Limited Taxation
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CLT Update
Tuesday, January 12, 1999

Confused Mass. Taxpayers Foundation Back-Peddles

After our news release hit early yesterday afternoon, the Massachusetts Taxpayers Foundation slammed their gearshift lever into reverse and started arguing the meaning of "if" and "alone." No, they don't want to "increase" fees, only "restore" them to their former level, you know.

Watching Michael Widmer, MTF's executive director, duck and weave under CLT's taxpayer defense was truly a sight to behold. Barbara "The Voice of the Taxpayer" Anderson was in demand everywhere by mid-afternoon, effectively deflating MTF's trial balloon.

We may have put a serious kink in MTF's stupid idea before it had time to take hold, but Gov. Cellucci's tax-rate rollback bill, filed yesterday, met with the usual response from the Legislature.

If Senate President Tom Birmingham will agree, let's stipulate the obvious and move this debate beyond his class warfare:

  • Someone who earns $30,000 a year in taxable income will pay about $1,785 in state income tax at 5.95 percent and save $285 if the rate is dropped to 5 percent, as promised.
  • Someone who earns $100,000 a year in taxable income will pay about $5,950 in state income tax at 5.95 percent and save $950 if the rate is dropped to 5 percent, as promised.
  • The person who earns $100,000 in taxable income a year will save more -- in actual dollars -- than person who earns $30,000 ($665) if the rate is dropped to 5 percent, as promised.

I'm with you, Tom, this far ... but in the name of honest "fairness" let us not stop here!

  • Even at 5 percent, the person who earns $100,000 a year in taxable income will pay much more ($5,000) in state income tax than the person who earns $30,000 ($1,500) and receive no more state services, and in fact will probably need fewer.

And besides, Tom, when the Legislature wanted to raise revenue back in 1989, it increased the tax rate across the board -- everyone's rate went up by the same percentage! And everyone was promised that the hike would be only "temporary."

If it was fair in 1989 when the Legislature took it, then why is it so unreasonable, so inconceivable in 1999, when we talk about returning the now-embarrassing tax over-payment?

Like the rest of us burned at least once by untrustworthy politicians ("Gee, how did you ever get this cynical?" they wonder!), the Boston Herald knows why and states it clearly in today's editorial (below-bottom) on "temporary" fee increases: "The politicians would never reduce these fees after the need has passed or the debt paid off, that's a lead-pipe cinch."

And anyone who thinks House Speaker Tom Finneran is even considering returning the income tax rate to its former five percent hasn't been paying attention too closely! He conveniently doesn't just remember the promise made.

Thanks to the pols' due diligence, expecting to be abused by them, anticipating their inevitable Big Lie, has now become an act of political faith! As Honest Abe Lincoln once observed, "... you can't fool all of the people all of the time."

Chip Ford --

The Boston Globe
Metro | Region
Tuesday, January 12, 1999

Cellucci gets 1 foe, 1 ally on tax-rate cut
By Tina Cassidy
Globe Staff

In his first official act as governor, Paul Cellucci yesterday filed legislation to lower the state income tax rate to 5 percent from 5.95 percent over the next three years, ultimately saving the average family $600 a year, according to administration figures.

His plan immediately hit a wall of skepticism when Senate President Thomas F. Birmingham said he favored a more progressive approach of increasing earned income tax exemptions rather than restoring the rate to 5 percent.

"We in the Legislature have supported tax cuts which provide the same dollar benefits to everybody," said Birmingham, a Chelsea Democrat. "The governor's proposal provides a lot more to the wealthier people and a lot less to the vast majority of middle- and working-class taxpayers."

But Cellucci's plan appeared to have at least one Democratic ally: The fiscally conservative House Speaker Thomas M. Finneran.

"I think there's some sentiment in the House for doing just a very straightforward, simple approach on rates, but that was articulated pretty aggressively last year," the Mattapan lawmaker said.

However, like Birmingham, Finneran said the size of the fiscal year-end budget surplus would largely influence how much of a tax cut will be granted.

Some expect that the budget surplus could be as much as $350 million by the end of the fiscal year, less than half of 1998's level. And one fiscal watchdog group believes the surplus should be used to help allay an impending "crisis" over the state's capital budget, which pays for improvements for roads, bridges, and public buildings.

