The Boston Herald
Friday, May 3, 2002
Finneran, House pass $1B in tax hikes
by Elisabeth J. Beardsley and David R. Guarino
House lawmakers yesterday hit up the average taxpayer for at
least an extra $317 per year, under a $1 billion tax-hike package that drew an instant veto promise from acting Gov. Jane
M. Swift.
But the veto is largely an empty threat, given that the
131-24 vote far exceeds the two-thirds majority needed to override.
House leaders were jubilant after spending weeks pushing and
cajoling rank-and-file members and threatening massive spending cuts to highly prized programs.
"It's an astounding vote, an astounding vote," said House
Speaker Thomas M. Finneran, adding he feels an "awful lot of pride" in lawmakers.
The first tax hikes in a decade come as lawmakers struggle
with a $2 billion deficit. Finneran said the new money would be used to restore huge cuts to schools, mental health and
retardation services.
Finneran warned that at least $1 billion would still be
slashed from programs, and urged lawmakers not to pile more spending onto the state ledger when the full budget debate
begins next Wednesday.
Finneran rammed the $1 billion tax-hike package through
after a four-hour debate - despite claiming a day earlier that he would neither offer an official package nor support $1
billion in new taxes.
The leadership-endorsed package contains five tax hikes,
which whack virtually every type of taxpayer - from middle-class citizens and business leaders, to philanthropists
and smokers.
The package:
-
Taxes capital gains at the same rate as income, eliminating
the existing tax phase-out system. This proposal raises $240 million for the state. Approximately 800,000 Bay State
residents hold capital gains, with two-thirds making less than $100,000 per year.
-
Scales back the personal exemption from $4,400 to $3,300 for
single filers. This raises $258 million for the state and costs the average family of four $262 a year. The proposal
also contains economic triggers to eventually restore the tax break.
Immediately after approving the package, House members
applauded and cheered. A few moments later, Democrats loudly booed a Republican whose late-entered "no" vote was
announced over the loudspeakers.
House leaders expressed pride in hitting virtually every
class of taxpayers, an approach they described as "fair and equitable."
"We do target all groups across the board," said House
Taxation Committee Chairman Paul Casey (D-Winchester). "It's a universal approach."
Swift quickly promised a veto, though the House vote showed
a two-thirds override vote could be easily mustered.
She chided lawmakers for refusing to consider non-tax
alternatives, like her proposal to cut payments to Lottery winners and use more state reserves.
"I have no intention of signing a huge tax increase
resulting from a debate that did not explore several viable revenue options such as reducing our highest-in-the-nation
lottery payout and using more reserves and tobacco fund money," Swift said in a statement.
Swift said the House's income tax freeze would block the
state from reaching the 5 percent income tax rate until at least 2009.
Senior administration sources signaled to lawmakers that
while Swift is willing to agree to tax hikes, she won't tolerate the "evisceration" of voter-approved ballot
initiatives.
"Everything about this is wrong," a senior Swift adviser
said.
Leaders in the Senate also hurried to undercut the House
plan, saying the House picked the wrong priorities.
Senate Ways and Means Chairman Mark Montigny (D-New Bedford)
said the Senate would frown on slashing taxpayers' personal exemptions, which Senate President Thomas F.
Birmingham trumpets on the campaign trail.
"The more optimistic among us would probably call it a lead
balloon, while the more pessimistic, like myself, would say it would be dead on arrival," Montigny said.
During the four-hour debate, even the phraseology echoed the
tense sentiment, with Democrats repeatedly referring to "revenue enhancements," while Republicans railed against
"tax hikes."
Democrats said they wished they could do more to save
programs or hit only the wealthy with tax hikes, and downplayed the breadth of the increases.
"It won't make things better, it's no panacea," said state
Rep. Carol Donovan (D-Woburn). "It's simply a modest stop-gap measure ... an investment in our children and in our state's
future."
House Republicans staged a vigorous - albeit futile -
resistance after their proposal to raise huge sums of money through casinos and other gambling was ruled out of order.
