The Fall River Herald News
Wednesday, March 13, 2002
Anti-tax group says Lambert is deceitful
in push for tax hike
By Michael W. Freeman
Herald News Staff
Raising the volume in the already heated debate over the
future of the income tax, an anti-tax group is accusing Mayor Edward M. Lambert Jr. of being deceitful in his push to raise
the tax rate.
As president of the Massachusetts Mayors Association,
Lambert has called for raising the income tax from 5.3 percent to 5.95 percent, what it was before voters approved a
referendum in November 2000 cutting the rate to 5 percent over three years.
Lambert's call has come under sharp criticism from Citizens
For Limited Taxation, which accused the mayors of being self-serving.
Chip Ford, CLT's director of operations, noted that
lawmakers in 1989 imposed a surcharge on the income tax, raising it to 5.95 percent, but never repealed it, even though
it was initially called a temporary tax hike.
"Despite annual billion-dollar revenue surpluses though the
1990s, never were we able to convince the Legislature to keep its word and roll back its 'temporary' increase," Ford said.
"Lambert and the mayors were Beacon Hill's willing accomplices in this deceit, as more local
aid swelled their coffers and created huge municipal surpluses on top of state surpluses."
He added, "They became active participants in opposing
Question 4, they lost, but they refuse to accept the democratic outcome."
Lambert dismissed this criticism, saying the group is making
personal attacks in a desperate attempt to get attention.
"Citizens For Limited Taxation has based their existence on
that approach, so I'm not bothered by it," Lambert said. "Usually they can only get attention for their ideas by making
it personal. I believe in the position the Mayors Association took. I think we as a group won't
hesitate to say what we believe is the right thing, despite these attacks."
There's a lot at stake for all of the Bay State's mayors.
The state is facing a budget shortfall that could reach $3 billion, forcing the need for deep spending cut. Lawmakers have
already warned mayors that they're looking at a 10 percent cut in local aid, for the first time in a
decade.
Hoping to stave off that prospect, Lambert and the other
members of the Mayors Association voted to endorse raising the income tax back up to 5.95 percent, at least
temporarily, to deal with the budget crisis. Lambert has argued that Massachusetts voters
would feel the impact of budget cuts far more painfully than a modest rise in the income tax.
"The mayors have not suggested a return to 5.95 (percent) as
a way to stimulate the economy," he said. "This is clearly just an opportunity to try to deal with what will be a very
significant budget gap, which we know will last this year and maybe into next year. We don't
see it as something that will choke off the economy, but it will head off very severe budget
cuts."
While acknowledging that Massachusetts voters approved the
referendum by a 2-to-1 margin, Lambert said residents were not fully aware of how the tax cut would impact
services back in 2000.
"It makes sense not to devastate programs for two years
until the rollback can be fully implemented," he said. "The approach we're taking is not one where we're trying to be
insensitive to the economy."
CLT has jumped on comments like that, to suggest any income
tax hike would be made permanent.
"A 'freeze' or 'delay' of the tax rollback ... a 'not
permanent' increase of the tax, rolling it back 'eventually' ... all are synonymous with 'temporary,' "Ford said, calling it
"political doublespeak."
"Fool us once, shame on you; fool us twice, shame on us," he
said.
Ford specifically noted Lambert's pledge that the full
income tax rollback could eventually be implemented, and added, "How stupid does he think his constituents are? It took
taxpayers 11 years, two signature drives and an expensive ballot campaign against hundreds of special
interests to finally make the 1989 'temporary' income tax hike promise truly
temporary, and we're still not even back to 5 percent."
Lambert said if CLT wants to lobby legislators against the
tax hike, fine.
"They're certainly allowed to lobby. I have no problem with
their participation in the tax debate," he said. "Where I have a problem is with their use of words like deceit and
dishonesty. That's where CLT lose their credibility."
Lambert predicted that without the income tax hike, budget
cuts "are going to be absolutely devastating. You have to use reason. Question 4 can be implemented, but not right now."
Lambert endorsed the idea of tax "triggers," which automatically go into effect as the
economy rises or falls.
"When certain economic indicators are met, the tax rate
would go down automatically, and not require additional action by the Legislature," he said. "I think, unfortunately, that CLT
has this constant knee-jerk reaction to any revenue-enhancing proposal. If they had their way,
we would have no government whatsoever, and that's ridiculous."
