The following memo is being hand-delivered this morning to
every member of the House by CLT Associate Director Chip Faulkner, prior to the opening of the House budget debate this
afternoon.
- CLT MEMO -
To: Members of the Massachusetts House
April 30, 2001
Re: House Budget and new tax revenues
Just in case the subject of new taxes comes up during the
budget debate:
The Massachusetts tax burden, per capita, is still the 5th
highest in the nation, and will remain high even after the income tax rollback is fully phased in.
But if that's not enough -- and for some people it is never
enough -- then there is an easy and ideal way to get more revenue.
Instead of raising the capital gains tax and jeopardizing
our economy, or raising the cigarette tax again, or creating a new tax on Joe Six-Pack, simply pass CLT's Senate Bill 1734 or
Rep. Fran Marini's House Bill 2093. Senate Bill 1734 will:
1. Provide a check-off on all state personal income tax
forms for electing an additional voluntary tax;
2. Create a new table in the Department of Revenue's Schedules and Instructions booklet
that provides the difference between the decreasing income tax rate (on Part A and B
income) and what it would have been had Question 4, the income tax rollback, not been
approved by 59 percent of voters -- the voluntary tax;
3. Require the Department of Revenue to annually report the
additional revenue derived from the voluntary tax check-off and the number of taxpayers electing to
participate.
House Bill 2093 is similar, letting voters choose to pay a
5.85 percent rate.
Instead of targeted tax cuts, these bills give targeted tax
hikes -- and the voluntary target is taxpayers who want to pay more. They are for choice, and against coercion. They answer
the question: "Can't we all just get along?" by letting everyone be a winner of last fall's
Question 4 tax rollback campaign.
The income tax rollback allows taxpayers to take their tax
cut and spend it on their own priorities, including, if they want to share, the charity of their choice. S1734 or H2093
allow some taxpayers to instead choose to continue to pay a higher rate and let the Legislature
decide where the money should go.
We hope all legislators and taxpayers who want higher taxes
will choose to pay them, instead of raising taxes on capital gains, cigarettes, beer and wine, or anything else.
The Boston Globe
Sunday, April 29, 2001
At the State House, taxes back on agenda
By Rick Klein
Globe Staff
Suddenly, on Beacon Hill, they're talking taxes.
A group of House Democrats wants to increase the capital
gains tax. A Democratic senator wants to halt a rollback of the state income tax. The Senate's Tax Committee chief wants a
new tax on liquor. And lawmakers in both houses are seriously discussing a 50-cent increase
in the cigarette tax.
At the end of a decade in which the state enacted 41 tax
cuts, totaling $4.5 billion, a slowdown in the economy has generated a flurry of taxation proposals.
In the state tagged "Taxachusetts," it appears the antitax
resistance that hardened during the 1990s is crumbling.
"We are finally capable of having a discussion of the total
state and local tax burden," said Representative J. James Marzilli Jr., an Arlington Democrat. "There's a greater
willingness to examine some issues that during the 1990s were considered the third rail of politics."
Some of the proposals appear to have little chance of
passage. Others, especially the cigarette tax increase, have powerful backers in the Legislature. That tax would give
Massachusetts one of the highest tobacco taxes in the nation, at $1.26 per pack.
Representative Paul C. Casey, a Winchester Democrat and the
chairman of the House Taxation Committee, spoke of an "undeniable" appetite for limited new taxes in the
Legislature. The public, Casey said, is willing to support targeted tax increases, provided that
they are directed at important programs. The cigarette tax would raise $150 million to help
pay health care costs, according to the tax's advocates.
"There's become a more developed rationale on the part of
the electorate," Casey said. "Certain reps have picked up on that overall predisposition."
The Swift administration says lawmakers are overreacting to
a sputtering in the economy, and giving in to the easy temptation of new taxes.
"Taxing is something that you do only in the face of an
overwhelming compelling public need," said Stephen P. Crosby, administration and finance secretary for Acting Governor
Jane M. Swift. "We have enough money to increase the state budget by more than a billion
dollars. That ought to be enough."
After taking over as acting governor this month, Swift
almost immediately took a "No New Taxes" pledge. Her predecessors, the Republicans Paul Cellucci and William F.
Weld, had taken similar vows. Swift may have more occasion to put hers into practice.
Michael Widmer, president of the Massachusetts Taxpayers
Foundation, said lawmakers are struggling to adjust to a reality: the loss of more than $1 billion in revenue, forced by
the income tax rollback, which passed by ballot initiative last year. The income tax rate will drop
to 5 percent by 2003.
"They're looking for additional revenues for programs
because of the tax cut," Widmer said. "I don't think it makes any sense at all, on several levels."
Widmer and business groups especially oppose the capital
gains change pushed by Marzilli and 18 other House Democrats. It would restore the tax on long-term capital gains to
roughly the rate paid on other income. It would generate $400 million annually for the state,
Marzilli said.
Casey, though undecided himself, said that the measure could
be attractive to the Legislature this term, and that the revenue could help fund expansions in education and health
care. Marzilli agreed.
"If you want to expand services on a widespread basis, then
you have to expand revenues," Marzilli said. "We should be as flexible in our attitudes toward taxing as we should be toward
spending."
The long-term capital gains tax was phased out starting in
1996, and there is now no tax for assets held for at least six years. Advocates say that bringing tax back to 5 percent would
generally affect only the richest residents.
But business interests and the Swift administration are
opposing the measure. New taxes of this type could scare away businesses, perhaps undoing the work of a decade in which
Massachusetts has become more competitive, said Christopher Anderson, president of the
Massachusetts High Technology Council.
"We have made progress, and we still have a long way to go,"
Anderson said. "The proposals that are on the table would bring us immediately back to the problems we had in
the '80s and undermine the very measures we have put in place to give us
advantages over other states in attracting employers."
Casey disputed that argument. Even though most lawmakers
weren't in office for the Dukakis years, they have learned lessons from the late 1980s fiscal crunch, he said. Even now,
while talk of new taxes has returned, nobody is going as far as the Legislature did a decade ago,
when it enacted across-the-board income tax increases.
The number of tax cuts filed this term, Casey said, is in
the hundreds, while just a handful of proposals would increase taxes.
Even Marzilli, the chief backer of the capital-gains tax
increase, is simultaneously supporting a tax cut -- an increase in the earned-income tax credit, which reduces the taxes paid
by poor residents.
"I don't see a scheme where people have to look over their
shoulders and say, 'Oh no, it's going to be Taxachusetts again,"' Casey said. "Will we have a repeat of history by
increasing a tax on alcohol or cigarettes? I doubt it. There's a rationale involved here."
