Tax Rollback Opponents Push Trojan Horse Substitute

"In 2003 we begin an absolutely definite tax cut program that gets us down to 5 percent. It's not wishful thinking. It's not dependent on a vote from the electorate."

House Speaker Thomas Finneran
Apr. 3, 2000
Defending the MTF/House Trojan Horse substitute
for the CLT/Cellucci tax rollback ballot question

"An absolutely definite tax cut" Speaker Finneran calls the House of Reprehensibles' proposed substitute income tax rollback, intended to defuse our ballot question. I imagine he'd also call it a "lead pipe guarantee" like Dukakis once did, as well as a "promise ... and we really mean it this time, honest"!

All we've got to do is give up a sure thing in November and hold our collective breath until 2003! Mista Speaker, how about calling it what it really is: A Trojan Horse.

Just what remains for any credibility whatsoever among the Bacon Hill Cabal, to think they can run this newest scam on us? "Fool me once, shame on you; fool me twice shame on me."

Having been burned by their cavalier deceits more often than not, we've reluctantly come to recognize that legislators are incapable of keeping their word from one day to the next when they want something more; it is their nature -- and more is never enough. We'll see in November if Abraham Lincoln was right, that "you can't fool all the people all the time."

The so-called Massachusetts Taxpayers Foundation, the mouthpiece for big-business interests, had to come to the defense of its Trojan Horse (below) against an attack by TEAM (Tax Everything And More). In an astounding feat of logic-defying mental gymnastics and usual hypocrisy, TEAM managed to attack MTF's "more reasonable" approach both for waiting too long and for not waiting long enough to roll back the income tax rate -- which TEAM and the teachers union don't want rolled back ever, under any circumstance. Don't you just love it when battle is waged between two of the taxpayers' worst enemies!

CFord-Sig2.gif (4854 bytes)

Chip Ford

ATTENTION!   Tomorrow is the Tax Committee hearing on our tax rollback initiative petition. Hope to see many of you there!

WHERE: Gardner Auditorium
State House basement

WHEN: Wednesday, April 5th

BILL #: H.4981

Associated Press

Tuesday, April 4, 2000

Gov. Cellucci calls budget "runaway freight train of spending"

BOSTON (AP) Gov. Paul Cellucci, fresh from a 12-day trade mission to China, slammed the Massachusetts House's budget plan, calling it a "runaway freight train of spending."

"This is a very bad budget for the taxpayers of Massachusetts," Cellucci said Monday, moments before walking into a meeting with House Speaker Thomas Finneran.

Cellucci blasted the House for using higher revenues estimates and for not being aggressive enough on tax cuts.

The budget also should have called for a study on the benefits of privatizing the Massachusetts Water Resources Authority, he said.

Finneran dismissed the criticism as "political rhetoric" and defended the proposed $21.7 billion budget.

Finneran said the House used slightly higher revenues estimates due to the continued strength of the economy. He said the question of whether or not to privatize the MWRA should not be debated in the budget.

Finneran also called Cellucci's tax cut criticism unfair, saying the House budget includes a significant tax cut.

"In 2003 we begin an absolutely definite tax cut program that gets us down to 5 percent," Finneran said. "It's not wishful thinking. It's not dependent on a vote from the electorate."

Cellucci is pushing a ballot question which would force the state income tax rate to 5 percent by 2003.

State House News Service
Monday, April 3, 2000

CELLUCCI ON BUDGET: Fresh from a trip to China, Gov. Cellucci lambastes $21.7 billion House budget as a "runaway freight train of spending," and criticizes omission of tax relief and MWRA privatization plans.

"I'm stunned, stunned that the House Ways and Means Committee would put out a budget with the kind of spending increases that it has," Cellucci said of the budget that's 1.9 percent larger than his own. "Usually, we wait for the Senate to add all the money. If the House starts adding the money, you can imagine what it's going to look like when the Senate gets done with it."

Governor also blasts House reliance on higher revenue estimate than administration used -- the first break from the decade-long Beacon Hill tradition of agreeing on base revenues prior to budget debates.

"One of the things that enabled us to restore fiscal discipline and the fiscal health of state government over the last 10 years is that we have been using conservative revenue estimates," Cellucci says. "Now all of a sudden, the House violates that principle by upping the revenue projections for this year without the agreement of the secretary of administration and finance. It reminds me of the late 80s, when spending was out of control. This is a very bad budget for the taxpayers and for the ratepayers of Massachusetts."

House Speaker Thomas Finneran dismisses Cellucci's criticism as "political rhetoric."

"Ignoring the irony of TEAM's concern about tax cuts not taking place fast enough, this characterization fails to appreciate how the proposal works in the immediate aftermath of a recession."

