Citizens for Limited Taxation & Government
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CLT&G Update
Tuesday, March 10, 1998

An Open Response to the Senate President
March 10, 1998

TO: Senate President Thomas M. Birmingham
FROM: Chip Ford, Co-director
RE: Your letter to CLT&G staff

Dear Senator Birmingham;

Please allow me to respond to your letter to us of yesterday, on behalf of Barbara Anderson, Chip Faulkner and myself, by frankly addressing it point by point:

I am in receipt of your missive concerning the nature of the tax increases imposed in 1989 and 1990. I will respond in kind. With regard to the 1989 tax hike you are absolutely correct: it was meant to be temporary and the legislation said so in plain language. Your collage of 1989 news stories provides support for this unexceptional proposition which is not disputed by anyone, at least not me.

Of course this proposition is "unexceptional" and indisputable. Name one increase in taxes, fees, or tolls that was not deceptively sold to us taxpayers accompanied by a promise of being "temporary": The income tax surtax was "temporary," but lived on until repealed by the voters; the MassPike tolls were "temporary" only until the bonds were paid off, which they should have been decades ago; the Mystic River Bridge tolls were only "temporary" until the bridge was paid off -- so now it's renamed the Tobin Bridge and its tolls continue and increase; the sales tax was to be "only" three percent, but it is now five and still being pushed from time to time to "one more cent for education."

The 1989 news clips do not, of course, inform the issue of whether the 1990 tax increase was permanent or temporary. Your pretense that they do demonstrates the intellectual dishonesty of your position. Your reliance on 1989 news stories and your omission of 1990 press coverage of the 1990 legislation reveals the absent center of your argument.

"Tem*po*rar*y, adj. Lasting or meant to last for a limited time only, not permanent, provisional."

Who is being disingenuous, Senator?

I concede that early on in the tax cut debate I stated that the tax increases "appeared" to be temporary. In saying that, I was repeating what was fast becoming the conventional wisdom. Since I have learned that your representations cannot be accepted at face value, I did legislative and media research on the issue. I discovered that, unlike 1989, the 1990 increase to 5.95% was neither touted as temporary nor written that way.

To be temporary, by definition, that which was changed must at some point be restored to its original form. In 1989 "temporary" was defined as "18-months."

The 1990 law (Chapter 121 of the Acts of 1990) provided as follows:

The tax rate was increased to 6.25% on a temporary basis, with a "sunset" provision at the end of 1991. As you know the rate has been reduced consistent with the bill's language. In contrast, there was no sunset provision applied to the 5.95% rate. Indeed, Senator Webber introduced an amendment at the time of the Senate debate, which would have sunsetted and lowered the tax rate in 1995. This amendment was rejected by a vote of 25-9.

None was needed, Senator -- a promise was made when it was increased the first time. Then *another* promise was made when it was raised the second time in as many years. Even though the second promise was actually written into law (which does not nullify an earlier verbal promise), legislative leaders balked at dropping the rate as the law required and gave in only when faced with Gov. Weld's veto of any attempt to keep the rate at 6.25 percent. This is why the Weld-Cellucci administration can count that tax cut as its own.

Thus, the legislature demonstrated that when it wanted to impose a temporary increase, as it did with the 6.25% rate, it said so. The Senate also demonstrated its conscious decision not to apply temporary status to the rest of the tax rate by rejecting the Webber amendment.

Despite your present insistence that the 5.95% rate was intended to be temporary, back in 1990 Barbara at least understood that the rate was permanent. In the May 9, 1990 edition of The Boston Globe, our latter day, ideologically inverted La Passionara proclaimed "the only way to prevent that [the rate] from being permanent is to vote for the petition [Question 3]." You lost that one by a vote of 60% to 40%.

She understood it in 1989 as well, when she was quoted (The Middlesex News, July 4) saying that she doubted any tax passed by the Legislature would be "temporary." Because we are not gullible enough to believe such an historical deception as a "temporary" tax when we hear it from politicians does not mean they should get away with lying to their constituents. We continue to hold our elected representatives accountable for their words -- though we've been forced by experience to recognize the limited value of their pronouncements.