Area lawmakers had a mixed reaction to the idea of raising
the income tax back up to 5.95 percent.
State Rep. David B. Sullivan, D-Fall River, said he would be
willing to support it.
"I was opposed to Question 4 to begin with," he said. "Since
1990, we're earmarked over 40 tax cuts, so I think that the prudent thing at this time would be to go back and revise the
tax income. I want to do whatever we can do to restore services to those who are most
vulnerable, and maintain that safety net for people, so I would not be opposed to bringing the
income tax back up."
But state Rep. Philip Travis, D-Rehoboth, criticized the
idea, saying "5.95 would be totally out of the question. It would be such an insult to taxpayers that it's not funny."
Travis said the premise that the Mayor's Association is
using "is too self-serving. They're not even looking out for anybody else but their communities, and I understand that. But
that won't help. They're not doing what the voters wanted us to do. I'm not a CLT champion, but
I am a champion of people's rights."
Return to top
State House News Service
Tuesday, March 12, 2002
Hundreds call for cap gains tax restoration;
businesses urge caution
By Michael C. Levenson
STATE HOUSE, BOSTON, MARCH 12, 2002 ... For Joanne
Lindler, Tuesday's debate about taxes came down to textbooks.
"We have a shortage of books in the brand new Lynn Classical
High School," said Lindler, 45, a retired mail carrier from Lynn. "My daughter can't take home books and study because
there's not enough for everybody. I think that's a sin."
About 200 activists, Lindler among them, packed a hearing
Tuesday to demand higher taxes, particularly the restoration of capital gains taxes in Massachusetts, to help prevent deep
budget cuts to education, health care and housing. Business groups warned that too many
new taxes could scare away investors and drag down economic recovery. And they too are
turning up the rhetoric.
But at least one key lawmaker seemed to warm to the idea of
raising the capital gains tax, which taxes earnings from the sale of investments. Rep. Paul Casey (D-Winchester),
chairman of the special House committee investigating ways to close a projected $500
million budget deficit, said capital gains taxes "seem to target a certain segment of the
population that one could objectively say should be targeted."
Business groups said lower taxes, including capital gains
taxes, have helped make Massachusetts an attractive place to do business. Raising taxes now, on the cusp of an
economic recovery, could hamper the state's growth, said Rick Lord, president of the
Associated Industries of Massachusetts.
"To change the capital gains tax, that sends a certain
message," Lord told the House panel, "and I think you need to consider that."
Lindler and other activists, many of them affiliated with
local unions and senior groups, said raising the capital gains tax was about fairness. "I want it taxed at the 5.3 percent
that I am being taxed on my retirement and that my husband is taxed on his weekly paycheck," Lindler
said.
The capital gains tax affects the sale of investments such
as stocks and commercial property. Investments held for six years and then sold are not taxed at all. Investments held for
five years are taxed 1 percent, four years at 2 percent and so on. Investments sold after less than
one year are taxed at 12 percent. The 1994 law aimed to encourage investors to hold onto
their investments for longer, benefiting start-up companies and other young businesses. The
law passed as part of a deal to raise legislators' pay.
But the state's budget gap, which House leaders predict will
reach $2 billion by July 2003, has pumped up calls to raise taxes, and the capital gains tax is emerging as a popular
target. Activists say the capital gains tax law benefits mostly the wealthy. The top 1 percent of
taxpayers, who make over $1 million a year, reap 76 percent of the benefit by holding on to
investments for over six years to avoid the tax, according to the Tax Equity Alliance of
Massachusetts, a liberal group. The group is pushing a flat capital gains tax of 5.3 percent,
the same as the income tax.
That tax hike could bring in $266 million next fiscal year,
not enough to close the yawning deficit, but enough to lessen cuts to schools, health care, housing, roads and bridges, says
James St. George, TEAM's executive director. "We need the money and it's fair," St.
George said. "We're asking investors to pay the same amount you pay on your income."
Acting Gov. Jane Swift continued her campaign to block tax
increases during a stop Tuesday at Sweetheart Cup Inc. in North Andover. "Despite the 42 tax cuts that we have enacted in
the past 12 years, Massachusetts is still an expensive place to live and do business," Swift
said. "I am committed to making sure that the first place the Legislature turns when it can't
balance its books is not your pockets." Swift has pledged to veto tax hikes and plug the
budget gap by slowing payments to the state pension fund and trimming Lottery prizes. She
plans to offer a multi-year budget-balancing plan later this week.
