The Boston Globe
Published on:
Thursday, October 4, 2001
Letters to the Editor
Fooling with the tax rollback
again
"BY FREEZING the tax cut until some certainty returns, we
would simply be deciding not to cut taxes again, not raising taxes," Globe business columnist Steve Bailey deceptively
asserted ("Freeze the tax cut," Oct. 3).
It's absurd to again have to make this winning argument, but
the income tax increase of 1989 was promised as only "temporary" -- needed just to get the state through its fiscal
crisis of that time. Since then, state spending has doubled, a "rainy day" fund of over $2 billion has been squirreled away,
and the promise was broken -- until voters finally kept it themselves with a resounding 59-41 percent vote.
The tax rollback is being phased in over three years -- a
far more generous approach than when the increase was abruptly imposed. This provides legislators with an opportunity to plan
ahead for a gradual adjustment in the tax rate back to its 1989 level.
Even more absurd is that taxpayers could possibly believe a
freeze would last only "until some certainty returns." We've been there, done exactly that in 1989, and were betrayed for
over a decade. The Legislature squandered any such credibility long ago. We taxpayers today recognize only too well, "Fool
me once, shame on you; fool me twice shame on me."
CHIP FORD
Citizens for Limited Taxation
Peabody
Timing may not be everything, but boy does it help.
Take Jane Swift, for instance. Last night the governor was
all over television trying to show she is on top of a fragile situation here in Massachusetts, both at the airport, where
terrorists hijacked two planes with disastrous results, and at the State House, where the fiscal situation
is deteriorating by the day.
Meanwhile, her predecessor, Paul Cellucci, was comfy in
Ottawa, far from the Massport director he appointed and the tax cut he fathered. Cellucci's big decision last night: Will it be
Ben Stiller in "Zoolander" or Michael Douglas in "Don't Say a Word"?
The choices Cellucci left Swift are not nearly so appealing.
There is still much we don't know about what went wrong at Logan, but on the economy and the state's fiscal position two
things are perfectly clear: It is getting worse and worse in a hurry.
My advice to the governor: Swallow hard and freeze Cellucci's incredibly ill-timed tax cut.
We have heard it said over and over since Sept. 11, but when
it comes to the economy the world really has changed. The debate about whether we are in a recession or not is over.
The only questions are how long and how deep? Federal Reserve chairman Alan Greenspan
has recognized just how extraordinary these times are by cutting short-term rates a full
percentage point in two weeks.
Rather than picking around the edges, Swift should act just
as decisively by delaying the tax cut voters gave themselves a year ago when the world was a very different place.
After a decade of big revenue and spending increases, the
Massachusetts Taxpayers Foundation is warning that the state faces a shortfall of as much as $1 billion compared to
what is budgeted in the House and the Senate. Last week the state reported that revenues
for September were down a startling $228 million, or 13 percent, compared to a year ago --
putting the finishing touches on the state's worst quarter since 1990.
"September confirmed all our worst fears," says House Speaker Thomas Finneran, who has seen this picture show
before.
On Beacon Hill the talk is all about budget cuts, spending
the $580 million surplus from last year and how much of the $1.7 billion rainy day fund to use. "It will not be pretty,"
says Senate President Thomas Birmingham.
And also not necessary. A year ago we could have had a
reasonable argument about whether cutting the income tax rates was a good idea or bad, and the voters thought it was a
good idea. Today, like the questions of whether we were headed for recession, that
argument is over. The Cellucci tax cut was an incredibly bad idea.
Putting the tax cut on hold would mean about $450 million
for the state each of the next two years. There is plenty of precedent for delaying the tax cut: Dozens of changes have been
made in Proposition 2 1/2 since it was passed; when voters ended rent control in Boston,
Cambridge and Brookline, the Legislature amended the law to give the elderly and others
more time.
Both Birmingham and Finneran say that in recent days they
have raised delaying the tax cut with Swift, but she told them she would veto any such move. Both judge it politically
undoable. Swift's secretary of administration and finance, Stephen Crosby, says raising taxes
now would be just the wrong thing now.
Crosby has been one of Swift's biggest assets, but he's
wrong across the board here. By freezing the tax cut until some certainty returns, we would simply be deciding not to cut taxes
again, not raising taxes. More important is the effect on the economy vs. the effect on the
state budget: Delaying a $450-million tax cut will not produce a blip in a state economy
approaching $300 billion. On the other hand, $450 million represents one damaging hole in
the state's budget.
