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Post Office Box 1147
▪
Marblehead, Massachusetts 01945
▪ (781) 639-9709
“Every Tax is a Pay Cut ... A Tax Cut is a Pay Raise”
46 years as “The Voice of Massachusetts Taxpayers”
— and
their Institutional Memory — |
|
CLT UPDATE
Thursday, May 28, 2020
The Assault on CLT's Tax Rollback
Jump directly
to CLT's Commentary on the News
Most Relevant News Excerpts
(Full news reports follow
Commentary)
|
Today 91
Massachusetts economists submitted a joint letter to the
Governor and state legislative leaders to tell them that
cuts to the state budget are categorically worse for the
economy than tax increases during a recession. Their message
comes as lawmakers prepare to restart a budget process that
has been upturned by deep revenue shortfalls brought on by
COVID-19.
"Instead of budget
cuts," the letter urged, "the state should look to raise
revenues to balance its budget."
Massachusetts
Budget and Policy Center (MassBudget)
Tuesday, May 26, 2020
News Release
Over 90 Economists Warn Mass. Lawmakers: Tax Increases are
Better than Budget Cuts During a Recession
"States must run
balanced budgets. In a recession, balancing the budget by
cutting spending has a more negative impact on economic
growth than balancing the budget by raising taxes. Both the
personal income tax and the corporate tax are fair ways to
do this, since they fall only on persons with incomes and
businesses with profits. A one percentage point increase in
the income tax could raise $2.5 billion per year while a one
percentage point increase in the corporate tax rate could
raise $180 million per year, even if the income tax base
falls by 25% and the corporate tax base falls by 50% during
this recession. These tax rates could be phased back as the
economy returns to its pre-recession level."
Excerpt from 91
Economists' Letter
Tuesday, May 26, 2020
Download/Read Their Full Letter
Last month,
economists estimated state revenues for fiscal 2021 will
fall short of projections by $5 billion to $6 billion — a
drop of nearly 20 percent. But the shortfall may be larger,
since recent reports indicate that GDP has slowed more than
expected, and more than one-fifth of the labor force is
currently unemployed, working reduced hours, or had given up
looking for work. Worse, revenues have plummeted exactly
when more public spending is desperately needed to cover
escalating public health costs and the greater demands on
safety-net programs due to the coronavirus pandemic....
Help may be on the
way from the federal government, but when and how much
remains uncertain. Fortunately, the state has amassed a $3.5
billion rainy day fund to buffer budget shortfalls during
recessions. It’s hard to imagine a rainier day than the
sharp economic contraction that has occurred since March:
State tax revenues in April were $2.34 billion lower
compared with the same month last year, partly due to the
delay in income tax payments until July. Yet even if these
deferred income taxes are paid and federal aid to states and
localities materializes, this will likely not be enough to
fill the gap....
History shows that
spending cuts are more harmful than tax increases during
recessions — especially in a downturn expected to be sharp
but short like this one....
How big would the
tax increase need to be and how can we ensure that the
burden on taxpayers is distributed equitably? The
Commonwealth’s income tax is directly tied to ability to pay
and is mildly progressive due to the personal exemption.
Increasing the income tax from 5 to 6 percent would raise
approximately $2.5 billion per year and could be combined
with a phase-back provision to 5 percent as the economy
recovers....
Ultimately, policy
makers need to consider the trade-offs involved in any of
these options for balancing the budget. It’s likely that
some combination of federal funds, rainy day funds, and tax
increases would be needed to prevent deep spending cuts.
More spending on public goods, services, and investments
means less spending on private goods, services, and
investments. In other words, households and business owners
will have to make financial sacrifices. Ultimately, the
question for taxpayers and policy makers is: Are these
sacrifices worth it? Given the existential threat
confronting the residents, cities and towns, businesses, and
major institutions, we believe the answer is a resounding
yes.
