CLT Update
Friday, July 6, 2001

Gov. Swift abandons tax hike plan

Today we celebrate success: The short-lived threat of a new payroll tax.

Gov. Swift has quickly taken her mandatory "disability insurance" payroll tax plan off the table and removed it from further consideration!

Thanks from us to those of you who contacted the governor's office with your opinion regarding her proposed tax increase. Your calls, faxes and e-mail messages apparently helped convince her and her staff that mandating "disability insurance" as a means to fund a "paid family leave" program would not fly as a "user fee."

Grover Norquist is executive director of Americans for Tax Reform, the Washington DC-based national taxpayer group with which CLT is affiliated. He originated the "No New Taxes" pledge in 1986. Grover -- a member of our e-mail Updates list -- contacted me yesterday by e-mail: "Chip; This certainly sounds like a violation of the pledge. I will call the Swift folks today."

Barbara was on the phone much of yesterday with the media -- most of which had entirely missed the big holiday story -- and with Swift administration people -- who no doubt wished it had remained unnoticed. The governor's staff insisted this bad idea was but one option put up for consideration; Herald reporter Ellen Silberman, who broke the story, stands by her initial report on Wednesday that it was a serious proposal [see her follow-up report, below].

Barbara and I caught her Boston Herald report early on the morning of the 4th and immediately wrote and fired off a CLT news release denouncing the plan to the media statewide, and an e-mail Update to our members. It made us late for the cookout we'd been invited to, but the result was worth our holiday interruption. "Eternal vigilance is the price of liberty" and it was, after all, Independence Day.

Once an entitlement program takes hold, it is near impossible to weed it out. It is so much easier to nip a bad idea in the bud than have to defoliate a forest once it takes root. Thank you for helping us wield the pruning shears!

And thank you Governor Swift for keeping your "No New Taxes" pledge in the end.

Chip Ford

The Boston Herald
Friday, July 5, 2001

Heat backs Swift away from family leave tax
by Ellen J. Silberman

Acting Gov. Jane M. Swift, under heavy fire from fiscal conservatives, yesterday backed away from a proposal to raise taxes to create a paid family leave program for Massachusetts workers.

"There is no intention of raising taxes to put together a program of paid maternity leave for Massachusetts workers," Swift's spokesman Jason Kauppi said. "We're looking at creative use of existing resources."

Swift, who is currently on her own fully paid $2,500-a-week "working maternity leave," has made creating a paid leave program for all working mothers a top priority.

The Herald reported Wednesday that Swift was seriously considering requiring all workers in Massachusetts to buy temporary disability insurance to be used by new mothers as well as workers who become sick or injured.

But after anti-tax activist Barbara Anderson -- who has largely been a fan of the Republican administration -- barraged the State House with faxes criticizing Swift for breaking her "No New Tax" pledge, Swift told her staff to take the mandatory insurance plan off the table, sources said.

In a conference call with senior administration officials, Swift said they "shouldn't be considering new taxes" as they looked at options.

Swift also told aides to speed the review process so that she can make a decision soon.

Among the options still on the table, according to a source in the governor's office:

  • An optional disability insurance program that would allow workers who wanted it to buy private insurance through employers with some state incentive for the businesses.

  • A tax credit for new parents that would allow them to recoup up to half their pay while they were on leave.

  • A tax credit for employers who offer paid parental leave, an idea floated earlier this week by House Speaker Thomas M. Finneran and rejected by Swift as inadequate on its own.

  • Low-interest loans for new parents that they could pay back over an extended period of time.

An administration source said the loan plan, being pushed by Administration and Finance Secretary Stephen P. Crosby, has already been rejected once by Swift but is being pushed back onto the table by staff.

The Boston Globe
Friday, July 6, 2001

Swift denies family-leave tax plan
By Ralph Ranalli
Globe Staff

Boxed in by a no-new-taxes pledge and a slowing economy, Acting Governor Jane Swift is struggling to come up with a way to fund one of the proposals to provide paid family leave for all Massachusetts workers.

Swift, who is on a working maternity leave, spent the July Fourth holiday on Cape Cod with her family. Her aides, however, spent the latter half of their holiday week in spin-control mode, denying a report published in the Boston Herald that she is considering imposing a new tax on workers and businesses to pay for the program.

"There is no intention of raising taxes to pay for a maternity leave program for employees. It is simply not an option," Swift's spokesman, Jason Kauppi, said yesterday.

Sources close to the administration said the situation illustrates just how difficult funding universal family leave will be.

"It is a complicated issue that ... does not lend itself to simple solutions," one administration source said.

If tax increases are out, antitax crusader Barbara Anderson of Citizens for Limited Taxation said yesterday, then so is any sort of state requirement that employers or employees purchase mandatory temporary disability insurance that would cover maternity and paternity leaves.

"A mandatory anything is a tax, no matter where it goes to," Anderson said.

Such a requirement, Anderson said, would also be counter-productive by imposing increased paperwork on small business owners, who in turn might be tempted to cut their workforces rather than deal with an additional headache.

During a brief public appearance yesterday at Cape Cod Community College in West Barnstable, Swift said she would not adopt any plan that would end up eliminating "the very jobs that people want to take maternity leaves from."

Instead, administration sources said the ideas receiving serious consideration include:

A maternity "student loan" program that would allow workers to borrow the money to cover a maternity or paternity leave and then pay it back over a long period of time at a low interest rate.

A parental leave "savings account" that expectant parents would pay into, with the state throwing in incentives such as making it tax-free.

A more traditional tax credit for workers who take parental leave that would allow them to recoup up to 50 percent of their lost salary.

Sources close to Swift said she has not dismissed House Speaker Thomas M. Finneran's proposal for a 20 percent tax credit to companies offering paid family leave, although she said Tuesday that she does not believe it would significantly increase the number of businesses offering leave to workers.

Swift said her staff has studied what other states are doing about family leave.

Swift also has to avoid another pitfall -- coming up with a program that is so attractive that it tempts companies currently offering family leave to drop it.

"No one ever said the job was going to be easy," one source said.

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