Since 1990, we have gotten our fiscal house in order. I believe that we can now afford a tax cut. We should have an open debate about how large a cut we can afford without undermining our commitments to public education, public safety, childcare and affordable health care. We should also debate who gets the next tax cut: should it be targeted at upper income tax payers, or should all benefit equally. These are important debates and debates we should all join. The voters deserve to hear these issues debated openly -- and not obscured by false claims about the tax increase enacted in 1990.

When the income tax rate was hiked, there was no debate over who would pay the "temporary" increase; it was raised across the board with every taxpayer seeing his or her rate climb equally. That is why voters rejected a graduated income tax in favor of an equally applied flat tax five times over the past two decades.

While Governor Cellucci and your organization have proposed a tax cut targeted at upper income taxpayers, I have made a proposal that would direct much more of the tax cut to middle income taxpayers. While not as large as your proposal, my proposed income tax cut would still be the largest of its kind in the history of the Commonwealth. Rather than reducing the tax rate gradually over several years, my proposal would immediately double the personal exemption.

Senator, we "target" nobody. That is your game. We apply our proposed tax rate rollback equally to every taxpayer who had his or her tax rate raised "temporarily." We intend to restore the income the Legislature took away, period. However, we also support an increase in the personal exemption -- like the one you helped take away from middle-income taxpayers last year when you increased the stabilization fund.

In the first year, under my plan, a two-parent family with taxable earned income of $50,000 would receive a tax cut of $262. Under the Governor's and your plan they would get a savings of $175. Under my plan, a two-parent family with taxable earned income of $500,000 would also receive a tax of $262. But under the Governor's and your plan those with half a million taxable dollars would get a $1,750 windfall.

Senator, it is the folks with larger incomes who pay larger amounts of taxes, so of course an equally applied rate cut will roll back a larger amount of their tax dollars -- just as an equally applied tax hike took a larger amount of income from them. As a Rhodes scholar, surely you can grasp this elementary principle.

As I said, tax cuts are a matter of values. I think we ought to value the average citizens who work hard, play by the rules, pay their taxes and get relatively little from government in return. Shouldn't they share in the bounty equally?

"Values"? Excuse me, Senator, but what about keeping a promise? On a scale of one-to-ten, where do you score the value of keeping one's word, honoring a promise rather than attempting to squirm out of it?

Over the past years the wealthy and, to a lesser extent, the poor have gotten special attention through our tax code. It is time to focus on the middle, and with our $443 million tax cut, we are doing exactly that. In my proposal, the top 20% of taxpayers get 20% of the benefit and the bottom 20% get 20% of the benefit and the middle 60% get 60% of the value of the tax cut. Compare that to your proposal in which the wealthiest taxpayers reap about half the value of the tax cut and the poorest 20% only 4%, leaving he middle 60% with less than half.

Let us not be disingenuous and insulting by playing word games. Restoring the rate to the promised level before it was "temporarily" hiked simply restores the status quo of 1989 and for decades prior. If the "wealthiest taxpayers reap half the value of the tax cut" it is only because they now pay half the revenue reaped by the increased tax rate. Senator, it is only their "fair share" of a promise kept.

I encourage you to continue the debate on this issue, but on the merits, not based on tendentious and intentionally misleading arguments. In the alternative, perhaps you could give a course on "How to get an initiative petition on the ballot." After all, you have to make a living just like everybody else.

Thank you for the encouragement, Senator. Of course, we "make a living" working around the clock for less than half of what you are paid by the taxpayers, and only as long as our members feel threatened by Beacon Hill agendas and policies. Our salaries are paid by voluntary contributions -- they don't come at the point of a gun to the taxpayer's head -- and we certainly can't vote ourselves a 55 percent pay raise whenever it suits us or feels good. However, if we got a pay raise in exchange for cutting the capital gains tax -- as you and the other legislators received -- we would keep our part of that deal as well.

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