"People will give us voluntarily their money, but we'd
rather take it through taxation," said House Minority Leader Francis L. Marini (R-Hanson). "I don't get it."
Behind the scenes, Finneran continued to orchestrate the
tax-hike campaign yesterday - issuing naked threats to lawmakers at a private caucus prior to debate.
"Finneran told us three times - three times - 'I expect
every Democratic vote,'" one source said.
Despite the arm-twisting, seven Democrats bucked leadership
by voting against the bill - including several of Finneran's chairmen.
Rep. James R. Miceli (D-Wilmington), chairman of the House
Personnel and Administration Committee, said there's no way he would be willing to face his working-class constituents
with the new taxes.
"I just thought the size of this was exorbitant," Miceli
said. "I'm just not ready to bite into a tax package of this magnitude."
After the main debate, lawmakers dove into a pile of
amendments to hike other taxes - prompting protest from the just-defeated GOP.
"Welcome to Taxachusetts!" Rep. Michael J. Coppola (R-Foxboro) shouted from the
podium. "My question is: Where's it going to end?"
But Finneran's leadership bungled several votes. At one
point, Majority Whip Lida Harkins (D-Needham) fast-gaveled an amendment to double the cigar tax, announcing it had been
adopted on a "voice vote."
Moments later, Republicans demanded a roll call, and the
cigar tax hike was resoundingly rejected on a 96-59 vote.
Karen E. Crummy contributed to this report.
The Commonwealth of Massachusetts
Executive Department
Thursday, May 3, 2002
Contact: James Borghesani, (617)727-2759
Swift vows veto of House tax package
Governor Jane Swift today said she will veto the
$1.4 billion tax package proposed by the House if it should reach her desk unaltered.
"I have no intention of signing a huge tax increase
resulting from a debate that did not explore several viable revenue options such as a reducing our highest-in-the-nation
lottery payout and using more reserves and tobacco fund money," Swift said.
Swift said the House package would raise taxes on an average
family of four with a $70,000 annual income by $317 a year. If there is a smoker in the household, the increase would be
$592.
Swift said the tax package works out to $218 for every man,
woman and child in the state.
Swift said the tax freeze structured by the House would
prohibit the state from reaching a 5 percent tax rate until at least 2009, and, if real baseline growth is 2.4 percent or less
every year, would keep the 5.3 tax rate indefinitely.
"I have said all along that I will work to keep taxes low in
Massachusetts. "The best chance we have of addressing our fiscal problems while protecting the economy and our taxpayers'
wallets is to explore all of our options, not just out tax-raising options," Swift said.
###
The Boston Herald
Friday, May 3, 2002
Tommy Taxes just mugged the working class
by Howie Carr
They cut your pay yesterday. The hacks jacked up your taxes
by a billion-plus dollars yesterday.
If you smoke a pack a day, they're whacking you for 75
cents. If you make $50,000, they're stealing next January's $150 tax cut you voted yourself. Your personal exemption got
cut to the tune of $258 million statewide. No more deductions for charitable donations. And if you
realized a capital gain they're ... but why rehash the gory details?
The bottom line, if you work you got screwed. The working
classes got mugged yesterday by the non-working classes.
Usually this time of year, the House members like to get a
snootful and start chanting "Toga! Toga! Toga!"
Yesterday the more appropriate chant was: "Hit 'em again,
hit 'em again, harder, harder!"
It was the taxpayers that got hit, and most of 'em probably
still don't know it. The arrest of Father Paul Shanley reduced the biggest tax hike in years, if not history, to a mere
voiceover in the B hole.
You've heard of bread and circuses? Shanley was the circus
while they relieved you of your bread.
Robbing taxpayers makes for a long day. That's why the
session started at 10 a.m., three hours before the TV coverage kicked in. The feeding frenzy preceded the live feed by three
hours.
Which was quite a break for the House speaker, Tommy Taxes.
He likes to talk about how raising taxes takes "courage." Yeah, that's why they waited until the day after the filing
deadline for legislative candidates.
