Massachusetts taxpayers will get a little extra spending money when they cash their
paychecks beginning this week.
That's because state income tax withholdings are reduced by
.3 percent in the second of three phases of the income tax rollback approved by voters.
To many, the difference will barely be noticeable.
A worker earning $500 a week will see an added $1.50 each week in his or her take-home
pay. A typical family of four will save less than $200 a year, tax-cut opponents have said.
"It doesn't really matter. Maybe I'll buy a scratch ticket,"
said Dennis Talbot of Brockton, who works at Isam Mitchell and Co., a building materials supplier in Brockton.
A financial professional agreed few would notice the difference.
"It's very insignificant," said John P. Kolentsas, who runs
a financial services business on Torrey Street in Brockton. "It's so insignificant, it doesn't really matter."
"It would probably get lost, if you don't get it in one lump
sum," said Harry Bryce, a retiree living in Easton who will not benefit from the rollback.
In 2000, Massachusetts voters passed a referendum to reduce
the state's income tax from 5.85 percent to 5 percent. Last year, it dropped to 5.6 percent and this year, it drops to 5.3
percent. In 2003, Massachusetts residents will be taxed at a rate of 5 percent.
Massachusetts Department of Revenue spokesperson Nicole St.
Peter said the average wage-earner does not have to worry about any added paperwork. "It really shouldn't affect
anything, except people will get a little extra money in their paycheck," she said.
However, independent contractors who make estimated quarterly payments may want to
adjust those payments, she said.
Joe Shepard and Cynthia Bermingham,, a husband and wife from
Easton who were shopping at Westgate Mall in Brockton Wednesday night, said gaining the additional .3 percent in
take-home pay is better than no gain at all.
"Anything is better than nothing," said Bermingham, an accounts payable clerk. "That could
be $20 a month, and that'll fill your gas tank."
Shepard, a heavy equipment operator, added, "They'll probably raise something else."
The income tax cut will cost the state about $400 million annually in revenues, according to
the Massachusetts Taxpayers Foundation, which championed the rollback referendum in
2000 [SIC! I've contacted -- see below -- and corrected the
reporter].
Taxpayers will also be able to take advantage of other targeted tax breaks this year,
including property tax credits for eligible senior citizens and deductions for charitable
gifts.
And this year is the final phase of the state's capital gains tax reduction, enacted in the early
1990s, costing state coffers another $75 million to $100 million.
The charitable donations deduction was passed in a separate
referendum in 2000. One study estimated the cost to the state at $180 million to $200 million this year, reflecting increased
charitable gifts since the Sept. 11 terrorist attacks.
Last year, falling tax revenues forced lawmakers to cut human services programs as part of a
$1.3 billion reduction in spending that resulted in a $22.3 billion budget for the 2002
fiscal year.
Senate President Thomas Birmingham, D-Chelsea, has said he will take a look at the
possibility of freezing the income tax rollback after the New Year, while acting Gov. Jane
Swift has vowed to fight any effort to undo the income tax reduction.
The property tax credit would be worth $385 for people 65 and older who qualify for the
program.
To qualify, the taxpayers' total income -- not adjusted gross income -- can't exceed $41,000
for single filers, $51,000 for head-of-household filers and $61,000 for joint filers.
The credit must be sought against a primary residence in Massachusetts assessed at less than
$412,000. Total property tax, including water and sewer bills, must exceed 10 percent of
total income.
The credit will increase next year, according to St. Peter.
Also, renters will see their rental deduction increase to $3,000 from $2,500, and the full
amount of interest on student loan payments can be deducted, as can adoption agency fees.
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Response to Reporter David
Connolly
The Brockton Enterprise
Dear Mr. Connolly:
In your report, "Tax cut adds dollars -- or cents -- to paychecks," you wrote: "The income
tax cut will cost the state about $400 million annually in revenues, according to the
Massachusetts Taxpayers Foundation, which championed the rollback referendum in 2000."
Excuse me, David, but you couldn't have been more wrong!
I was there -- for the four years that we at Citizens for Limited Taxation fought for the
rollback ballot question, including TWO separate petition drives (the first challenged in
court and defeated by the teachers union in 1998 after an intense and extensive challenge of our
signatures. We came back again, in 1999 -- backed by then-Gov. Cellucci -- and turned in
twice as many signatures as required, thereby precluding another teachers union/special
interests challenge.
Throughout our entire effort, we urged the Mass. Taxpayers Foundation to support our effort
-- after all, MTF continued to warn year after year of overspending by the state (the state
budget doubled in the decade of the "temporary" increase) and the only way to prevent it
from unsustainable spending and another inevitable fiscal crisis (right where we're now told
we are!) was to take the money off the table (the "stop me before I kill again" syndrome).
The best we could achieve during the 2000 ballot campaign was to have MTF agree to not
oppose us.
Let me repeat that: The best we could achieve was to have MTF agree to not oppose us.
They stayed out of the rollback campaign, utterly.
For more information (in real time, as it was happening over
the years), please feel free to visit our website at:
http://cltg.org
I suggest that in the name of accuracy you pay particular attention to the following links:
http://cltg.org/promise/Files/first_try.htm
http://cltg.org/promise/prom_index.htm
Thanks for the hopeful correction. We sure put in one hell of a lot of time, work, and funds
for you to hand credit for our final success to a neutral, uninvolved party that sat out
the entire effort -- the so-called Massachusetts Taxpayers Foundation.
Chip Ford
Director of Operations
Citizens for Limited Taxation
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