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House Debate on Proposed Tax Cuts
Wednesday, April 28, 1999

State House News Service
April 28, 1999


RECONVENES........The House reconvened at 1 pm with Rep. Nagle presiding.


INCOME TAX CUT.....Question came on suspending rules to consider H-4268 permanent reduction in the income tax rate.

Rep. Marini said I just read the Patriots memo. Congratulations are in order for a job, at this `point, well done. We value so many things here. We can accomplish so many things when we work hard. I wonder why we work hard and debate rules and then continually suspend them. It mystifies me. For what good reason are we suspending rules to take this matter up today? Let's do this in a normal course. Next week we will discuss the entire state budget. This is an appropriate discussion at that time. We could discuss this tomorrow or Monday. This is one of the more important topics we will discuss. The governor says unless we reduce our tax rate to 5 percent he will go to the voters and put it on the ballot. We ought to take that seriously and not do this in a heated rush. Why do we always take up a bill within 24 hours of when it comes out of a committee? This is supposed to be a deliberative body. Give us a chance to read and understand, and maybe to talk to a constituent about a proposal.

Rep. Slattery opposed suspending rules. We are going to debate a tax cut. It's part of the budget the members received yesterday morning. Why are we debating this if the issue is in the budget? All of the members want a full open debate and discussion of alternative tax cuts. Why debate this today when it is ripe for debate next week? There are a lot of amendments that relate to tax cut issues. Let's make no mistake, it's a tax cut bill and there are tax cut amendments.

Rep. Gauch requested a roll call and there was support. Rep. Gauch said I wonder at times why we go through a rules debate in January and then suspend rules every chance we get. We only have a half dozen major bills we consider each year. This is one of them. It seems unfair to rush it out of Ways and Means to the floor. What's the rush? We haven't done a lot since January. Why do we have to do everything in a two-week period? I hope we don't suspend the rules.

Rep. Jones said it's interesting that as we seek recognition, no one comes to the podium to speak of the necessity to suspend rules. We might have to come back on a Thursday or a Friday or God forbid, on a Monday. I oppose suspending the rules.

Rep. McManus said the issue of tax cuts is nothing new to this body. We have enacted over 28 in the last seven years. Reducing the income tax is something we have toiled with for the last three years. We know what we're talking about. This doesn't need to be studied. It's time to go forward. We should know what our fiscal picture will look like before we go through the budget next week.

Rep. Jones said we could come back Thursday and deal with this well before the budget debate begins. The tax cut is contained in the budget. Why is that, when it's so important to take it up before the budget?

The roll call remained open for several minutes. At one point, Rep. Jones yelled, Mr. Speaker, Mr. Speaker, but was not recognized by the chair.


Rep. Marini said point of parliamentary inquiry, how long was that seven-minute roll call open? Rep. Nagle said 6 minutes, 59 seconds and 38 tenths of a second.

By voice vote, income tax cut bill ordered to third reading. By voice vote, rules were suspended and the question came on engrossment.

5 PERCENT AMENDMENT.....Rep. Marini and other Republican members offered an amendment substituting a bill to reduce the income tax rate to 5 percent.

Rep. Marini requested a roll call and there was support. He said this will take about seven minutes. You have time to get a sandwich. We are asking to substitute Gov. Cellucci's plan to fulfill our word to our people. I have stood here and said in the late 80s and early 90s when our fiscal situation was bleak and we were ranked only above Louisiana on Wall Street, we said we must temporarily raise the income tax rate to right the ship of state. The people responded as they always do in times of crisis. They supported the Legislature and the governor and paid more income tax. They also voted in a Republican governor. We have low unemployment, hundreds of millions of dollars in surplus, a stabilization fund brimming over with money and now the people say, can you now afford to keep your word and restore the historic 5 percent tax rate? We answer by saying we can afford to, but we are not so inclined. Since we've turned the state around and everyone is working and crime is down, we have thought of a bundle of new things to do with your money and very little of it involves giving back anything to you.