Tommy Taxes' ego is totally out of control, and the way you
know it is that last night he was referring to himself in the third person. He said he's a "conservative fellow - prudent and
cautious."
Good Lord, think of how bad he'd have hit us if he were an
imprudent liberal.
And the rank-and-file solons - what a sad collection of
people, or should I say sheeple. Ex-cons and ex-priests, wife beaters and per-diem cheaters and bag-lady stalkers.
They were "troubled" by the tax hikes. But there's a
shortfall - $2 billion, $3 billion, the number depends on how bad you want to scare the old folks. Rep. Frank Israel Smizik
of Brookline said "My personal goal was to meet the needs of those who rely on government
service."
Why don't you get a real job then? Or make a donation to
charity?
One after another, the solons said the state can't "afford"
a tax cut. Did anyone ask you if you can "afford" a tax hike? Rep. Peter Larkin, he of the phony per-diems, compared the hit
to taking a family of four to a Red Sox game.
The only difference being, it's your choice if you want to
spend $245 on a trip to Fenway Park.
Using Larkin's reasoning, I look at the cigarette tax
increase this way. At $270 a year, it's three phony $90 per-diems from Larkin's hometown of Pittsfield. It's a
gimme, like capital gains.
"What a country," Larkin said, "that you can enjoy a gain."
What a state, that you can get $90 for coming into Boston
when you never left Pittsfield.
Of course, now we will have hacks on the border, making sure
you're not trying to sneak low-tax cigarettes and untaxed appliances back into the Commonwealth. Is this a state, or is
it a prison?
Have any of these sheeple in the Legislature been paying
attention to the Prop 2½ override votes this spring? The override went down bigtime in Stoughton.
In Newton, the hometown of the condescending Ruth Balzer and
Kay Khan, the override only passed by about 800 out of 28,000 votes cast. Without a dirty-trick anti-Jewish leaflet
that falsely tarred the pro-taxpayer group, the override would have gone down in even the
Garden City.
And they keep talking about these alleged tax cuts. So, as
Rep. George Peterson said, if tax collections in 1980 were $8 billion and they were $14 billion last year, where exactly is
the "cut?"
Meanwhile, life goes on. Speaker Tommy Taxes plans to speak
at a fund-raiser May 19 for Rep. Jailbird George Rogers. He needs to get some money to replace those 450 gay porn
videos the New Bedford cops took off him a few months back.
You got a paycut yesterday, while an ex-con politician
replenishes his campaign chest with help from the most powerful man in Massachusetts, Tommy Taxes.
Where do I sign Carla Howell's abolish-the-income-tax
referendum petition?
The Boston Herald
Friday, May 3, 2002
A Boston Herald editorial
Timing everything in tax hike debate
The Massachusetts House is working overtime this week to
produce one of the largest tax hikes in state history - one that threatens to devastate the economy just when the end of
the recession appears near.
Now members of the legislative leadership had fiddled over
the issue of taxes for weeks. Speaker Tom Finneran, long accused of running his House with an iron hand, insisted he was
a born-again small-d-democrat. This decision was the product of long hours spent caucusing
and polling. Whatever The Members wanted, The Members would get.
What went largely unspoken, however, was that Finneran had
already arranged to help cover their sorry backsides. No vote to hike taxes would take place until after the filing
deadline for candidates for House and Senate seats.
So for taxpayers who woke up this morning feeling used,
abused and more than $1 billion lighter in the wallet, well, what you see - that tax-loving rep from your district - may
well be what you get when you walk into the polling booth come November. Those tempted to run
against the scoundrel who just robbed them of a larger slice of their paychecks will be
virtually precluded from doing so. (Oh, there's the old sticker route, but that takes an
incredible amount of skill and organization not often found in novice campaigns.)
The Republican Party will be fielding candidates in only 70
of the 160 House races and 18 of 40 Senate races. A handful of Libertarian candidates could make it onto the ballot and there
could be a sprinkling of Democratic primary contests (the final tally won't be known until
signatures are certified by city and town clerks).