The Boston Globe
Friday, May 15, 2020
With plummeting revenues, state should impose a temporary
tax increase
Cutting public spending could have long-term consequences
for education,
safety-net programs, and overall economic
growth.
By Alan Clayton-Matthews, Michael Goodman, and Alicia
Sasser-Modestino
As the wait
continues for a fiscal 2021 budget plan, 91 economics
professors are newly prodding lawmakers to raise taxes and
to avoid spending cuts to make fiscal ends meet amidst
plummeting revenues.
"Large cuts would
erode the health and social infrastructure needed to
continue combatting COVID-19, increase an already high level
of inequality, and exacerbate the economic downturn. Instead
of budget cuts, the state should look to raise revenues to
balance its budget," the economists wrote in a letter to
Gov. Charlie Baker and legislative leaders that was
distributed Tuesday by the Massachusetts Budget and Policy
Center.
Raising the
personal income tax and the corporate tax "are fair ways to
do this, since they fall only on persons with incomes and
businesses with profits," the economists wrote, projecting
that a 1 percentage point increase in the income tax could
raise $2.5 billion per year while a 1 percentage point
increase in the corporate tax rate could raise $180 million
per year "even if the income tax base falls by 25 percent
and the corporate tax base falls by 50 percent during this
recession."
They said the
higher tax rates "could be phased back as the economy
returns to its pre-recession level."
State House News
Service
Tuesday, May 26, 2020
Economists Urge Beacon Hill to Raise Taxes
State legislators
should tax profitable corporations to generate additional
revenue before resorting to budget cuts to solve for a
financial crisis brought on by COVID-19 that could cost the
state billions in lost taxes, a coalition of community,
labor and faith-based organization said Tuesday.
The Raise Up
Coalition, which has been behind multiple successful ballot
campaigns, wrote a letter to legislators urging them to
raises taxes before pursuing "severe budget cuts" that it
worries will worsen the impacts of the economic downtown.
Some economic
experts have predicted that anticipated revenues in fiscal
2021 could come in $6 billion short of what had been
projected a few months ago. The coalition argued that
students, colleges, hospitals, public transit and direct
care workers will need more financial support in the coming
months, not less.
State House News
Service
Tuesday, May 26, 2020
Raise Up Presses State to Boost Business Taxes
A group of 91
Massachusetts economists are calling on Gov. Charlie Baker
and legislative leaders to raise personal income and
corporate taxes amid projected massive coronavirus-induced
decreases in tax revenues.
They claim it’s
the only “fair” way to balance next year’s budget and avoid
spending cuts — even as homeowners and businesses try to dig
out of an economic hole.
“In a recession,
balancing the budget by cutting spending has a more negative
impact on economic growth than balancing the budget by
raising taxes. Both the personal income tax and the
corporate tax are fair ways to do this, since they fall only
on persons with incomes and businesses with profits,” the
economy and public policy experts wrote in their May 26
letter to Baker, House Speaker Robert DeLeo and Senate
President Karen Spilka....
Economists are
floating one percentage point increase in the income tax and
corporate taxes they say would raise a combined $2.68
billion in additional tax revenues. The tax hike could be
phased back as the economy returns to its pre-recession
level, the letter states.
Spilka and DeLeo
have both hinted at tax increases to make up the losses, but
Baker has repeatedly told reporters he would not consider
raising taxes in the middle of the worst economic downturn
in American history.
The Boston Herald
Tuesday, May 26, 2020
Group of economists push for tax hikes to balance
Massachusetts state budget
|
Chip Ford's CLT
Commentary
In
my commentary for the CLT Update of April 12 ("Never
let a crisis to go waste") I wrote:
. . . Keller asked
rhetorically, "Could a resurgent economy amid public
gratitude for state and local government’s handling
of the crisis clear the way for a Prop 2½ takedown?"
I expect that question will be
broadened in the weeks and months ahead: Could a
resurgent economy amid public gratitude for state
and local government’s handling of the crisis clear
the way for all sorts of tax increases?
