost
obligations.
He said he is not aware of any current proposals
to establish a sales tax on services and said he
would "assume" that any action towards a service
tax would begin after the 2018 election, when a
proposed 4 percent surtax on income above $1
million is expected to go to voters.
While he had the attention of the region's
business leaders, Rosenberg on Wednesday used
that opportunity to implore the business
community not to pursue a cut in the state sales
tax on the 2018 ballot, arguing that it would
further compromise the state's fiscal health.
Rosenberg again pushed for the proposed 4
percent income surtax but warned a sales tax cut
would negate the revenue from the extra tax on
higher earners.
"If the fair share tax passed and the sales tax
[cut] passed, we'd lose about the same amount of
revenue we'd gain and all the revenue we'd gain
will be earmarked for education and
transportation," he said. "And we'd lose all
that other money that's being used to fund other
projects in the budget at this point, which as I
described, is out of structural balance."
Frustrated by the rising share of tax-free sales
transacted online, retailers last month said
they are considering the launch of a ballot
campaign in 2018 to lower the sales tax from its
current 6.25 percent. The Legislature raised the
former 5 percent rate almost eight years ago as
part of a plan to generate $1 billion in new
revenue to support the state budget.
In his prepared remarks, Rosenberg called the
proposed sales tax cut "a very bad idea"
although he did not use those words in his
speech. Speaker DeLeo has said he cannot see
himself supporting a sales tax cut as it would
put Massachusetts "in a more precarious
financial situation."
The Boston Globe
Thursday, April 6, 2017
A case for the millionaires tax
By Jon Chesto
Stan Rosenberg visited the Greater Boston
Chamber of Commerce with high hopes that he
could change some minds.
It was a tough sell. Ever try to tell a
six-year-old to eat her veggies? That’s what the
mood in the room felt like, as the Senate
president made an impassioned case for the “Fair
Share Tax,” aka the “Millionaires Tax,” on
Wednesday. The state, Rosenberg said, has
implemented many tax cuts over the years, and
now the bills are coming due as lawmakers
wrestle with a perennially out-of-balance state
budget. Rosenberg sees some salvation in this
new tax. It’s a potential 2018 ballot question,
a constitutional amendment, that would add 4
percentage points to the state’s income tax rate
(currently 5.1 percent) for all personal
earnings over $1 million, to raise funds for
transportation and education.
The Boston chamber has not taken a position yet.
So Rosenberg saw an opening.
Other business groups – such as the Mass. High
Tech Council and Mass. Taxpayers Foundation –
are already strategizing about a legal
challenge.
The chamber might not be far behind. CEO Jim
Rooney expects to discuss the issue with his
board’s executive committee this month. Although
the chamber is still studying the issue, Rooney
says it’s likely his group will join the
opposition.
The tax could chase big earners away or deter
companies from moving or expanding here, the
critics say, and the funds could get vacuumed
into the general fund at some point down the
line. But Rosenberg’s fundamental problem
remains unsolved. Those bills he mentioned are
coming due.
State House News Service
Friday, April 7, 2017
Weekly Roundup
Two Things Are Certain
By Matt Murphy
President Donald J. Trump and Senate President
Stanley C. Rosenberg may finally have a common
interest: tax reform.
While that may be the point where their shared
agendas start to diverge, the topic that Beacon
Hill leaders largely like to avoid may soon
become something they can't escape.
The federal debate over tax reform appears
headed toward a package of tax cuts, while
Massachusetts voters will almost certainly be
asked to decide in 2018 whether households
should pay a surtax on incomes over $1 million
to generate additional revenue for state
government.
Enter Rosenberg, who in a speech to the Greater
Boston business leaders this week pleaded with
the community not to embrace the Retailers
Association of Massachusetts's pitch for a sales
tax cut as he took a stab at explaining a
conundrum that has vexed budget writers for
years now.