The capital gains tax hike is being positioned as an issue
of fairness as much as fiscal necessity. Activists are using the motto 'tax capital gains the same as wages,' to point out
the differences with the income tax. After Phil Mamber, head of the Massachusetts Senior
Action Council told legislators squarely, "Put the burden on those who can afford it, not on
those who can't," the crowd applauded.
Other ideas for raising revenue include tying the income tax
cut passed by the voters in 2000 to economic triggers. The idea is gaining support among some business-affiliated groups,
including the Massachusetts Taxpayers Foundation, an original proponent of the idea, and
the Massachusetts Business Roundtable.
Rep. Daniel Bosley (D-North Adams), House chairman of the
Government Regulations Committee, which oversees gambling and gaming issues, criticized another
revenue-generating idea, casinos. Bosley urged lawmakers to avoid the "siren song" of
casino gambling, arguing the changes casinos bring to a community should be weighed apart from
pressures to solve a budget crisis. When legalized in a state, casinos tend to
multiply as lawmakers seek to "feed the need" for revenue, Bosley said. "It grows and it grows and it
grows," he warned.
The special House committee is set to make recommendations
on taxes, fees, casinos and other revenue-generating ideas to the House Ways and Committee by the end of the month.
Return to top
Associated Press
Wednesday, March 13, 2002
Proposed tax hikes spare corporations
By Steve LeBlanc
BOSTON -- A budget plan floated by House Speaker Thomas
Finneran would hike taxes for seniors, students and single parents, but spare defense contractors, mutual fund
companies and corporate researchers.
The plan envisions lawmakers approving as many as 16 tax
hikes to close a worsening state spending gap.
Some of the hikes, like an extra dollar on a pack of
cigarettes, are new. Others would repeal tax cuts signed into law during the past decade.
Renters, students and people caring for disabled and elderly
relatives are among those who would be paying more under the plan.
Many of those hikes would do little to fill what Finneran
has predicted could be a $3 billion budget gap over the next 18 months. A tuition deduction repeal would bring in $25 million.
Abolishing an exemption for single parents would raise just $15 million.
Vastly more lucrative corporate tax cuts, which will cost
the state hundreds of millions of dollars each year, didn't even make the list, including a $130 million break for mutual
funds companies, a $61 million cut for defense contractors and a $313 million repeal of taxes on
service industries.
Keith Lane, 69, a retired machine tool supervisor from
Northboro, criticized Finneran's proposal to kill a $30 million tax cut designed to help older homeowners pay soaring
property tax bills. Lane said some of his neighbors have had to sell their homes.
"All these cuts he's talking about hurt the low income
people instead of getting more money from the people making the most money," Lane said.
Finneran spokesman Charles Rasmussen declined to comment
Tuesday.
Business leaders praised House leaders, saying lower
corporate taxes helped pull the state out of the recession of the early 1990s.
Repealing those tax cuts could slow the state's recovery
from the latest slump, said Richard Lord, president of Associated Industries of Massachusetts.
Tax cuts like a 1997 break for mutual fund companies helped
the state keep jobs and shed its "Taxachusetts" moniker, Lord said.
"It's important to create a business climate where the
mutual fund industry could thrive," Lord said.
Critics said the break was a giveaway to a politically
powerful industry.
The mutual fund break, which will cost the state about $130
million in the next fiscal year, is one of a half-dozen corporate tax cuts left untouched so far by House leaders.
Others include:
-
A 1991 sales tax on services that was repealed only days
after it took effect, although some services, like telecommunications and energy, remained taxed. Annual cost to
state: About $313 million.
The corporate tax cuts, if repealed, could bring in more
than $600 million annually.
The 16 tax hikes proposed by Finneran and House Ways and
Means Chairman John Rogers, D-Norwood, would generate nearly $2 billion.
In a letter outlining the hikes last month, Rogers said he
is not endorsing any particular increase, but said lawmakers should be prepared to vote on tax hikes.
"The brutal truth is this: We cannot tax and spend. We must
tax and cut," he said.