I won't
be surprised if a complacent,
historically-challenged, and relieved public buys
a promise that any and all tax hikes will be "only
temporary, just to get us back on track after this
crisis."
Crises by definition are
temporary. Taxes never are.
We taxpayers and taxpayer
advocates know all too well, have learned that
bitter lesson the hard way: Any and all tax
hikes inevitably mutate into forever. . . .
After
CLT's two separate, onerous, and expensive
statewide petition signature drives (1997-98 then
again in 1999) and a successful state ballot
campaign in 2000; after the Legislature then
freezing our rollback of that "temporary" income tax
hike in 2002, replacing it with its own "economic
triggers"
— the income tax was finally
returned to its historic rate of 5 percent just
this year — THIRTY YEARS after the
promise of a "temporary, only 18-months, trust
us, we promise!" tax hike.
Understandably, we won't
be buying any more "temporary" tax hike deceptions.
The Takers are so
predictable. They seek any excuse to separate taxpayers from their
hard-earned income all the time. This latest assault was only a
question of when, not if. They couldn't restrain themselves
any longer and launched.
When they plunged in with
their news release CLT countered early yesterday with its own: "Cruel
tax hike proposal deceives taxpayers, again."
The Massachusetts Budget and
Policy Center behind this latest tax increase scheme is the direct
evolution of CLT's longtime opponent, the Tax Equity Alliance for
Massachusetts (TEAM), which we renamed more accurately as "Tax
Everything And More."
MassBudget hoped
its "non-partisan" non-profit status would provide it with more
credibility. Its backers have remained the same
— the teachers unions, organized labor for
both the public and private sectors, "social justice" groups, etc.
Its goal has never wavered: Take more from the productive to
spread around on more and bigger programs for the less if at all
productive.
A similar progressive
organization on the national level is the
Institute on Taxation and
Economic Policy. It reported today:
State Rundown 5/27: Some States Finally Talking Revenue Solutions to
Revenue Crisis
This
week the immense scale and uneven distribution of economic and
health damage from the COVID-19 pandemic continued to come into
focus, hand in hand with greater clarity around pandemic-related
revenue losses threatening state and local revenues and the
priorities—such as health care, education, and public safety—they
fund. Officials in many states, including Ohio and
Tennessee, nonetheless rushed to declare their unwillingness to
be part of any solution that includes raising the tax contributions
of their highest-income residents. On the brighter side, some
leaders are willing to do just that, for example through progressive
tax increases proposed in New York and corporate tax subsidy
reductions discussed in California.
Concerning Massachusetts, and a comparison
state, Kentucky, ITEP notes:
● Lawmakers
in KENTUCKY are
preparing for a revenue shortfall of
more than $450 million, or roughly 4 percent of the state’s
general fund, this fiscal year (ending June 30th).
● As
lawmakers brace for a $4.4 billion revenue shortfall, nearly 100
MASSACHUSETTS economists
make the case for increasing the state’s personal and corporate
income taxes.
Look at that comparison.
Kentucky has a population of 4.6 million
residents, currently the second-highest unemployment rate of any state,
and an anticipated budget shortfall of $450 million. That
number represents "roughly 4 percent of the state's general fund."
Massachusetts has a population of 2 million
more residents, an unemployment rate four-tenths of a percentage point
over the national rate of 14.7 percent, and an anticipated revenue
shortfall of $4-$6 billion —
"nearly a 20 percent decline of lost revenue over last year" ($31.15
million, according to the Massachusetts Taxpayers Foundation).
The Courier Journal (Louisville, Kentucky)
reported on May 23 ("Kentucky
faces over $450 million in budget cuts amid plunging tax collections and
COVID-19")
The
[Consensus Forecasting Group] panel agreed to a revised forecast of
just under $11 billion in General Fund revenues this fiscal year.