The strength of the state economy, including low
unemployment, has done little to stablize state
finances or generate the tax revenue growth
necessary for Democratic leaders to comfortably
invest in education, rail expansions and other
projects on their wish lists. March brought
another round of collections that missed
benchmarks, and the state now trails revenue
projections for the year by $220 million with
just three months left in the fiscal year.
Rosenberg suggested a tax system reliant on
income gains and taxes on the sales of goods has
failed to capture the nature of the new
service-based economy.
"The bill is finally coming due," he warned,
calling the state's tax structure "regressive."
The Amherst Democrat suggested it was "certainly
worth looking at" a revival of the sales tax on
business and professional services passed under
Gov. Michael Dukakis and repealed by Gov.
William Weld.
But even if that's just one suggestion,
Rosenberg raised an interesting questions and
one that might not soon go away. True tax reform
has not been attempted since Gov. Deval Patrick,
late in his second term, put a package on the
table that would have raised the income tax,
lowered the sales tax and eliminated a variety
of exemptions, but it barely got a look by
skeptical legislators.
House Speaker Robert DeLeo recognized the need
for revenue in 2013, but opted for increases in
gas and cigarette taxes that haven't produced
the revenue jolt that DeLeo's 2009 sales tax
hike did.
Gov. Charlie Baker may not be chomping at the
bit to entertain straight tax hikes, but the
possibility of more comprehensive tax revamp is
exactly the reason he refused to take a
no-new-taxes pledge in 2014 when he was running
for governor, and may be the opening Democrats
need to start the debate, if not for now than
perhaps the years to come.
STORY OF THE WEEK: Senate President Stan
Rosenberg can't initiate taxes, but he can start
the discussion.
State House News Service
Monday, April 10, 2017
Budget dynamics gain clarity with release of
House's $40 billion plan
By Matt Murphy
Democratic leaders of the Massachusetts House
put forward a
$40.3 billion spending plan for fiscal 2018
that Ways and Means Chairman Brian Dempsey said
focused "first and foremost on the fundamentals"
- health care, pensions and local aid.
Increases of $322 million in MassHealth, $198
million for pensions and $164 million for local
aid consumed $684 million of just more than $1
billion in projected revenue growth, leaving
just one-third of new revenue to spread around
to other programs and services.
The House also signed off on Gov. Charlie
Baker's controversial employer assessment plan
to generate new revenue to cover a shift of
workers off employer-sponsored health coverage
to MassHealth, but left the details for the
administration to work out.
As with all budgets, some interests were pleased
with how they fared in the Ways and Means
budget, while others were left wanting. The plan
landed amidst another period of budget
uncertainty with state tax collections trailing
estimates this fiscal year by $220 million
despite a relatively healthy economy.
Here are some highlights, lowlights and
takeaways from those who wrote the budget bill
and could be impacted by it:
- THE GOVERNOR'S REACTION: Via Press Secretary
Billy Pitman, "The Baker-Polito Administration
proposed a balanced budget that protects
taxpayers and increases public education
investments to historic levels, and while the
administration is concerned the House chose to
drop a bipartisan proposal to reform welfare,
the governor looks forward to working with the
legislature to produce a final balanced budget."
Pitman was referring to Baker's proposal that
would have included supplemental security income
(SSI) in the calculation of transitional
assistance benefits. SSI is a federal program
that provides stipends to low-income people who
are either aged 65 or older, blind, or disabled.
Baker hoped to save $12.6 million in
transitional assistance by making the change.
- WILL IT STAY BALANCED? For the past two years,
Gov. Charlie Baker has had to resort to mid-year
budget cuts to keep spending in balance with
revenues. Currently, revenue projections are
trailing estimates by $220 million, making it a
possibility that the governor could resort to
another round of cuts. And yet with revenues
growing by just 1.7 percent over the first nine
months of fiscal 2017, House leaders are
proposing to increase spending by 3.8 percent.
