Massachusetts can afford a $1.2 billion income tax rollback
and still expand services, even in a recession, according to a report by the Beacon Hill
Institute, a conservative think tank.
The group issued a study yesterday disputing what some other
think tanks have said in opposing ballot Question 4, which would lower the state's income tax rate from 5.85 percent
to 5 percent.
The report from the Beacon Hill Institute does not provide
details on how state revenues would continue to grow despite the reduction, but it puts forth the general notion that lower
taxes stimulate dynamic economic growth.
"Massachusetts can have this tax cut and the substantial
economic benefits it will confer and still generously expand state services and programs," said David
Tuerck, executive director of the Beacon Hill Institute.
"Not a single service or program will have to be cut, not
even if there is a recession," Tuerck said.
With the tax cut, the state could increase its spending by
6.5 percent a year over the next 5 years, he said. Without the tax cut, state spending is expected to rise by 8.1 percent a
year, the report said.
If the tax cut is followed by a recession, spending growth
would drop to 6.2 percent, just slightly less than if the economy continues to be strong.
The report did not explain why a recession would have little
impact on spending.
More important, the study suggests, are the broader economic
benefits the tax cut could generate, including nearly 80,000 new jobs, $800 million in new business capital, and more
than $6 billion in new salaries.
A yes vote on Question 4 would decrease the state's income
tax rate to 5 percent.
A no vote would make no change in the income tax rate, now
at 5.85 percent and scheduled to drop to 5.75 percent next year.
The Campaign For Massachusetts' Future, which opposes
Question 4, says the state should instead spend the $1.2 billion on education, health care, and reducing the state's
debt.