That projection necessitates the budget cuts of about $457 million.
It reviewed such variables as consumer spending, unemployment,
manufacturing and personal income in revising its forecast.
Last month, state budget director John Hicks
warned of a potential General Fund shortfall of $318.7 to $495.7
million this fiscal year. Tax collections took a nosedive in
April as businesses closed or scaled back amid the virus outbreak.
The state’s unemployment rate has surged since the virus hit.
It's a time like this when all the years of
billions of increased profligate spending larded into the state budget
becoming the new baseline inevitably come home to roost.
Just three months ago Massachusetts was
raking in
record amounts of revenue, following a year with a record surplus of
well over a billion dollars. The state carries the
highest per capita public debt in the nation. In January Gov.
Baker proposed a $44.6 billion fiscal 2021 budget for the coming year
starting in July; $1.3 billion more than the prior (current) fiscal
year's $43.3 billion of state spending. The good times on Beacon
Hill just kept on rolling.
Then in March Charlie Baker by executive
fiat unilaterally shut down the state and its economy, to "flatten the
curve" of Wuhan Chinese Pandemic hospitalizations
— we were told back then.
Now the pandemic has become the excuse to
nullify three decades of CLT's effort to finally get the income tax rate
back down to 5 percent. We finally succeeded, just this year.
But The Takers can't have that. They've arisen to take it
back from taxpayers, under any guise, by any means.
Again it's proven that Massachusetts has a
long term spending addiction, not a short term revenue shortage.
Record state revenue accumulations have
come to a self-imposed halt for now. Withdrawal pains are settling
in on Beacon Hill denizens. But "never let a crisis go to waste."
Be alert, taxpayers. Be very alert.
|
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 |
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Chip Ford
Executive Director |
|
|
Full News Reports Follow
(excerpted above)
|
Massachusetts
Budget and Policy Center (MassBudget)
Tuesday, May 26, 2020
News Release
Over 90 Economists Warn Mass. Lawmakers: Tax Increases are
Better than Budget Cuts During a Recession
Today 91 Massachusetts economists submitted a joint letter
to the Governor and state legislative leaders to tell them
that cuts to the state budget are categorically worse for
the economy than tax increases during a recession. Their
message comes as lawmakers prepare to restart a budget
process that has been upturned by deep revenue shortfalls
brought on by COVID-19.
"Instead of budget cuts," the letter urged, "the state
should look to raise revenues to balance its budget."
The economists recommend judiciously using the state's Rainy
Day Fund and explain that additional federal support for the
Commonwealth's budget would be best for economic growth. But
insofar as lawmakers must choose between budget cuts or
temporary taxes, the latter is preferable for economic
growth during a recession, especially if taxes are targeted
to high-income households and corporations. The letter
includes economists from public and private universities
across Massachusetts.
Included among the signers are three economists who outlined
the economic choice in the Boston Globe on May 16th. In that
opinion piece, economists Alan Clayton-Matthews, Michael
Goodman, and Alicia Sasser-Modestino explain, "History shows
that spending cuts are more harmful than tax increases
during recessions." They continue, "Both the Great
Depression of the 1930s and, more recently, the Great
Recession of 2008-09 demonstrated that raising taxes to fund
public spending could stimulate a depressed economy. This is
because the rise in public spending more than offsets the
fall in private spending, since some of the increase in
taxes that households and businesses pay comes out of
savings. In contrast, all of the tax revenue collected by
the government is spent - much of it by purchasing goods and
services from the private sector - and so total spending
increases, driving job creation and income growth."
"This is not the time for an austerity budget," said
Marie-Frances Rivera, President of MassBudget, a nonprofit
think tank that conducts research and analysis on the
Commonwealth's budget and economic policy. "The economists'
letter underscores how public spending cuts would lengthen
an oncoming recession, as it would take money out of our
local economy that would otherwise recirculate and spur
economic activity. Furloughing public employees, cutting
state contracts to businesses and nonprofits, and reducing
assistance to municipalities and low-income families will
take money out of the Massachusetts economy, prolonging and
deepening the recession. Avoiding budget cuts through
targeted tax increases is the best way to build a strong
recovery in Massachusetts."