"It's not an exact science," Dempsey noted,
indicating that the Legislature and
administration picked a revenue projection
somewhere in the middle of the range presented
by economic expects in December. "When we make
these projections we've been correct more than
we haven't and we took the mid-point range
hoping again that in the current fiscal year we
will begin hopefully to see some progress in
April and May." Massachusetts Budget and Policy
Center President Noah Berger said the House
budget is not overly optimistic, but he did not
rule out mid-year problems under the plan as
proposed. "I think the budget itself and 3.8
percent growth has a reasonably good chance of
being sustainable, but the fact that there are
some underfunded accounts within that is a
little bit troubling," Berger said. Dempsey
acknowledged that the House put less funding
than Baker into some accounts, such as sheriffs
and indigent counsel services, that historically
require passage of midyear spending bills to
meet demand.
--- TRUST BAKER ON HEALTH CARE: It's somewhat
unusual for the Democratic Legislature to defer
decisions on major policy specifics to the
administration, let alone a Republican
administration. But that's what House leadership
has done. The House plan leaves Baker free to
pursue a new, controverial assessment on
employers that don't provide health coverage to
a significant number of their workers, which has
been identified as a driver in higher Medicaid
enrollment expenses. It does not specify the
size of the assessment or who it should apply
to, but directs the administration to hold
public hearings and consider several factors
that have been flagged by the business community
as troubling with the governor's existing
proposal. Dempsey said Baker's "expertise" in
the health care arena and the ongoing dialogue
with the business community give House leaders
reason to believe a consensus can be reached. "I
think we're cautiously optimistic that a
constructive dialogue will continue between the
administration and the business community that
will yield a better outcome, whether it's simply
considering those factors that we outlined in
our document today or whether it be a more
viable alternative that's more brady accepted by
the business community," Dempsey said.
--- "PROGRESS" ON LOCAL AID: City and town
leaders were less than enthusiastic about the
levels of local aid proposed in Gov Baker's
January budget bill, but Massachusetts Municipal
Association Executive Director Geoff Beckwith
said he was pleased with what he saw in the
House Ways and Means redraft. The budget
advanced Monday matched Baker's $40 million
increase in unrestricted local aid, and put an
additional $15 million into Chapter 70 for local
schools, totaling a $106 million increase in
fiscal 2018. Beckwith said that the Chapter 70
funding, along with investments in special
education and regional school transportation,
bring the House education increase to $20
million above Baker's budget. "We know that if
this was a budget year with a growing pie that
there would be a more accelerated effort to fund
education. The fundamental education funding
debate has not been resolved, clearly, but the
intent of the House is to do as best as they
can...," Beckwith said. "Today it's important to
recognize that progress was made."
--- AIRBNB TAX NOT READY: The governor proposed
a tax on short-term room rentals through
websites like Airbnb as part of his budget, but
the topic was not touched by House leaders in
their proposal. Baker counted on $12 million for
fiscal 2018 from the expanded room taxes, but
Dempsey said his committee preferred to let
bills dealing with the issue wind their way
through the process. "I think we wanted to stay
away from any potential revenue there," Dempsey
said, adding, "First and foremost, it's
important for us to get the policy right." Rep.
Aaron Michlewitz, who chairs the Financial
Services Committee, has filed legislation that
would not only implement a tax structure for
short-term room rentals, but address insurance
requirements and safety precautions.
--- MARIJUANA IMPLEMENTATION: The House Ways and
Means budget set aside $4 million for the
implementation of the new medical marijuana law,
large parts of which have been delayed by six
months so that lawmakers can consider ways to
change or strengthen the law. Treasurer Deborah
Goldberg, whose authority to regulate the new
industry may be stripped away and given to
another entity, requested $10 million in startup
costs. "We usually give everybody about 40
percent of what they ask for," Dempsey joked,
before calling the proposed House appropriation
a "good starting point" until officials get a
better sense of staffing and other needs.
--- MONEY, MONEY, MONEY BILL: While Speaker
Robert DeLeo eschewed broad-based tax increases
with his budget proposal, there are provisions
in the bill that make it a "money bill," opening
the door for the Senate to consider taxes next
month when it takes a turn producing a budget.