But the bottom line is that the kind of taxpayer-be-damned
arrogance we're seeing at the State House this week is a product of a perpetual incumbency. The speaker did everything
in his power to protect his membership from being burned at the ballot box and they in turn did
his bidding.
The MetroWest Daily News
Friday, May 3, 2002
House hikes rates, freezes tax rollback
By Michael Kunzelman
BOSTON - An average family of four would pay nearly $200 in
extra state taxes next year under a plan that House lawmakers overwhelmingly approved yesterday, according to
Department of Revenue estimates.
The proposed tax package, which includes freezing the income
tax and raising the cigarette tax by 75 cents, would generate about $1 billion in new state revenue.
The plan, which now heads to the Senate, is designed to
stave off deep cuts in state funding for local schools and human services, including programs for the mentally ill and
mentally retarded.
Even with the tax hikes, however, the House still plans to
cut more than $1 billion from the state's budget.
"I don't relish raising taxes," said state Rep. David
Linsky, a Natick Democrat who co-sponsored the tax package, "but I was absolutely convinced that this had to be done."
House leaders billed the tax plan as a compromise between
conservative and liberal Democrats, who wanted to raise as little as $500 million or as much as $1.5 billion in new
taxes.
The House passed the measure by a vote of 131 to 24.
MetroWest legislators voted along party lines, with
Democrats supporting the plan and Republicans voting against it.
"I think we made a major step in the right direction to
closing the budget gap," said state Rep. Deborah Blumer, D-Framingham. "Yes, it costs us money in the short term, but I
think it costs us more in the long term if we don't continue the services we've committed to."
State Rep. Susan Pope, R-Wayland, blasted her Democratic
counterparts for forcing her to vote for a package of tax hikes rather than debating them individually.
"It's so frustrating," she said. "To have them all lumped in
together, I think the Democrats should be ashamed of themselves for what they've done." ...
Under the plan, a family of four with a combined income of
$70,000 would pay $142 more in income tax than if the rate falls to 5 percent next year, as planned, according to the
Department of Revenue.
The same family would pay $116 more for the reduction in
personal exemptions and an extra $65 for the postponing the deductions in charitable contributions, the DOR said.
And if one of the parents is a pack-a-day smoker, the family
would pay an additional $275 in taxes.
More than three-quarters of the families who meet the same
profile don't pay taxes on capital gains, so that tax change wouldn't apply to them, said DOR spokesman Tim Connolly.
The House proposal calls for future tax cuts to be tied to a
series of economic "triggers," including the state's revenue figures.
Under the House's formula, it would take a minimum of six
years for the income tax to roll back to 5 percent, which voters approved several years ago. It would take even longer,
as much as a decade, for the personal exemptions and charitable-giving deductions to be
reinstated.
State Rep. Patricia Walrath, D-Stow, said the delay in
implementing the tax rollback reflects the state's bleak economic climate.
"I think most members realize just how difficult the
situation is," she said. "I don't know how we can do it any other way."
Debate on the House's budget plan is scheduled to begin next
week. The budget proposal, which was based on a $2 billion revenue shortfall, didn't take any new revenues into account.
In addition to Walrath, Linsky and Blumer, the tax package
was supported by state Reps. Stephen LeDuc, D-Marlborough, Karen Spilka, D-Ashland, James Vallee, D-Franklin, and
Marie Parente, D-Milford.
Besides Pope, the two dozen lawmakers who voted against the
plan included Reps. Karyn Polito, R-Shrewsbury, and Paul Loscocco, R-Holliston.
LeDuc said he voted for the tax package even though he only
wanted to raise about $600 million in tax revenue.
"Nobody was happy at the end of the day ... but sometimes
you're forced to compromise," he said. "Even at the end of the day, with more taxes than I wanted, there's still a significant
amount of cutting taking place."
Pope said the 75-cent increase in the cigarette tax is the
only tax hike she would have supported.
"Next week, we get to debate the budget, and hopefully we
can change some of this," she added.
Democratic legislators insisted that their constituents
overwhelmingly support raising taxes in order to protect school funding and other programs.
Blumer said 95 percent of her telephone calls, or all but
six constituents, came from people who expressed support for tax hikes.
