A $1.2 billion tax cut, anyone?
For the first time in a decade, Massachusetts voters will face a tempting proposition when they go to the polls in November: cutting their income taxes back to 1989 levels as part of a three-year rollback designed to save working families $500 a year.
To nobody's surprise, early polls show the public is eager to pocket a greater share of its earnings, with 70 percent favoring the tax-cut plan. "It really sounds like a no-brainer," concedes Ernest J. Corrigan, a spokesman for the Newton-based Coalition to Protect Quality Health Care and one of rollback's leading opponents.
So why is Question 4 expected to turn into the closest and most fiercely contested of all the referendum questions?
For one thing, tax cuts are hardly no-brainers in the state formerly known as Taxachusetts. Fearing long-term damage to the state services, voters turned back a similar proposal in 1990, the same year the Legislature boosted the income tax rate to 6.25 percent, an all-time high, to offset massive budget shortfalls.
This year, the same coalition of educators, union members and health care advocates who rallied public sentiment against the 1990 tax rollback are mobilizing to battle the new one, which would lower the income tax rate, now at 5.85 percent, to 5.0 percent over three years. (In response to public pressure, the Legislature dropped the rate from 5.95 percent to 5.85 percent after the ballot question was drawn up.)
Opponents argue that a tax cut will disproportionately benefit the rich, offer only negligible benefits to the middle class, and damage schools, social services and the health care system for decades to come.
"The top 1 percent of taxpayers will get a bigger tax break than the bottom 60 percent combined," said James R. St. George, executive director of the Tax Equity Alliance of Massachusetts. "The average person will get 40 cents a day."
Still, the rollback's proponents, including Gov. A. Paul Cellucci and other prominent anti-tax advocates, believe time and public sentiment are on their side.
They argue that the 1990 rollback was doomed because voters were squeamish over the state's free-falling economy. No such argument is possible this time: The state is running a $1 billion surplus, and anti-tax sentiment, fueled by the Big Dig, is running high.
"If we can't have a tax cut now, when can we have it?" asked John G. Birtwell, Cellucci's press secretary, who points out that Massachusetts has the highest income tax of any industrial state and one of the five highest nationwide.
Equally important, the advocates maintain, is that the current tax rate was never supposed to be permanent -- the Legislature adopted it in 1989 to get a temporary revenue infusion, and promised to roll it back once the state's finances improved.
"This campaign is about that promise," said Barbara Anderson, executive director of the Citizens for Limited Taxation, which spearheaded Proposition 2½, the state's 1980 property tax rollback. "Yes, we know politicians don't keep their word, but that doesn't mean we shouldn't try to hold them to it."
Tax-cut opponents scoff at the notion that the three-year phase-in will soften the blow: They note that if both Questions 4 and 6 -- which would offer rebates for turnpike tolls and license fees -- win approval, the total annual revenue loss will be $2 billion.
Both sides agree on two things: the stakes are high, and early polling results could shift once the war of words heats up.