The House bill includes a $2,000 tax credit for
businesses that hire veterans, as well as
reforms to how sales taxes are collected and
remitted to the state. "I think we'll see what
they do," Dempsey said about the possibility of
the Senate adding tax increases to the budget to
generate new revenue. Senate President Stanley
Rosenberg last week raised the idea of a sales
tax on services, which was briefly contemplated
and abandoned in the early 1990s. "Any new
expansion to something that it is currently not
taxed is always a challenge...," Dempsey said.
"Personally, I would have some concerns."
--- IMPACT ON COLLEGE TUITION: Public higher
education campuses would see minimal increases
under the House budget plan. The Ways and Means
budget would send an additional $5.1 million to
the University of Massachusetts, $2.5 million to
state universities, and $2.7 million to
community colleges. "We continue to do our very
best," Dempsey said, noting that support for
UMass increased by $95 million since 2012 as
part of an agreement to reach a fifty-fifty
funding split between the state and the
university. "We're hopeful that all of the
campuses will continue to work together to find
efficiencies." The Havershill Democrat said he
didn't know what impact the House budget plan
would have on tuition and fees on public college
campuses next year, but said Northern Essex
Community College recently had success
eliminating programs that had low student
enrollment. "That's the kind of work that needs
to be done," he said.
--- GOOD AND BAD FOR ENVIRONMENT: Not unlike
Gov. Baker's budget proposal, the House spending
plan made no progress toward pushing
environmental spending closer to the 1 percent
of overall spending long sought by activists.
Environmental League of Massachusetts Vice
President Erica Mattison said the "one bright
spot" in the budget was for a "very small
program that does very important work" known as
the Division of Ecological Restoration. That
division within the Department of Fish and Game
works on wetland protection and dam removal. "On
the other hand, it's disappointing to see the
lack of investment continuing with major line
items, like the overarching line item for the
Department of Environmental Protection and the
Department of Conservation and Recreation,"
Mattison said. Overall, Mattison said the Ways
and Means budget would allocate $215 million for
environmental programs and agencies, down from
$219 million in the fiscal 2017 budget.
The Boston Globe
Tuesday, April 11, 2017
House unveils $40.3 billion state budget
By Priyanka Dayal McCluskey, Joshua Miller and
Laura Krantz
House leaders unveiled a $40.3 billion state
budget Monday that significantly tempered two
controversial plans by Governor Charlie Baker to
tackle the cost of health care. Lawmakers
slashed his proposed fee on businesses to fund
state medical costs, and they rejected a plan to
cap the prices charged by hospitals.
The budget proposal comes as state tax revenue
has failed to meet projections. It effectively
maintains spending levels in many areas,
including the University of Massachusetts
system, and cuts funding for lawyers for poor
defendants.
Like the plan Baker released in January, the
House budget calls for a new fee on employers to
help pay for the state Medicaid program, which
provides health coverage to 1.9 million
residents. But House leaders did not detail how
their version of the fee would work, saying the
Department of Revenue — overseen by Baker —
should determine exactly which companies would
have to pay and how much.
The House plan would raise an estimated $180
million from employers in the fiscal year that
begins July 1, far less than the $300 million
proposed by the governor.
Business groups had slammed Baker’s original
plan as an unfair and expensive new tax and
lobbied hard against it. On Monday, they said
they were open to the House proposal for a
smaller fee, one that would be implemented after
months of public debate.
“It’s clearly a step in the right direction,’’
said James E. Rooney, chief executive of the
Greater Boston Chamber of Commerce. “It gives us
all more time to craft a solution that is
actually more targeted at the problem.”
The House plan also rejected the governor’s
effort to impose a tax on people who use
short-term rental services like Airbnb from
landlords who have a high-volume rental
business.
Representative Brian S. Dempsey, the House
budget chief, said legislators are examining the
issue and hope to address whether short-term
rentals should be taxed and regulated like
hotels in a more comprehensive bill after
hearing further from the public.
The most significant move by House leaders,
though, was the dent they want to put in Baker’s
attempt to address rising health costs.