"That tells me that people understand the problem and are
willing to pay to fix it," she said.
Mustering more than a two-thirds majority allows the House
to override a possible veto by acting Gov. Jane Swift.
After approving the tax package, the House shot down a
series of other proposed tax hikes.
Besides rejecting plans to hike taxes on gas, cigars and
alcohol, lawmakers voted 140-14 against a proposal to raise the sales tax from 5 percent to 6 percent.
Anti-tobacco advocates said the increase in the cigarette
tax should compel many more smokers to quit....
The Telegram & Gazette
Friday, May 3, 2002'
House tax vote is veto-proof
By Shaun Sutner
Telegram & Gazette Staff
BOSTON-- The House of Representatives overwhelmingly approved a
$1 billion tax package yesterday designed to prevent deep cuts in education funding, human services,
police and courts.
It would be the first tax increase in more than a decade and
one of the largest expansions in taxes in state history, hiking the tax bill of an average family of four earning $70,000 by
$317.
Gov. Jane M. Swift said she would veto the bill, but the
131-24 vote gave the sweeping measure a veto-proof "super-majority" that would allow the House to easily override
a veto. It must also pass the Senate, where it may encounter difficulties.
Lawmakers voted to freeze the income tax rate at 5.3 percent
and tax capital gains the same as income, raise taxes on cigarettes by 75 cents, suspend the deduction for charitable
giving, and lower the personal exemption from $4,400 to $3,300 for individuals.
The cigarette tax hike would make Massachusetts' tobacco
levy the highest in the country.
House leaders sold the package as a compromise between
liberals who wanted to raise more revenues and anti-tax conservatives.
Some House members opposed to some of the provisions,
nevertheless voted for the whole group, including Worcester Democrats John J. Binienda and John P. Fresolo. They voted
against a $1 increase in the cigarette tax in a preliminary vote Wednesday, but changed their
votes yesterday.
"I don't apologize for my conservative approach. So there's
a certain reluctance to have moved in this fashion, but there's also a certain pride," House Speaker Thomas M. Finneran
told lawmakers in the House chamber. "You get one chance or shot to fix a problem of this
magnitude."
Several of the measures would be rolled back if the economy
begins to grow again. The capital gains tax would fall at the same rate as the income tax, which would be lowered
incrementally each year and finish at 5 percent. At that point, the charitable donation
deduction would be restored and the personal exemption returned to its current level.
Although five of the 22 Republicans voted for the tax
increases, most GOP House members blasted the plan as a betrayal of the income tax rollback approved by voters in 2000.
Voters also approved the charitable deduction by a wide margin two years ago.
"We're talking over $1 billion. That's not a little bit of
money, it's a whole lot of money," state Rep. George N. Peterson Jr., R-Grafton, said on the House floor. "Passing
taxes is a false choice. You don't have to make that choice."
Supporters of the package said higher taxes are necessary to
confront a $2 billion budget deficit forecast for fiscal 2003. But they said further steep cuts -- of up to $1 billion -- will
also be unavoidable even with the use of $500 million in reserves.
Some Democrats acknowledged that voters might be unhappy
with them for raising taxes.
All Central Massachusetts Republicans and all Democrats
except Anne M. Gobi of Spencer voted for the package. Ms. Gobi has a Republican opponent in the November election.
"Our responsibility was to balance a budget," said state
Rep. Vincent A. Pedone, D-Worcester. "There will be a backlash, but sometimes you have to take a difficult vote."
House leaders said the taxes would allow some of the most
popular state programs to escape serious cuts and receive more or less an equal level of funding as this year.
The top priorities are restoring $320 million proposed to be
cut from school funding, $86 million from programs for the mentally ill and retarded and $53 million from public health,
House Ways and Means Chairman John H. Rogers said. "I think you'll see education
restored," he said.
Human services and education advocates said the convincing
vote boded well, though they cautioned that important programs and services will still feel a big pinch because
"level-funding" will not cover rising costs.
School supporters also said they are braced for cuts in
indirect school funding, such as money to decrease class size and for desegregation.