MassBudget has put forward research on a variety of possible
ways to raise additional revenue targeted to high-income
households and profitable corporations in its recent
reports, "14 Options for Raising Progressive Revenue" and
"Taxing the GILTI: By Reversing 2018 Policy, MA Can Fight
Corporate Tax Dodging & Raise $450 Million a Year."
The economists' letter can be read here.
https://scholars.org/sites/scholars/files/MA_Economists_Letter_05262020.pdf
Excerpt from economist' letter:
"States must run balanced budgets. In a recession, balancing
the budget by cutting spending has a more negative impact on
economic growth than balancing the budget by raising taxes.
Both the personal income tax and the corporate tax are fair
ways to do this, since they fall only on persons with
incomes and businesses with profits. A one percentage point
increase in the income tax could raise $2.5 billion per year
while a one percentage point increase in the corporate tax
rate could raise $180 million per year, even if the income
tax base falls by 25% and the corporate tax base falls by
50% during this recession. These tax rates could be phased
back as the economy returns to its pre-recession level."
The Boston
Globe
Friday, May 15, 2020
With plummeting revenues, state should impose a temporary
tax increase
Cutting public spending could have long-term consequences
for education, safety-net programs, and overall economic
growth.
By Alan Clayton-Matthews, Michael Goodman, and Alicia
Sasser-Modestino
Last month,
economists estimated state revenues for fiscal 2021 will
fall short of projections by $5 billion to $6 billion — a
drop of nearly 20 percent. But the shortfall may be larger,
since recent reports indicate that GDP has slowed more than
expected, and more than one-fifth of the labor force is
currently unemployed, working reduced hours, or had given up
looking for work. Worse, revenues have plummeted exactly
when more public spending is desperately needed to cover
escalating public health costs and the greater demands on
safety-net programs due to the coronavirus pandemic.
Help may be on the way from the federal government, but when
and how much remains uncertain. Fortunately, the state has
amassed a $3.5 billion rainy day fund to buffer budget
shortfalls during recessions. It’s hard to imagine a rainier
day than the sharp economic contraction that has occurred
since March: State tax revenues in April were $2.34 billion
lower compared with the same month last year, partly due to
the delay in income tax payments until July. Yet even if
these deferred income taxes are paid and federal aid to
states and localities materializes, this will likely not be
enough to fill the gap. Given the balanced budget mandate,
how can the Commonwealth avoid painful cuts to essential
social services, local aid to cities and towns, and
investments in K-12 and higher education?
History shows that spending cuts are more harmful than tax
increases during recessions — especially in a downturn
expected to be sharp but short like this one. Why? Shrinking
safety-net programs like food pantries, housing, and health
care remove spending from the economy when it is most needed
and from the people who need it the most. Cutting local aid
to cities and towns for police and fire protection, parks,
and public works erodes the infrastructure that makes
communities vibrant places to live and work. Reducing
funding for K-12 and higher education reverses longstanding
investment in human capital — including recent new
commitments, such as the Student Opportunity Act enacted
last November that provides more than $2 billion in
additional school funding through 2027 — with long-term
consequences for worker productivity and economic growth.
Moreover, all of these spending cuts serve to exacerbate the
already high level of inequality that exists in the
Commonwealth.
Although raising taxes can reduce consumer spending and slow
economic growth, it turns out to be less damaging than the
alternative. Both the Great Depression of the 1930s and,
more recently, the Great Recession of 2008-09 demonstrated
that raising taxes to fund public spending could stimulate a
depressed economy. This is because the rise in public
spending more than offsets the fall in private spending,
since some of the increase in taxes that households and
businesses pay comes out of savings. In contrast, all of the
tax revenue collected by the government is spent — much of
it by purchasing goods and services from the private sector
— and so total spending increases, driving job creation and
income growth.
