Limited Taxation & Government
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CLT&G Update #2
Thursday, November 19, 1998

Back in our May 30th Update, I asked: "Aren't you getting a little tired of Massachusetts Taxpayers Foundation's Michael Widmer and his constant support of more and more spending, more and more for the 'rainy day' fund? He's become a real Johnny One-Note, hasn't he."

This observation was in response to the Boston Herald's report, "Bay State's mega-surplus ignites call for tax cuts," that morning: "Michael Widmer, president of the Massachusetts Taxpayers Foundation, a business-funded think tank that monitors state spending, agreed with much of the spending . . . saying both the stabilization fund and the capital fund needed infusions of cash."

The Massachusetts Taxpayers Foundation, the name usually preceded in news reports with the adjectives "highly-respected" or "non-partisan," is sometimes confused by readers with us, Citizens for Limited Taxation and Government.

There should be no confusion.

MTF is a business-funded organization which is concerned only with what is best for those who support its existence, and its interests are very narrow and focused. MTF lobbies for tax advantages for business, period.

If it's good for business, it's good for MTF.

CLT&G is a member-funded grassroots organization, concerned with its members' best interests, and that includes all taxpayers, both individual citizens and business, because we recognize that limited taxation benefits all, and that any strategy to divide-and-conquer benefits only the Bacon Hill Cabal.

If it's good for the taxpayers, it's good for CLT&G.

Then you've got Jim St. George of Tax Everything And More (TEAM), putting in his two cents worth. St. George and TEAM -- representing the welfare-state lobby, and the public employees' and teachers' unions -- don't think businesses are taxed enough; but then, they don't think we citizens are either.

Never has a better opportunity than the following Boston Globe and Herald reports presented itself to illustrate these distinctions.

Chip Ford --

PS. I would like to point out that CLT opposed the classification constitutional amendment in 1978. In reference to Chip's point, MTF did NOT support Proposition 2 in 1980.

Barbara Anderson --

The Boston Globe
Thursday, November 19, 1998
Business Section

Firms bearing larger share of tax burden, report says
Industry study blames property rating system

By Lynnley Browning, Globe Staff

Massachusetts has made progress in slowing the growth of property tax rates, but businesses shoulder an increasingly larger share of the burden, according to an industry report released yesterday.

The study, compiled by the Massachusetts Taxpayers Foundation, blamed a system that allows communities to set one lower tax rate for residential and undeveloped properties and higher rates for commercial and industrial properties.

According to the foundation, a nonprofit research group financed by leading businesses, that law allowed Massachusetts communities to transfer $618 million in property taxes to businesses from residential payers during the 1998 fiscal year.

The amount constitutes nearly one-third of the $2.1 billion in property taxes paid by Massachusetts businesses for the period, which ended in June.

"The higher property tax burden adds to the already high costs of doing business in the Commonwealth, placing many companies at a further competitive disadvantage," said foundation president Michael J. Widmer.

Property taxes are calculated according to property values. In Boston, businesses paid nearly three times the rate assessed to residences, or $38.45 per $1,000 of property value, the foundation said. By contrast, in those cities and towns that set the same rate for residences and businesses, each pays an average of $14.60 per $1,000 of assessed value.

Massachusetts is undergoing a real estate boom, and residential values have risen at a faster rate than commercial and industrial ones. Yet Massachusetts businesses, which sit on 26 percent of the state's total assessed property value, account for 33 percent of the entire property tax bill, the foundation said.

Not everyone agrees that businesses are hurt under this system.

James St. George, executive director of the Tax Equity Alliance of Massachusetts, an advocacy group for individual taxpayers, said businesses had benefited excessively from various tax breaks in recent years.

"The foundation's fundamental message is that you should cut taxes for businesses and make individuals pay more," St. George said.

Thirty four states allow communities to tax different property classes at different rates under a rule known as a classification law. Among those states, Massachusetts ranks near the top in having businesses bear a greater portion of the overall property tax burden, according to the foundation. Still, Massachusetts property tax rates, once nearly double the national average on a per capita basis, are now only 10 percent above the average.

The Boston Herald
Thursday, November 19, 1998
Business Section

Group: Adjust Resident Tax

By Jennifer Heldt Powell

With an improved economy bringing in extra property taxes, Massachusetts cities and towns should give businesses a break and ask residents to pick up more of their share of the bill, a watchdog group said yesterday.

Business paid an extra $600 million in property taxes in the cities and towns that took advantage of a state law that allows them to tax commercial property at a higher rate than residential property, according to a report issued by the Massachusetts Taxpayers Foundation.

"Our hope is that communities will be, at a minimum, careful about adding to the tax burden and perhaps in some instances that they might make small adjustments over time that would lessen the disparity," said Foundation president Michael J. Widmer.

The disparity between the business and residential tax burdens has roughly doubled in the last decade and a half, according to the foundation.

Property tax is one of many issues businesses consider when deciding whether and where to move, said Sam Tyler, president of the Boston Municipal Research Bureau, another watchdog group.

"It's never been a major factor, but it is becoming more important than it has been," he said. Cities and towns have to decide how much they can shift the tax burden to businesses without discouraging development.

The shift helps residents, particularly those with lower incomes, city officials said.

"The benefit is to the residential taxpayers, the fellow with the smaller pocketbook," said Somerville Chief Assessor Richard M. Brescia, who heads the city's Board of Assessors. Somerville has been shifting a greater tax burden to businesses for 20 years. Businesses account for 20 percent of the property but pay about 30 percent of the property taxes, $16 million this year.

Of all the 102 cities and towns that shift some of the tax burden to businesses, Boston shifts the most, the study found. In Boston, businesses pay three times the residential rate, resulting in a shift of $217 million last year. That's not likely to change, a city official said.

"Boston has one of the lowest office vacancy rates and one of the hottest commercial markets in the country and to ask homeowners to pay more in that kind of environment would be difficult to sell at this point," said Ron Rackow, Commissioner of Assessing.

The city gets half its revenue from property taxes, and about half the property in Boston is tax exempt.

Some municipal officials shrugged off the study.

"There is nothing new here," said Geoffrey Beckwith, executive director of the Massachusetts Municipal Association. Every year communities have to take a vote on whether to have a split tax rate, he pointed out.

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