Acting Gov. Jane Swift has vowed to veto any tax hike. A
Swift spokesman chided House leaders for trying to balance the budget on the backs of individuals.
Finneran's tax package would cost a family of four with two
young children and a $70,000 annual income about $960 a year said Swift Chief of Staff Stephen Crosby.
"If there's one thing we don't want to be doing is taxing
low-income seniors for another $400 a year," he said.
*
* *
Here are 16 tax hikes House Speaker Thomas Finneran, D-Boston,
is asking lawmakers to consider to help close the state's spending gap. Finneran has not asked lawmakers to repeal
corporate tax cuts:
SOURCE: House Ways and Means Committee
Return to top
The Boston Globe
Wednesday, March 13, 2002
Swift to unveil budget strategy
Plan eyes tobacco and reserve funds
By Stephanie Ebbert
Globe Staff
Acting Governor Jane Swift, trying to seize control of a
budget crisis and a campaign issue, will unveil a four-year budget plan tomorrow that avoids tax increases but would drain
most of the state's reserves, and may borrow against annual payments expected from the state's
settlement with tobacco companies.
Details are not final, but Swift is considering withdrawing
$2 billion of the $2.5 billion now in reserve accounts. And, despite an agreement by legislative leaders last year to spend
only half of the annual tobacco settlement payments and save the rest for future health care needs,
Swift is looking to either spend an estimated $580 million set aside in reserves,
or borrow against the future payments.
In addition, Swift would cut the budget, but her top aide
would not provide any details of the reductions.
She is also eyeing the use of reserves set aside for
laid-off workers' health insurance, and for welfare recipients. The need for those funds has declined in recent years, but is
expected to rise.
Swift is considering the moves to stave off Democratic
proposals for tax increases - a standoff that chief of staff Stephen Crosby said is defining this year's budget, and that
Swift says may define the upcoming gubernatorial campaign.
All five of Swift's Democratic rivals have said they would
raise some taxes to deal with a budget deficit now projected at $500 million this year and $2 billion next year. House
Democrats laid out a menu of 16 taxes that legislators should consider to boost revenues by
at least $1.5 billion, but Swift has said that approach is unacceptable. And Crosby said it is
unnecessary.
"If we had no other alternative than to put crippled kids on
the street without tax increases, then I bet you this governor would think about that," he said. "But we are not in that
situation."
Yesterday, as Swift spoke on the issue in North Andover,
Crosby called the state's inclination toward tax hikes "an addiction" the state controlled during 12 years of Republican
leadership. "We're now at risk of falling off the wagon," he said.
House Ways and Means Chairman John H. Rogers, a Norwood
Democrat, called the prospect of borrowing money against future tobacco settlement payments "Big Dig II," and
said tax increases are necessary, along with spending cuts and the use
of reserves. "I think the earlier we tell the truth to the taxpayers how desperate a situation Massachusetts is in, the
more understanding they will be in the long run when we have to raise taxes," Rogers said.
Crosby did not detail the spending cuts, but said that the
state could weather a 3 or 4 percent reduction, as most any business could. But Swift has appeared reluctant in recent
weeks to enact cuts. She has yet to impose many of the emergency cuts she asked her
department heads to prepare, in the event that the Legislature continued to rebuff her attempt
to save $134 million by reducing contributions to the state's pension fund. She has trimmed
the budget by $155 million under her emergency powers, while the state faces a deficit this
year of up to $500 million.
Crosby said the administration is still hoping to restructure the pension plan payments. "None
of us can believe that the House and Senate won't go along," Crosby said. "It's
such easy money."
All of the proposals would require legislative approval and
appear to face an uphill fight. House Speaker Thomas M. Finneran and Senate President Thomas F. Birmingham agreed
to use only $500 million from the rainy day fund each year.
In a statement, Birmingham said, "We need to be looking for
real long-term solutions, not the unreal quick fixes proposed by the administration."
While Swift holds the Republican line on taxes, some said
her reliance on the reserves and delay of future payments threatens her image as a fiscal conservative.
"That's a form of pushing back the obligation to future
taxpayers," said Michael Widmer, president of the Massachusetts Taxpayers Foundation.
Widmer has suggested that the state delay the $1.2 billion
income tax reduction until the economy improves.
Return to top