The Massachusetts Taxpayers Foundation yesterday said it expects a fiscal disaster brought on by the huge cost of the Central Artery project, a reduction in federal highway funds to pay for the Big Dig, and a growing need to fix the state's roads and bridges.

Finneran and Birmingham said the report was worrisome.

But Cellucci rejected its premise and said the tax cut was a priority.

"It also continues what we've been trying to do over the last eight years, and that is to make life more affordable for the people of our state," Cellucci said. "Tax cuts go into the pockets of families and I believe they can spend those dollars a lot better than the government can."

Under the current framework, the state gives just about everyone the same earned income exemption, regardless of how much money they make each year. For tax year 1998, single filers will be exempted $4,400, for a savings of $131; joint filers $8,800, for a $262 rebate, and heads of households $6,800 per year, for a $202 return. There was also an additional, one-time tax cut worth $200 million last year.

By contrast, Cellucci's rate-cut plan would give an average family of four earning $75,000 a year $600 in savings each year; single parents earning $35,000 with one child would get $228 back; and a single person earning $25,000 would get $154.

Cellucci said lawmakers should honor the "promise" they made nearly a decade ago to restore the income tax rate to 5 percent once the economy was again sound and debt was retired.

That time is now, the governor said, noting that the state has an overflowing billion-dollar rainy day fund and an astounding 2.9 percent unemployment rate.

Birmingham said he is more inclined to support a plan like last year's doubling of the earned income tax exemption, which will cost the state more than $400 million a year once it is phased in entirely.

He is questioning whether the state can afford Cellucci's plan, which would cost more than $1 billion annually, especially when more money is needed to improve education and the Central Artery project is siphoning money from the state's strained capital budget.

Finneran said he did not believe a promise was made during the 1989 budget debate. [Mistah Speakah, peruse the evidence at -- we've left it posted there just for you - Chip Ford] But if one were: "We've given back in tax cuts multiples of a billion dollars already," he said. "Dollar for dollar, the promise, if one was made, has been redeemed."

Cellucci filed the same tax cut proposal last year that he proposed yesterday, but he was forced to compromise with the Legislature, getting an increase in the earned income exemption instead.

Birmingham said lawmakers would once again be more likely to approve an increase in the exemption over the rate reduction.

The Boston Herald
Tuesday, January 12, 1999

Respecting the debt limit
A Boston Herald editorial

The Massachusetts Taxpayers Foundation is absolutely right, the Big Dig is putting a strong squeeze on the ability of the state to build all the projects it wants to. But rather than boost tolls and fees beyond what's already planned to support more borrowing as the foundation recommends, it's better to postpone low-priority work.

The watchdog group is concerned that the state is jeopardizing its future by not rebuilding its infrastructure, whether that be roads or libraries.

Money has to be borrowed to finance such work, but the state finds itself maxed out on its credit card. The Weld-Cellucci administration pledged to limit general-purpose borrowing to $1 billion a year, exclusive of MBTA debt, and has managed to observe that limit only by pledging future federal aid to repay some obligations.

This limit is an important support of the state's restored double-A credit rating, and an important curb on future taxes. But Mass. Taxpayers believes Gov. Paul Cellucci won't be able to hold the line.

"In view of the intense pressure to complete a backlog of [transportation] projects already in the pipeline, [the foundation] projects that non-Artery spending could outstrip the administration's plans by up to $1 billion over five years," the report states. Call it $200 million a year. And non-highway projects could receive only $500 million a year under the administration's plan, the foundation complained, though the Legislature has authorized $12 billion in borrowing.

The governor is just going to have to resist that "intense pressure." And it is no great tragedy for the state if borrowings for courthouse renovation, new college buildings, prison cells and the like are limited to $500 million a year. That ought to be enough to get started on the greatest needs. One of the things a governor is paid to do is to put prisons at the head of the line and purchase of open space to preserve scenery at the end of the line.

Should the state increase tolls on the Massachusetts Turnpike Extension, not to $1 in 2002 as planned (from 50 cents) but to $2, impose similar larger-than-planned increases on the Boston Harbor crossings and keep all the old Registry of Motor Vehicle fees, all to support an addition of $1.6 billion to a debt that totals $14 billion?

The politicians would never reduce these fees after the need has passed or the debt paid off, that's a lead-pipe cinch. Our debt is the third heaviest in the nation, both in dollars and as a percentage of income. More debt is not justified.

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