How big would the tax increase need to be and how can we
ensure that the burden on taxpayers is distributed
equitably? The Commonwealth’s income tax is directly tied to
ability to pay and is mildly progressive due to the personal
exemption. Increasing the income tax from 5 to 6 percent
would raise approximately $2.5 billion per year and could be
combined with a phase-back provision to 5 percent as the
economy recovers. Moreover, unemployment insurance benefits
could be exempt from being taxed by the state to ease the
burden on those most impacted by job loss due to the
pandemic.
Ultimately, policy makers need to consider the trade-offs
involved in any of these options for balancing the budget.
It’s likely that some combination of federal funds, rainy
day funds, and tax increases would be needed to prevent deep
spending cuts. More spending on public goods, services, and
investments means less spending on private goods, services,
and investments. In other words, households and business
owners will have to make financial sacrifices. Ultimately,
the question for taxpayers and policy makers is: Are these
sacrifices worth it? Given the existential threat
confronting the residents, cities and towns, businesses, and
major institutions, we believe the answer is a resounding
yes.
Alan Clayton-Matthews is professor emeritus at the School
of Public Policy and Urban Affairs at Northeastern
University. Michael Goodman is a professor of public policy
and executive director of the Public Policy Center at UMass
Dartmouth. Alicia Sasser-Modestino is an associate professor
at the School of Public Policy and Urban Affairs at
Northeastern University.
State House
News Service
Tuesday, May 26, 2020
Economists Urge Beacon Hill to Raise Taxes
By Michael P. Norton
As the wait continues for a fiscal 2021 budget plan, 91
economics professors are newly prodding lawmakers to raise
taxes and to avoid spending cuts to make fiscal ends meet
amidst plummeting revenues.
"Large cuts would erode the health and social infrastructure
needed to continue combatting COVID-19, increase an already
high level of inequality, and exacerbate the economic
downturn. Instead of budget cuts, the state should look to
raise revenues to balance its budget," the economists wrote
in a letter to Gov. Charlie Baker and legislative leaders
that was distributed Tuesday by the Massachusetts Budget and
Policy Center.
Raising the personal income tax and the corporate tax "are
fair ways to do this, since they fall only on persons with
incomes and businesses with profits," the economists wrote,
projecting that a 1 percentage point increase in the income
tax could raise $2.5 billion per year while a 1 percentage
point increase in the corporate tax rate could raise $180
million per year "even if the income tax base falls by 25
percent and the corporate tax base falls by 50 percent
during this recession."
They said the higher tax rates "could be phased back as the
economy returns to its pre-recession level."
While he hasn't taken a no-new-taxes pledge, Republican Gov.
Charlie Baker has generally discouraged tax increases
although he's also been a strong advocate for government
services, both at the state and local government levels.
Democrats in the Legislature have over the years mostly
refrained from increases in broad-based taxes, but have
turned to tax increases to preserve government services in
previous recessions.
"This is not the time for an austerity budget," MassBudget
President Marie-Frances Rivera said in a statement. "The
economists' letter underscores how public spending cuts
would lengthen an oncoming recession, as it would take money
out of our local economy that would otherwise recirculate
and spur economic activity. Furloughing public employees,
cutting state contracts to businesses and nonprofits, and
reducing assistance to municipalities and low-income
families will take money out of the Massachusetts economy,
prolonging and deepening the recession. Avoiding budget cuts
through targeted tax increases is the best way to build a
strong recovery in Massachusetts."
Under emergency House rules, the House Ways and Means
Committee must report a fiscal 2021 budget bill by July 1,
the first day of the new fiscal year. State budget officials
are monitoring tax revenues, an influx of federal aid, and
the use of budget reserves as they contemplate budget fixes.
