CITIZENS
for
Limited Taxation & Government
18 Tremont Street #608 Boston, Massachusetts
02108 (617) 248-0022
E-Mail: cltg@cltg.org Web-page: http://cltg.org
CLT&G
Update
Friday, July 17, 1998
Greetings activists and supporters:
Yesterday the Senate passed the Finneran/Birmingham "tax cut" package and sent
it along to the governor for his signature. In the entire 200 members of the
state Legislature, only one representative of the people stood for principle and
not simply for political expediency and, once again, that one heroic senator was Bob
Hedlund, Republican of Weymouth.
He voted "no" and insisted that the tax cut
be enlarged and the promise made in 1989 be kept, and he again argued that the "rainy
day fund" scam be eliminated.
Senator Hedlund, it must be tough and lonely standing
up for honor and integrity among that crowd. You have our gratitude.
The most important thing to remember about this
"largest tax cut in the state's history": IT RETURNS ONLY A HALF
OF THE LARGEST TAX INCREASE IN THE STATE'S HISTORY!
I never thought I'd ever, ever again think about
doing another petition drive...
Chip Ford
State House News Service
SENATE . . . SHNS . . . July 16, 1998
[ . . . ]
Sen. Hedlund said I recognize the hard work and the historic nature of this package, but I
think it's a lost opportunity. I will vote no. We really could have done a lot better at
returning money that rightfully belongs to the people of the Commonwealth. We are going to
see now with the second increases in a year in a half an increase in the stabilization
fund from 5 percent to 7.5 percent of revenues. This will put us at $1.4 billion-plus,
second only to Alaska which funds their stabilization fund through oil revenues and does
not have an income tax. It is unlikely that we will see the tax reduction fund allow
returns to the taxpayers. It is a lost opportunity to not move to the 5 percent income tax
rate. We had a promise to live up to -- eliminate the surtax imposed in the late 80s now
that the bonds have been paid off. We are enacting a major piece of tax policy change with
the stabilization fund and there have been no hearings on this issue. Is this an amount
that's justified? I don't know.
Sen. Hedlund said it's unfortunate that what is
driving this change is not a discussion on economic prosperity. It's an attempt to hide
money from taxpayers. That troubles me. Of the 45 states that have a rainy day fund, we
are one of the only ones that have no rules governing the use of that fund, which some
call a legislative slush fund. It can be used for almost any purpose.
[ . . . ]
BY A ROLL CALL VOTE OF 37-1, TAX CUT BILL ENACTED.
The Boston Globe
Friday, July 17, 1998
Metro | Region
Senate sends tax cuts to Cellucci
By Tina Cassidy
Globe Staff
The Senate yesterday approved the $700
million tax cut package, 37-1, sending the legislation to Acting Governor Paul Cellucci,
who has said he will quickly sign it into law.
Taxpayers can expect to see some of the
benefits on their upcoming tax returns in two areas: Increased personal exemptions and
eased taxes on capital gains from the sale of a principal residence and on individual
retirement accounts.
The House unanimously passed the same
tax package Wednesday.
One senator, Robert Hedlund, voted
against the measure. "I think we could have done a lot better," Hedlund, a
Weymouth Republican, said during debate.
The package doubles the exemption for
earned income, saving $131 for a single filer and $262 for joint filers, and cuts in
half the 12 percent tax rate on interest and dividend income. The new 5.95 percent
tax rate for unearned income would be applied to tax year 1999.
As for the doubling of exemptions,
taxpayers will be able to receive 75 percent of the phased-in savings this year and 100
percent of the savings the following year.
The plan also allows the state's
stabilization, or rainy day, fund to grow by as much as $475 million to $1.42 billion. The
proposal also reduces unemployment insurance rates by $116 million, funneling another $18
million toward creating a workforce development program.
The bill does not include Cellucci's
proposal to lower the income tax from 5.95 to 5 percent, which would cost more than $1.2
billion when fully phased in over three years.