Massachusetts Taxpayers Foundation
News Release

April 3, 2000


In a critique of MTF's proposal to cut the income tax to 5 percent at a pace tied to growth in the Massachusetts economy, the Tax Equity Alliance for Massachusetts (TEAM) focuses on an issue of which the Foundation is fully aware: The proposed tax cut trigger has a built-in delay, reflecting in part the availability of economic information and, more importantly, ensuring that the Governor will be able to build any tax rate adjustment into his annual budget submission. Because of this delay, TEAM alleges, the Foundation's tax cut plan "fails by its own standards" -- an utterly false claim that arises from a fundamental mischaracterization of MTF's proposal.

Under the Foundation's plan, the state income tax rate would be reduced to 5 percent in gradual steps tied to growth in the Massachusetts economy, as an alternative to the Governor's ballot proposal to cut the rate to 5 percent over the next three years. After an initial reduction of the current 5.85 percent income tax rate to 5.75 percent in 2001, each 2.5 percent of annual growth in total Massachusetts personal income since 1999, adjusted for inflation, would trigger an additional 0.1 percent cut in the tax rate until the rate reaches 5 percent. The accumulated growth from the base year 1999 to 2000would determine the tax rate for 2002, the growth from 1999 to
2001 would determine the tax rate for 2003, and so on, until a tax rate of 5 percent is achieved.

This approach accomplishes two important goals. First, it would put the state on a track to reduce its personal income tax burden, which is among the highest in the nation, an essential step to improve the long-term competitiveness of the state economy. At the same time, through a careful selection of the "trigger" level and the amount of the incremental rate cuts, it would ensure that the state has sufficient resources over the next several years to manage the many budgetary challenges it faces -- in education, capital, health care and other areas -- as well as to accommodate the impact of the many tax cuts adopted in recent years.

TEAM's analysis focuses on one aspect of the MTF proposal, the timing of future incremental cuts, charging that -- because the cuts would not reflect the actual growth in personal income in the year in which they are implemented -- the plan "does not succeed in protecting state revenue during a recession." However, TEAM has completely overlooked a crucial point: If it were possible to solve this problem of delayed information -- if we could base the decision to cut the tax rate on up-to-the-minute information about personal income growth -- the result would be to trigger the cuts two years earlier than the MTF plan provides, putting in place precisely the same tax rates that TEAM faults! Carrying TEAM's reasoning to its logical conclusion, a tax cut would never be justified, because it is impossible to know to what extent the economy will grow, or contract, over the next 12 months.

TEAM's inadequate evaluation of the impact of implementation delays also leads to the erroneous claim that the MTF plan would "block tax cuts during a recovery." Ignoring the irony of TEAM's concern about tax cuts not taking place fast enough, this characterization fails to appreciate how the proposal works in the immediate aftermath of a recession. Because the accumulated growth in personal income, rather than the year-to-year change, is used in the trigger mechanism, the income growth that is lost in an economic downturn must be "earned back" before further tax cuts are instituted. Far from blocking cuts during a recovery, this approach puts a brake on the pace of cuts, ensuring that rate reductions reflect real growth in the economy over the longer term.


The Commonwealth of Massachusetts
House of Representatives
Representative Francis L. Marini


Contact: Darren Johnson, (617) 722-2100
March 30, 2000

Proposed Budget is like Christmas in April

BOSTON - House Minority Leader Francis L. Marini (R-Hanson) says the $21.7B budget offered by House Ways and Means "spends every dollar and then some." The Minority Leader added a proposal of Governor Paul Cellucci to rollback income taxes to the five percent, which goes before voters in November, has caused the Democratically controlled House of Representatives to go on a spending spree and ignore the hard lessons of the 1980's.

"The budget released today spends every penny of available tax money, borrows and spends another $750 million, then commits $875 million over the next five years to pay for it," Marini said. "This budget gives money to people beyond their wildest desires." Marini cited Treasurer O'Brien's budget that was way up over even her own requests. "We give people money they didn't even ask for!"

He continued, "this budget increases spending for everyone and decreases funding for no one. By the time voters get a chance to roll back their own income taxes, there will be no budget surplus left over to make up the difference."

According to published reports, Ways and Means Chairman Paul Haley said the proposed FY'2001 budget will "shore up our supports rather aggressively" and added "we don't think now is the time to be cutting on our tax base."

"This spending spree contained in this budget is the best argument that we can afford a tax cut and still provide the services people expect and deserve," Marini said. "If the 80's taught us anything, it is that nothing will last forever. This budget reminds of our so called Massachusetts miracle and obviously the Democrats are looking for another one."


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