Rep. Marini continued: The governor proposes to return the rates over three years from 5.95 percent to 5 percent. It's prudent, affordable and most importantly, it keeps faith with the people who sent us here. People are cynical about government. They don't think we as a profession are very trustworthy. You know what? They're right. We aren't very trustworthy. Through their hard work, we enjoy unparalleled prosperity in the Commonwealth. They ask, return the tax rate to 5 percent like you said you would. If you want to keep your word, you will vote yes on this amendment.

Rep. Fagan said let me tell you something, next week we will take up the largest budget the state ever addressed. There are social services, health care, expanding education, doing all those things we want to do for our families. I have a wife, six children and last year's tax cut did nothing for my family. Part of the budget proposes an expansion of the T's budget, taxing communities for the T. That's a hidden tax. For the 30-40 people in my city that might ride the T some day, we're going to start paying right now. We have a lot of other ways they're looking to take money away from our taxpayers.

Rep. Balser was recognized and a quorum call was ordered.


Rep. Balser opposed the amendment. For those I have not yet met, I represent parts of Newton and Brookline. There is so much fanfare about the maiden speech, one wonders what is best to debate - what will most represent my political commitment. There is nothing more telling about why the voters put me here than this. I rise to oppose the philosophy we hear from the governor and the minority. How often we hear the words - "Let's reduce government spending. Let's cut taxes." I always wonder what programs they're talking about. Is it the education budget? Public transportation or the government spending that incarcerates those who endanger the public safety? Are those the government spending items that need to be reduced? Is it the building of the bridges, libraries, or the preservation of open space? I believe more and more of us should speak up and tell people what we are doing. The governor and members of the minority try to tell us a promise was made. The mantra about the promise keeps getting repeated. A Legislature can't make such a promise without putting it into law. I can't promise for someone else. I never told anyone I would vote to reduce the tax to 5 percent. My constituents in Newton and Brookline care about the schools. They don't want a bigger piece of the pie. They just want to make sure the pie continues to get bigger. I promised to fight for education funding, for technology in the schools. I also promised to help fund capital projects across the state and to help those in need. I also made campaign promises about health care. In fact, there's no end to the promises I made. That's why we run for office. But I also said I would not vote to decrease the income tax rate. In a hotly-contested race, I was the only one who said they would vote against the tax cut and I'm the one standing before you today. I applaud the leadership for the budget. There is money for shelters, for prescription drugs for seniors. I am proud to support the budget. By cutting the income tax to 5 percent, what would happen to those programs? If a progressive tax cut is offered today, I will support it. In the meantime I urge everyone to oppose this. The fact we have a surplus means we can do more. Let us do what we were elected to do and fund the programs the people of the Commonwealth need and deserve. (Rep. Balser was applauded for her maiden speech).

Rep. Cresta congratulated Rep. Balser for her maiden speech but asked about the evil Republican conspiracy to keep the promise. The former governor from Brookline has said it is his belief the tax cut was to be temporary. Is that not true?

Rep. Balser said I wasn't here to make that promise. I made other promises to my constituents.

Rep. Gauch said where is our credibility? A couple of weeks ago at a Taxation Committee hearing, members of both parties said they were here back then and they agreed a promise was made. Now is the time to keep the promise. The Beacon Hill Institute has said that cutting the tax to 5 percent will create jobs and cut government spending. Gov. Weld always considered government as the beast. As long as we keep feeding the beast, it will keep growing. In a few years when this economy turns around, we'll be in trouble. Now is the time to do this.

Rep. DeFilippi said I was here in '88 and '89 and '90 and heard the promise repeated many times at this microphone. I voted against the income tax hike. I was also here when we were swimming in money as we are now and gave benefits to immigrants and everyone else. At the same time, we had the reputation of being Taxachusetts. We have an administration now that came here eight or nine years ago and turned Taxachusetts back into Massachusetts. Regardless of how many of you feel, it is not our money. It's our constituents' money. They can live on meat and potatoes. They don't need caviar. If you give your kids five dollars to spend, they'll spend it all, just like they'll spend ten dollars if you give them that much. They might come home sick after eating too much candy or too much ice cream. I believe in keeping my promises.

