A PROMISE TO KEEP: 5%
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A Ballot Committee of
Citizens for Limited Taxation & Government
PO Box 408 * Peabody, MA 01960
Phone:(617) 248-0022 * E-Mail: cltg@cltg.org
Visit our web-page at: http://cltg.org
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*** CLT&G Update ***
Friday, March 6, 1998
Greetings activists and supporters:
If you can believe it, House Speaker Tom Finneran unveiled *his* tax-cut plan only yesterday—and again with *no public hearing* it will be reported out of the Taxation Committee’s executive session this afternoon at 3:00. (Barbara will be in attendance, for what it’s worth—nobody will be allowed to testify.)
Now who says the gears of government grind slowly—when it benefits the Beacon Hill Cabal to grease the skids!
Chip Ford—
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Citizens for Limited Taxation & Government
18 Tremont Street #608 * Boston, MA 02108
NEWS RELEASE
THURSDAY, MARCH 5, 1998
RE: FINNERAN TAX RELIEF PLAN
1. Whoop-dee-doo.
2. The House news release says the Finneran TRP "is scheduled to be considered by the Taxation Committee in an executive session on Friday." When is the public hearing? Or doesn’t the Taxation Committee do public hearings on tax plans anymore?
3. The Legislature promised in 1989 that the Earned Income rate would be returned to 5 not 5.7 percent. We expect the Legislature to keep its word.
4. Reducing the rate on so-called Unearned Income from 12 to 5.7 percent is a nice start. We support this until the Earned Income rate is 5 percent, at which time the Unearned Income rate should be 5 percent as well.
5. The long-term capital gains tax repeal was passed in 1994 after the legislative payraise. Some said it was a payback to Gov. Weld for the payraise. Legislators thought they were voting on a tax cut for low income people, which was the item on the calendar; former Speaker Flaherty substituted a phase-out of the capital gains tax at the last minute. Business community leaders were delighted by this clever substitution which got the tax cut past their enemies without a public debate. Are they laughing now?
6. We support increased exemptions and deductions. This does not, however, release the legislature from having to keep its word on restoring the 5 percent income tax rate for everyone. Families with children and dependent elders benefit more from Governor Cellucci’s permanent decrease in the income tax rate, as do we all.
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The Boston Herald
Friday, March 6, 1998
Cellucci slams tax plan
By Carolyn Ryan and Ellen J. Silberman
Acting Gov. Paul Cellucci clammed House Speaker Thomas Finneran’s $500 million tax relief plan
yesterday, saying it does not send enough money back to ordinary taxpayers.
Cellucci also blasted a tax increase included in the House package, which will boost the capital gains tax by $200 million. "That would be a big step backwards," Cellucci said. "It’ll discourage investment, and investment means jobs."
The House plan unveiled by Finneran, House Taxation Chair Peter Larkin (D-Pittsfield) and Ways and Means Chair Paul Haley (D-Weymouth) would cut the tax on salaries and wages from 5.95 to 5.7 percent. Investment income would also be taxed at 5.7 percent, down from 12 percent.
Under the House bill, the capital gains tax on assets held for more than for more than 18 months would also be 5.7 percent. Under the current code, the gains tax ranges from 0 and 5 percent, depending on how many years the asset is held.
The bill would also increase the exemption for dependents from $1,000 to $1,500, and include elderly and disabled relatives as dependents. Children from aged 12 to 18 would also be added.
The bill must now compete with Cellucci’s plan to slash the income tax prom 5.95 percent to 5 percent, and Senate President Thomas Birmingham’s bill to double the personal exemption.
Birmingham (D-Chelsea) yesterday called the House plan "a step forward" but said his own proposal is fairer because every family—regardless of income—receives the same savings: $262 per couple.
Senate Taxation Chair Warren Tolman (D-Watertown) said he’s confident legislators can agree on some compromise to grant broad-based tax relief.
"There might be some happy medium between where the House and Senate is," Tolman said.
But Republicans are trying to block Finneran’s package from advancing. House Minority Leader David Peters (R-Charlton) sent a letter to all House members yesterday calling on them to support an up or down vote on the Cellucci plan. Peters charged that Finneran’s proposal is simply a diversion designed to avoid that vote.
"This is an attempt by Tom Finneran to protect his members from taking a very tough vote in an
election year," Peters said.
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The Boston Herald
Friday, March 6, 1997
Editorial: A (tax) deal is a deal
The $500 million tax cut plan put forward by leaders of the Massachusetts House has its virtues. But it isn’t big enough, and it would achieve virtue in part by breaking yet another deal and *raising* a crucial tax.
The deal was with the-Gov. Bill Weld three years ago. He agreed not to veto a pay raise for the lawmaker; they agreed to phase out the capital gains tax over six years.
Now House Speaker Tom Finneran and Taxation Committee House Chairman Peter Larkin (D-Pittsfield) want to make the capital gains rate and the rate on wages, salaries, dividends and interest the same -- 5.7 percent.
The long-term capital gains tax rate is not 5 percent or four percent, depending on the holding period, on the way to zero. The House plan would *raise* these rates permanently.
The theoretical case for taxing capital gains at the same rate as other income is strong, but we live in the real world, in a state with stratospheric business costs and whose hopes rest on new knowledge-intensive companies.
Such companies, in software, telecommunications and bio-technology, devour what cash they can generate. They find the best way to attract and keep the unique talent they need is by the promise of reward through payment in stock in the company. To the extent that Massachusetts doesn’t add to the burden of the federal capital gains tax, it generates an advantage for itself.
The Legislature accepted the argument when it accepted a 55 percent increase in members’ base pay. Funny, we must have missed the page in the announcement of the tax plan where Finneran promises to give back the pay raise.
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You can e-mail CLT&G at --> cltg@cltg.org
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