CITIZENS
for
Limited Taxation
Post Office Box 408     Peabody, Massachusetts   01960     (508) 384-0100
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CLT Update
Wednesday, January 13, 1999

As if we need any more proof of the need for a tax cut beyond the burgeoning state revenue surplus, now comes the release of a report highlighting Massachusetts as the most profligate spender of any New England state.

The American Legislative Exchange Council just issued the following analysis of state spending as a relation to personal income, and found:

"Since 1996, the New England states, with the exception of Massachusetts, have exhibited a return to fiscal discipline, reducing state spending as a share of personal income.

"Connecticut, Rhode Island and Maine have exhibited the most dramatic turnaround. All three began the period as profligate states, spending more than 10 percent of residents' income. Since 1996, however, all three have cut the share of personal income consumed by government.

"In Massachusetts, however, state spending continues to outpace the growth in personal income. Since 1994, state spending as a share of personal income increased more than 28 percent."

A full copy of the report is available by link, below.

Chip Ford --

The Boston Herald
Wednesday, January 13, 1999

Income tax rate needs fixing now
A Boston Herald editorial

Gov. Paul Cellucci's income tax cut proposal couldn't come at a better time.

A Report Card on Fiscal Policy released yesterday by the respected American Legislative Exchange Council, the nation's largest bipartisan association of state legislators, gave Massachusetts a failing grade for fiscal discipline. The Bay State earned its "F" based on how much of "residents' income is consumed by state government."

The report noted that since 1994, Massachusetts spending as a share of personal income increased more than 28 percent. All other New England states won praise for fiscal discipline. Maine even won an "A" rating. And many states ended up with surpluses similar to the one our Legislature was so eager to spend at the end of fiscal 1998.

"Budget surpluses are preferable to budget deficits," said Michael Flynn, director of the task force that issued the report, noting that over the past four years states collected $74 billion "more than needed to maintain current levels of public service."

"These surpluses are largely due to dysfunctional tax systems that capture greater shares of personal income as the economy expands," Flynn added.

So what part of that doesn't Senate President Tom Birmingham understand?

The Cellucci proposal to lower the income tax rate from 5.95 percent to a flat 5 percent isn't just about returning money to taxpayers. It's also about fixing a system that is taking too much from their pockets to begin with. And the debate that follows during this legislative session shouldn't be about who has a better plan for redistributing income via a tax cut - the route thus far taken by Birmingham - but about repairing that dysfunctional system.

Tax rates do matter. They matter not just to average taxpayers but to companies making expansion or relocation decisions. And this state's income tax rate needs an overhaul.

NOTE: In accordance with Title 17 U.S.C. section 107, this material is distributed without profit or payment to those who have expressed a prior interest in receiving this information for non-profit research and educational purposes only. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml

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