Rep. Peterson supported the amendment. The budget is over $20 billion and most items get increased every year. Last year's budget was over $18 billion and there was a surplus of a billion dollars. It's time we gave some of this money back to people who are working two jobs and need relief. Someone earlier said last year's tax cut was inconsequential to them. Well, $135 in my pocket is important. This is not a radical tax cut. This would take effect over a three-year period and makes sense.

Rep. Fallon said I pray this amendment does not pass. Malden is building five new schools and we're looking for funding for a sixth. I need more money for a fire station and other things. People need relief from water and sewer bills. In Malden, we have public safety needs that cannot wait.

Rep. Frost supported the amendment. Imagine that somehow in the past decade we've been able to cut taxes 28 times yet the budget keeps going up. Even after all those tax cuts, we still find a way to fund necessary programs we want funded. Lowering taxes has helped the economy and helped working families. It creates more jobs. This is a no-brainer. We know that in a few years, we will again have rough seas but this is the time to reduce this tax.

Rep. Bosley opposed the amendment. I was one of the 35 or so who were around. I can create press clippings. We went to 5.95 percent and tried to cut spending at the same time. The next year we went to over 6 percent. We must balance off against what budgets should look like and set the tax rate accordingly. I think tax breaks should go to those who need them the most. What we're hearing is that we have to go back to 5 percent. We're not hearing about how much revenue we need to support the budget. Republicans used to have a "Better Budget" they offered as an alternative. We haven't seen anything like that. Please, can we get away from the parade of people telling us about the litany of the promise? We have a governor who's on a trade mission to Hollywood. He's talking about school uniforms and not about how we're going to fund the budget. How are we going to pay for the Big Dig and make up for federal cuts in transportation, job training, Medicaid?

Rep. Lepper supported the amendment.

Rep. Flynn opposed the amendment. I've served under five governors and gone through the ups and downs of the economy. I don't think any governor ever was responsible for anything that happened to the economy. This is the finest budget I've ever seen. I'd like to vote to drop the tax rate to 5 percent but we can't. This administration just doesn't get it. This is a poorly thought-out amendment. The taxpayers are indeed fortunate that we're moving to the 5.75 percent. As a fiscal conservative, I hope that in the future we'll have a robust economy so we can vote for this.

Rep. Travis said I was here back then. We want to remember that it didn't happen but it did happen. What scares everyone the most is that the state derives most of its income from this tax. If you got a mortgage for which the rate was supposed to drop when warranted, what would you think if the bank called you and said you couldn't get the rate relief because there were other needs to be met? This schedule brings it down over three years. The referendum brings the rate to 5 percent all at once. We can afford to do it now. In politics, the only thing you have is reputation and I made a promise.

Rep. Rogers offered a further amendment substituting a version requiring the governor to submit a five-year plan. There was a conference as several members spoke in the well, following which Rep. Rogers withdrew his amendment. The question recurred on the Marini amendment, a roll call having been ordered.



Rep. Marini and others offered an amendment adding a section.

Rep. Gauch asked for a roll call and there was support. Rep. Gauch said this would bring the tax down to 5 percent over the next seven years just as the Massachusetts Taxpayers Foundation has recommended. This is something recommended by a group with a lot of credibility.

Rep. Marini said earlier today we debated the governor's bill. While this isn't as quick, it does fulfill the promise and bring the rate down to 5 percent. This would amend the speaker's bill and say if and when the income level of residents grows by 2 1/2 percent in a year, the rate would drop by one-tenth of a percent every year until 5 percent is reached. This tax cut could only be triggered by an indication that revenues have grown, so no revenues will be cut. It's affordable and it's right.