"It's a good first step in the right direction of protecting
the investment the state has made in education over the last 10 years," said Robert B. Duffy, spokesman for the Massachusetts
Teachers Association.
According to estimates released by the state Department of
Revenue yesterday, the cost to taxpayers for preserving such services will be noticeable.
Ms. Swift said in a prepared statement that the tax package
comes out to $218 for every person in the state.
She said that the House did not look for ways to raise money
that do not involve taxes, such as reducing Lottery prize payouts and using more money from reserves and the state
tobacco fund.
"I have no intention of signing a huge tax increase
resulting from a debate that did not explore several viable revenue options," she said.
Here's how Central Massachusetts State Representatives voted
on the bill:
Yes: John J. Binienda, D-Worcester; David C. Bunker Jr.,
D-Rutland; Mark J. Carron, D-Southbridge; John P. Fresolo, D-Worcester; Emile J. Goguen, D-Fitchburg; Brian
Knuuttila, D-Gardner; Paul Kujawski, D-Webster; James B. Leary, D-Worcester; Stephen
P. LeDuc, D-Marlboro; John F. Merrigan, D-Greenfield; Harold P. Naughton Jr.,
D-Clinton; Marie J. Parente, D-Milford; Vincent A. Pedone, D-Worcester; Robert P.
Spellane, D-Worcester; Patricia A. Walrath, D-Stow.
No: Anne M. Gobi, D-Spencer; Paul K. Frost, R-Auburn; Robert
S. Hargraves, R-Groton; Reed V. Hillman, R-Sturbridge; Paul J.P. Loscocco, R-Holliston; George N. Peterson Jr.,
R-Grafton; Karyn E. Polito, R-Shrewsbury.
Mary Jane Simmons, D-Leominster, was not present.
The Boston Globe
Friday, May 3, 2002
House OK's $1b in taxes
A veto-proof margin; Senate has next move
By Rick Klein
Globe Staff
The House yesterday gave lopsided approval to a $1.06 billion package of tax increases, passing what would be the first major tax hike in Massachusetts since 1990 in an effort to deal with a gaping budget shortfall.
The package, which passed 131-24, would freeze the voter-approved income tax rollback, raise taxes on cigarettes and capital gains, do away with charitable deductions, and reduce the amount of personal income exempt from taxation.
House Speaker Thomas M. Finneran, who pushed hard for passage of the plan, said it would spread the burden of taxation across income levels.
"It'll be a good solution, and it will get us out of this once and for all," Finneran said. "There's a symmetry to it, and a balance."
The measure moves to the Senate, which has also signaled a willingness to raise taxes, though senators will craft their own approach. The two sides would then reconcile the differences and send the final bill to Acting Governor Jane Swift, who indicated yesterday she will veto it.
But the landslide vote yesterday demonstrated that, at least in the House, there are more than enough votes to override a veto of tax hikes.
"It's an astounding vote," Finneran said. "Three or four months ago, people said this could not be solved, that it would not be solved."
Eighteen of 22 Republicans opposed the tax hikes, and they were joined by six Democrats. House Minority Leader Francis L. Marini and other GOP leaders took to the House floor several times to lambaste Democrats, saying they reflexively look to solve problems by raising taxes.
"The problem is not that the people of Massachusetts are undertaxed. The problem is, we overspend," said Marini, a Hanson Republican.
Said Stephen Crosby, Swift's chief of staff: "It's just fiscal madness. To raise people's taxes $300 to $600 a year, while you have $1.5 billion in the bank, in the rainy day fund, just takes my breath away."
After five days of intense negotiations with members, Finneran's leadership team unveiled the package yesterday morning, saying it was the only viable tax bill - and the only measure that would be supported by the speaker himself. According to several House members, Finneran told his colleagues privately that he "expects every Democrat" to support him on the matter.
He came surprisingly close to getting it. Even the liberal wing of the party, which clashes with the speaker more often than Republicans do, backed off its own package of taxes - which included a sales tax increase - in favor of Finneran's plan.