Baker’s proposal charged companies $2,000 per
worker if they failed to meet a slate of
requirements for providing health coverage. He
argued the fee would help stem the number of
people who are leaving employer-sponsored health
insurance because their employer isn’t providing
adequate and affordable coverage. The
administration says these people are shifting to
subsidized coverage under the state Medicaid
program, called MassHealth, driving up costs to
the state budget.
As MassHealth enrollment has grown, spending on
the program has doubled over the past decade and
now represents 40 percent of the state budget.
About half the costs are paid by the federal
government.
In their spending blueprint, House leaders also
axed a plan by the governor to rein in health
care spending by capping the prices charged by
expensive hospitals. Speaker Robert A. DeLeo
cast hospitals as crucial to the state’s economy
and said they should not be subjected to new
cost-control measures at a time when Congress
continues to consider repealing and replacing
the Affordable Care Act.
Baker had proposed that the most expensive
hospitals get no rate increase in insurance
payments. Mid-priced health care providers would
get a 1 percent increase, and the lowest-priced
providers would not see their payments capped.
He included a separate measure to limit rates
for hospitals that do business with the state
Group Insurance Commission, an agency that
administers health benefits to public employees
and their families.
House leaders did away with all of that.
Hospitals have been lobbying against rate caps,
warning that such measures could force them to
lay off staff.
“When you’re talking about a cap, you’re talking
about a limitation as a result of that cap on
nursing staff, you’re talking about limitation
as to some of the people who do home-keeping
type of services,” said DeLeo, a Winthrop
Democrat.
Hospitals welcomed DeLeo’s comments. The
Massachusetts Health and Hospital Association
“greatly appreciates that the House listened to
the concerns of hospitals and approached this
budget proposal with caution about its impact on
the Massachusetts health care community,” Lynn
Nicholas, president of the association, said in
a statement.
The House budget also differs slightly from the
governor’s plan in several areas related to
human services. It proposes $15 million to
increase the pay of child-care workers, an issue
the speaker has made a priority. That is more
than double the amount proposed in the
governor’s budget.
The House budget does not include a
controversial proposal by the governor to shrink
the number of people eligible for a program that
provides cash to the state’s neediest families.
Baker spokesman Billy Pitman said the
administration was concerned the House dropped
that welfare “reform” measure.
The state’s 11 district attorneys would see a
bump in their budget if the House proposal
becomes law. But money for lawyers for poor
defendants would be sliced from the more than
$230 million expected to be spent this fiscal
year to $174 million. (Funding for those lawyers
is often supplemented mid-year, so a cut of that
size, even if it were to become law, would be
unlikely to last.)
In line with the governor’s budget, the House
budget proposes a $10.3 million increase for
public higher education. But that’s a modest
increase of about 1 percent.
The plan comes as the state grapples with
flagging tax revenue.
Through March, tax revenues are up just 1.7
percent — about $220 million less than Beacon
Hill expected to take in. That could mean more
emergency budget-tightening measures from Baker
in the coming weeks. And that could impinge on
the new budget House leaders are proposing for
fiscal year 2018, which begins July 1.
In his January spending plan, Baker proposed
several ideas for bringing in additional tax
revenue to the state, including more aggressive
efforts at collection. The House budget proposal
embraces some of those plans.
The House is poised to pass a budget this month.
The Senate will then pass its own plan.
Differences will be ironed out in a conference
committee before a final vote. Baker will likely
veto some parts of the budget and sign the rest
into law.
The Providence Journal
Wednesday, April 12, 2017
How Massachusetts slashed its car tax
By Chip Faulkner
The call from an irate woman came into the
Citizens for Limited Taxation (CLT) office
in the summer of 1979. Upon answering the phone,
I listened to someone furious over the auto
excise bill she had received after moving from
the Midwest to Massachusetts. She explained that
this tax didn’t exist where she had previously
resided.
I explained that Massachusetts has this onerous
tax and she had to pay it within 30 days or face
a fine. That was the bad news.