Rep. Jones said this tax cut is triggered by revenue growth. We've heard we can't afford the tax cut. We had a memo from the speaker today on the Patriots' deal. It talks about the House integrity. I think it is important too. I wasn't a member of this House when education reform was approved but I feel obligated to funding it. I researched the word commitment. It's a promise, a pledge, duty or covenant. I find it a commitment to pursue this.

Rep. Giglio said let's be a little more cautious and have a wait-and-see attitude rather than a mandate.

Rep. Lepper said we must look after the needs of our individual constituents. They too have needs. This would give them a tax cut at a time of great economic prosperity.

Rep. Hill supported the amendment. The stabilization fund is full. So is the unemployment insurance trust fund and we have a $500 million surplus. We are well cushioned for an economic downturn. I believe tying the tax cut to economic growth is appropriate. Keep the promise.

Rep. Rogers opposed the amendment. It is indexed solely to the growth in personal wealth and income. Although we have among the healthiest wage earners, we shouldn't blind ourselves to larger issues. This doesn't take into effect the escalating commitments of the state that will increase over the years for projects like the Big Dig. The amendment would automatically cut the rate of income and assume that the health of the economy is solely predicated on the growth in income.

Rep. Marini said Rep. Rogers says there are other factors like the cost-of-living that might go up faster than wages. If the COL is going up faster than your income, then you should cut taxes because that is like a wage hike. Rep. Rogers talked about escalating commitments and our inability to meet them and says we can't afford this one-tenth of 1 percent tax cut. Using that logic, we can't afford the 5.75 percent cut. Gov. Cellucci says he will get the signatures. Why would we want to let the people drop the rate to 5 percent all at once.



Rep. Marzilli said I hope the bill is not engrossed. Let's keep our promise to the voters. I have promised every year that the Commonwealth provide a variety of services that we need and deserve and that we raise the money in as fair a way as possible. The fundamental truth about the Massachusetts tax code is we fail. Poor and working families pay a disproportionate share of their income in taxes. The unfortunate truth about this rate reduction is it provides most of its relief to people in the upper tiers of income. The $275 million estimate would strip from us the ability to care for vital services. The truth is that we can't afford this tax cut. It is too big. We can afford a tax cut though. The working families tax cut was offered in a timely fashion. The circuit breaker was filed last term and this term. The speaker suggested the earned income tax credit in July of last year.

Rep. Frost said he supports the bill, even though we would have rather have seen us keep the promise and lower the rate to 5 percent. I don't even know if this would have happened if it were not for Gov. Cellucci, but we'll take this tax cut because it's better than nothing for the people of the Commonwealth. But we are going to have to follow up and join Gov. Cellucci to go out and get the signatures to put this on the ballot. I pledge my help to that cause. It's unfortunate that we have to do it this way and that we can't keep our promise.

Rep. Marini said I hope you join with me in voting for a tax cut. It could be bigger, but it's a tax cut. This bill deserves to pass.

Rep. Rogers said a lot has been said about what this bill should do. We should at least discuss what it does. Effective Jan. 1, 2000, there will be an automatic rate cut on wages, interest and dividends from 5.95 percent to 5.75 percent. In the first full fiscal year, it will result in a $275 million tax cut in FY 2001. For the average family of four, it will yield a savings of $135 next year and each year that follows. It's permanent and has no sunsets. It's a straight fair deal. It returns us to the rate Massachusetts was at in 1989. It enhances the economic climate by taxing the sweat of a worker's brow at a lower rates, it encourages business to retain workers and it begins to impose the same notions of fiscal discipline on state government during economic good times and economic dire times. We send a message that we need to refocus on the manner with which we provide services.

BY A ROLL CALL VOTE OF 122-24, INCOME TAX CUT BILL ENGROSSED. Rep. Rogers moved reconsideration, which was did not prevail.

ADJOURNS.....The House adjourned at 6:55 pm to meet again Thursday at 11 am in an informal session.

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