"I don't think there's a single member in this chamber who says this is a perfect package," said Representative J. James Marzilli Jr., an Arlington Democrat and frequent Finneran critic. "But that may be the best test of political compromise. It doesn't completely satisfy anyone, but it's palatable to a two-thirds majority."
During the four-hour debate, a succession of members rose to the House floor and told their colleagues they were putting aside their opposition to major portions of the tax package to deal with the $2 billion budget gap for fiscal 2003, which begins July 1.
"I'm not here to support any specific part of this package, because I don't," said Representative Daniel F. Keenan, a Southwick Democrat. "But as a whole, I think it works to solve the fiscal situation that we're in."
Under the plan, the income tax would stay at 5.3 percent rather than drop to 5 percent on Jan. 1, as scheduled under a ballot question approved by voters in 2000. The tax on capital gains would be the same 5.3 percent, replacing a complicated schedule that taxes assets held less than a year at 12 percent and taxes long-term gains on a sliding scale that places no levy on securities sold after being held for five years or more.
While the tax increase on cigarettes was 75 cents per pack, less than the $1 per pack approved on Wednesday, it would still give Massachusetts the highest cigarette tax in the nation, at $1.51 per pack - a penny more than New York's tax. Unlike the first 76 cents of the state cigarette tax, the $150 million generated by the additional 75 cents would not automatically go toward health care programs under the House plan.
Except for the tobacco tax, the taxes approved yesterday would be temporary increases that would expire when the state's fiscal condition improved.
According to the language of the bill, for every future year that revenues outpace inflation by 2.5 percentage points, the income tax rate would decline by half a percentage point, until it reaches 5 percent. The earliest that could occur, if the legislation becomes law this year, is 2009.
After that, the personal exemption would rise by $275 for every additional year revenues reached the threshold of 2.5 percentage points above inflation, until it returns to $4,400.
At that point, the next year growth was recorded at the threshold level, the deduction for charitable contributions would be reinstated.
The Republicans mocked the "temporary" description, saying taxpayers cannot count on any relief soon.
"When would that be? Around the year 3047?" Marini asked.
The House also unanimously approved a tax amnesty program proposed by Swift. According to the state Deparment of Revenue, offering a two-month amnesty period would generate between $35 and $40 million, though some of that money would be used for related administrative costs.
Senators appear likely to approve most of the House package, though the proposal to cut the personal exemption will probably be the most contentious in that chamber. Senate leaders have said they would like to protect the $4,400 personal exemption, which was doubled in 1998.
Senate President Thomas F. Birmingham has said he may support raising the income tax to 5.6 percent, which would generate a similar sum of money, but support for such a move could be difficult to marshal in the Legislature.
The House will now turn to how to spend the additional $1.1 billion that would be generated. That will be debated next week, and House Ways and Means Chairman John H. Rogers warned that spending will still have to be slashed by nearly $1 billion in the fiscal year that begins July 1.
Rogers said that consensus has already emerged on how to spend about half of that money. The $320 million cut to K-12 education aid will be first on the agenda next week, meaning that schools will be level-funded next year. Proposed cuts to the departments of mental retardation and mental health also figure to be restored, Finneran said.
The Salem Evening News
Friday, May 03, 2002
House OKs $1B tax plan to restore
budget cuts
Ottaway News Service
BOSTON -- The House of Representatives overwhelmingly approved a tax package
yesterday that would pump more than $1 billion into the state's coffers and help prevent some deep cuts to popular programs.
All but three North Shore lawmakers voted for the package. Rep. Brad Hill, R-Ipswich, and Rep. Brad Jones, R-North Reading, joined most of the Republicans to vote against the plan. Rep. Harriett Stanley, D-West Newbury, was one of six Democrats to vote against it.
"Tough times and tough choices require some tough political leadership," Rep. John Slattery, D-Peabody, said on the House floor while urging lawmakers to approve the package.
The proposal would freeze the voter-approved income tax rollback at 5.3 percent, hike the cigarette tax by 75 cents a pack, and stop tax deductions for charitable donations.