The good news was that CLT was preparing to
collect signatures that fall for its Proposition
2½ ballot question, which included reducing the
auto excise from $66 per $1,000 assessed value
to $25 — a 62% reduction.
The main purpose of the ballot question, of
course, was the reduction of property taxes. Our
ballot question stipulated the every
Massachusetts community had to get down to 2½
percent of assessed valuation. Once that level
was achieved, then every city and town could
increase its property tax levy by not more than
2.5 percent annually. If the taxpayers in any
community felt they needed more revenue than the
allowable 2.5 percent, their selectmen or city
council could schedule a Prop. 2½ override
election for any desired increase.
This system exists to this day — 38 years after
the ballot question passed by an almost 60-40 %
margin.
The irony is that the question may never have
even appeared on the ballot if not for that
irate caller from the Midwest. She organized a
group in the Springfield area which collected a
multitude of signatures towards the roughly
100,000 needed to qualify for the 1980 ballot.
We achieved the required amount by less than a
thousand. It was this woman’s irritation over
the auto excise that gave voters the chance to
vote for property tax reduction/limitation.
When the late Barbara Anderson, a few
other speakers and I fanned out over the state
during the fall campaign of 1980 to sell our
Proposition 2½ ballot question to the voters, we
discovered something startling: Of the several
sections within the ballot question, the most
popular was the decrease in the auto excise.
Our private polling indicated support for that
reduction was close to 80% “Yes” to 12% “No”
(with 8% undecided). Armed with these results,
we publicized the auto excise part of the ballot
question as much as the section dealing with
property tax limitation.
The auto excise bill for car-owners is based on
the manufacturers’ list price for vehicles in
their year of manufacture. It’s not based on
market value as commonly believed. The
percentage drops in four steps, from a high of
90% down to 10% by the fifth year of ownership.
For example, my 2013 Toyota Scion for which I
paid over $20,000 in 2014 had an auto excise
bill that year of $362.50. (Thanks to CLT I
avoided a bill of $957 that would have been due
under the old rate.) My latest bill for 2017 was
for $60.
Compared to what Bay State taxpayers shell out
for other taxes like income, sales, or property
taxes, why the hatred for this particular tax?
Much of the reason, I suspect, is because
drivers already spend a lot of money to keep a
car on the road and the auto excise is just
piling on.
First, the 6.25% state sales tax paid when we
buy a car is over a thousand dollars if you’re
purchasing a vehicle that costs a little over
$20,000. On this same car your city or town then
socks you with an excise bill for several
hundred dollars.
Then there are those nitpicking charges for
registering your vehicle and the annual auto
inspection fee of $35.
Once finally on the road, a fill-up at the gas
pump includes a Massachusetts tax of 26.54 cents
per gallon. (Still not as bad as Rhode Islanders
who pay 33 cents per gallon — 12th-highest in
the nation according to the non-partisan Tax
Foundation) Lest I forget, bridge, tunnel, and
turnpike tolls are always out there — awaiting
your arrival.
The Massachusetts Legislature passed a 3
cents-per-gallon gas tax hike in 2013, but more
ominously also tied future increases
automatically to inflation. Opponents let the 3
cents increase stand, but headed for the 2014
ballot advocating the elimination of the
automatic increases — increases on which the
legislature would never have to take another
roll call vote.
Finally, as we always suspected and was revealed
during the campaign to repeal, Massachusetts had
the third-highest highway administrative costs
in the nation — $74,000 per highway mile —as
well as spending $675,000 per mile on road
maintenance — also third-highest in the nation.
The vote to repeal passed with a 53-47% vote,
despite its ballot campaign being outspent by
the special interests by 30-to-1! Among those
advocating for this gas tax increase was —
believe it or not — AAA! This allegedly
non-partisan national organization shamed itself
by its very partisan position on this ballot
question.
Victory over the automatic gas tax increase
showed that many Bay State car-owners didn’t
mind being driven, but nobody likes being taken
for a ride.
Chip Faulkner is communications
director of Citizens for Limited Taxation. |
| |
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