State House
News Service
Tuesday, May 26, 2020
Raise Up Presses State to Boost Business Taxes
By Matt Murphy
State legislators should tax profitable corporations to
generate additional revenue before resorting to budget cuts
to solve for a financial crisis brought on by COVID-19 that
could cost the state billions in lost taxes, a coalition of
community, labor and faith-based organization said Tuesday.
The Raise Up Coalition, which has been behind multiple
successful ballot campaigns, wrote a letter to legislators
urging them to raises taxes before pursuing "severe budget
cuts" that it worries will worsen the impacts of the
economic downtown.
Some economic experts have predicted that anticipated
revenues in fiscal 2021 could come in $6 billion short of
what had been projected a few months ago. The coalition
argued that students, colleges, hospitals, public transit
and direct care workers will need more financial support in
the coming months, not less.
The coalition said that deep budget cuts would be "exactly
the wrong response." While it did not recommend any specific
tax policy changes, the letter argued that large
corporations "use loopholes to hide their profits" and
"exploit tax breaks to avoid paying their fair share of
taxes."
"Throughout the economic crisis we're facing, many large
corporations continue to generate enormous profits that flow
to their extremely wealthy shareholders. It's time that they
pay more to support our economic recovery," the coalition
wrote.
The coalition also said the state legislators should not
hesitate to tap into the state's $3.5 billion "rainy day"
fund.
"But if federal aid and the state's rainy day fund are not
sufficient to make up for the drop in state revenue, state
lawmakers must pursue progressive revenue options to close
the gap," the coalition wrote.
The pandemic's impacts have unevenly affected businesses,
but many are struggling to stay afloat amidst rising
unemployment and sharp declines in consumer and business
confidence.
The Boston
Herald
Tuesday, May 26, 2020
Group of economists push for tax hikes to balance
Massachusetts state budget
By Erin Tiernan
A group of 91 Massachusetts economists are calling on Gov.
Charlie Baker and legislative leaders to raise personal
income and corporate taxes amid projected massive
coronavirus-induced decreases in tax revenues.
They claim it’s the only “fair” way to balance next year’s
budget and avoid spending cuts — even as homeowners and
businesses try to dig out of an economic hole.
“In a recession, balancing the budget by cutting spending
has a more negative impact on economic growth than balancing
the budget by raising taxes. Both the personal income tax
and the corporate tax are fair ways to do this, since they
fall only on persons with incomes and businesses with
profits,” the economy and public policy experts wrote in
their May 26 letter to Baker, House Speaker Robert DeLeo and
Senate President Karen Spilka.
State budget writers are bracing for a $4.4 billion decrease
in anticipated tax revenues as the coronavirus crisis
continues to erode the state’s economy. The projected
shortfall is 14.1% below the benchmark reached in January,
according to a Massachusetts Taxpayers Foundation report.
Economists are floating one percentage point increase in the
income tax and corporate taxes they say would raise a
combined $2.68 billion in additional tax revenues. The tax
hike could be phased back as the economy returns to its
pre-recession level, the letter states.
Spilka and DeLeo have both hinted at tax increases to make
up the losses, but Baker has repeatedly told reporters he
would not consider raising taxes in the middle of the worst
economic downturn in American history.
Michael Goodman, director of the Public Policy Center and
the University of Massachusetts Dartmouth, signed onto the
letter and said Baker needs to “open his mind” to tax
increases or suffer the inevitable consequences of spending
cuts.
But Paul Craney, spokesman for MassFiscal Alliance, told the
Herald Tuesday night some of the UMass professors pushing
for the tax hikes have not felt the pain themselves of the
downturn.
“The UMass professors who teach economics are the ones
advocating for their own salaries,” Craney said. “They
should try living in the shoes of the 1 million who filed
for unemployment in Massachusetts.”
Baker did not respond to a request for comment on Tuesday
afternoon.
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