The Boston Herald
Friday, July 17, 1998
Tax cut politics can be a killer
Op-Ed by Rachelle G. Cohen
Life must be so gosh-darn simple when
you know you are right, when the world is black or white and not all those messy
shades of gray, when all you have to do is talk, not act, and certainly never worry about
the consequences of those actions. [1]
So hey, Paul Cellucci, you just whip out
that veto pen of yours and show those smarmy Democrats what you're made of. You just stand
right up there in front of that battery of TV cameras and reporters (who don't have
anything else to cover but the heat wave anyway) and explain why it is that the taxpayers won't
be getting a $700 million tax cut.
Then you do two things: (1) You kiss
your political future goodbye and (2) you check yourself in to a secure facility for the
terminally stupid, where you can enjoy the company of your Republican primary opponent,
Joe Malone, and the hierarchy of Citizens for Limited Taxation and Government. [2]
Sure, Senate President Tom Birmingham
and House Speaker Tom Finneran have the acting governor right where they want him. It's
not pretty, but what can you expect when you send a guy into battle without any troops to
speak of behind him? And face it -- the Republican Party has been practicing its own form
of unilateral disarmament for years.
So Birmingham and Finneran, who have
little in common other than the "D" after their names, have at long last found
common ground, and if they can get the Republican acting governor over a barrel in the
process -- well, does it get any better than that?
In addition to giving taxpayers a $700
million cut, they have agreed to increase the amount socked away in the state's rainy-day
fund to nearly $1.5 billion. That's an entirely excessive amount (the Massachusetts fund
is currently near the $1 billion mark -- the third largest in the nation). So it is,
fiscally speaking, a perfectly idiotic idea. [3]
But there aren't 12 people in the entire
state who understand the concept, which makes it a little hard to explain in a 30-second
spot. [4]
Of course, two of those 12 people are
Barbara Anderson and Chip Ford of Citizens for Limited Taxation and Government, who along
with Malone think Cellucci should veto the tax cut. [5]
For Malone, of course, it's a two-fer.
He gets to say he's for a bigger tax cut (and who isn't?) And urges his rival to
commit political suicide at the same time.
For Anderson and Ford it's a quest for
the perfect tax cut. They no doubt forget that adage about the best often being
the enemy of the good.
They note, If the Legislature does
nothing but allow the present rainy-day fund law to work as promised, the tax cut will be
bigger than if you pass this personal exemption increase." Doubling the exemption
gives taxpayers back $443 million. Anderson and Ford insist taxpayers would get back $475
million if the rainy-day fund were not tinkered with.
However, they conveniently forget that a
legislative increase in the personal exemption is for this year, next year and for all the
years after that. The give-back via the rainy-day fund is for one year only. [5] And it
only continues *if* the good economic times keep rolling and *if* the Legislature doesn't
find more ways to spend tax dollars. And would you really like to bet $700 million on that
premise? [6]
The governor's staff would live to find
a way to attack just the enlargement of the rainy-day fund in the tax cut, but they have
not found a magic bullet -- sending the bill back with an amendment puts the tax cut at
risk.
However, all is not lost. Apparently
some amiable discussions continue between the governor and legislative leaders on a modest
one-year tax rebate. So when Finneran says, "This is not the last word on
taxes," we should take him at his word -- and take the $700 million too.
My Response to Rachael Cohen:
[1] Yes,
Shelley, indeed life is simple when the difference between right and wrong is clear and
constant, not situational, and when convictions are strong.
[2], [3] and [4] Shelly, how can we be
"terminally stupid" for being among the "twelve people in the entire
state" whom you believe understand a "perfectly idiotic idea" for what it
is and oppose it? Further, your condescension is arrogant and elitist: We
"twelve" are not alone.
[5] If you
read our memo to the Legislature, we called for more than you reported -- including a
long-overdue increase in the personal exemption at least adjusted for inflation. Why
didn't you report all the facts instead of just those which conveniently fit your silly
theme.
[6] You
wouldn't "like to bet $700 million on that premise" -- half of last fiscal
year's excess revenue . . . but you're willing to bet the other half on the same crew in
the vague hope that Finneran's cryptic if "amiable" words will lead to an honest
return of all the taxpayers' hard-earned money? How do you rationalize this
disjointed leap of faith even in your own mind?
Shelley, the most important thing to
remember in your celebration is that this "largest tax cut in the state's
history" returns only a half of the largest tax increase in the state's
history.
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