The plan would also tax capital gains at 5.3 percent instead of the more favorable sliding rate that is used now, and reduce personal exemptions taxpayers can claim from $4,400 to $3,300 for individuals and from $8,800 to $6,600 for couples.
The package, one of the biggest tax hike proposals in the state's history, still needs the Senate's approval and faces a veto if it reaches acting Gov. Jane Swift. Yesterday's 131-24 vote shows there's much more than a two-thirds majority in the House to override Swift's veto.
The income tax would eventually drop to 5 percent -- the rate approved by voters in 2000 -- once the state's economy improves to a certain level.
Economic triggers would also reverse the changes to the capital gains taxes, the personal exemption and the charitable donation deduction.
Supporters said the package will prevent some deep cuts to education, aid to town and cities and programs for the mentally ill and the elderly.
"Nobody wants to raise taxes, but I feel it's the responsible path," said Rep. Mike Cahill, a Democrat from Beverly who said the tax package would help shield valuable expansions of school aid and health care programs during the past decade.
Rep. Doug Petersen, D-Marblehead, said lawmakers should have been allowed to vote on each of the taxes individually. He said cutting the personal income tax exemption will unfairly hurt the poor and the working class.
He's also unhappy about the loss of the deduction for donations, which was also approved by voters in 2000. Petersen, however, said he voted for the package as a way to help protect budget amendments from his colleagues' possible retribution.
"I think the (public) reception to this package is going to be fierce and angry," Petersen said.
Even with the tax package, the Legislature would still need to make many cuts to close a budget shortfall of $2 billion that's expected in the next fiscal year. The final budget will also likely draw from the state's reserves.
"We're not just taking the easy route and taxing the taxpayers," said Rep. Ted Speliotis, D-Danvers. "This spreads the pain."
Republicans said Democratic House Speaker Thomas Finneran used threats of deep budget cuts to pressure lawmakers into approving higher taxes.
"Instead of letting the Legislature decide what to do with the people's money, I'd rather let the people decide," Jones said.
The tax package could cost the average family hundreds of dollars, according to state Department of Revenue figures. A family of four earning $70,000 a year would pay $142 more a year in income taxes under the plan.
That family would also pay $110 more because of the personal exemption change, and an extra $65 on charitable donations of $1,300. A smoker with a pack-a-day habit would pay an extra $275 annually.
Marblehead anti-tax activist Chip Ford said the lawmakers should avoid tax hikes by making more cuts.
"In a $23 billion budget, there's a lot of waste," Ford said. "They've cut where there's the most citizen support and they leave all the boondoggles alone."
The Cape Cod Times
Friday, May 3, 2002
Most Cape lawmakers favor tax bill
By David Kibbe
Times Boston Bureau
BOSTON - House members from the Cape and islands overwhelmingly supported the sweeping tax package last night, except for state Rep. Thomas George, R-Yarmouth, who joined most Republican members in voting against the measure.
George thought there were areas of the budget that could be cut without curtailing school aid and direct services to residents.Despite the promise that future income and capital gains rates would be tied to economic triggers, George believed taxpayers would never get a reduction, even after the economy improves.
State Rep. Shirley Gomes, R-Harwich, voted for the tax package, but said she was "torn by the decision."
She wanted to put a time limit on the income-tax freeze, rather than tying it to economic factors, which she said could be subject to interpretation. She also wanted some of the tax proposals to be broken out as separate votes, which the Democratic leadership rejected. In the end, she voted for the tax increases to restore cuts in the proposed state budget.
"I believe we needed the additional revenue to cover the cost of health care, human services, housing, shelters and education aid," Gomes said after the vote.
State Rep. Demetrius Atsalis, D-Hyannis, said the cuts in local aid and human services would be too severe without
tax increases.
"The ultimate reality is if you don't support the tax package, you're hurting hundreds of thousands of people in the commonwealth," he said.
State Rep. Ruth Provost, D-Sandwich, said "it wasn't the tax package I would have offered. In fact, I think it goes too far." But she voted for it anyway and said budget cuts still would be needed.
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