When the Massachusetts House begins
debate today on a $500 million tax cut, a curious whodunit, or perhaps
who-didn’t-do-it, is likely to grab center stage.
The mystery is over whether lawmakers
actually promised in 1990 that an income-tax hike would be temporary - and
tax rates would be rolled back once the economy recovered.
Acting Governor Paul Cellucci says he
recalls the promise quite well. At the State House and on the campaign
trail, Cellucci has dismissed House and Senate tax-cutting plans in favor
of his own, which he says lives up to the Legislature’s vow to cut the
income-tax rate from 5.95 percent to 5 percent.
But the $1.2 billion promise Cellucci
insists he is keeping is proving difficult to find. Not only is it absent
from the text of tax law at the time, it can’t be found in news accounts
of the day.
Cellucci has some witnesses, albeit from
some unusual corners. Two leading Democrats, former governor Michael S.
Dukakis and former House Ways and Means chairman Richard A. Voke, say
Cellucci’s recollecton is correct.
"I thought it was written into the
law," Voke said. "But even if it isn’t, I know it was our
intention to cut back the tax rate when times got good. It was never
intended to stay at 5.95 percent."
The confusion has created some unusual
political alliances as the debate on what was promised becomes pivotal in
Boomtime 1998. Further confounding the issue, the state’s leading tax
opponent, Barbara Anderson of Citizens for Limited Taxation and
Government, says Cellucci is wrong and no such pledge was made in 1990,
inadvertently allying herself with the present Democratic leadership whose
tax initiatives she considers misguided.
But Anderson says there is nevertheless
a broken promise to rally around: She wants to put a referendum question
on the ballot asking voters to hold the Legislature to a pledge it made a
year earlier, in 1989, to lower the income tax rate to 5 percent within 18
months.
There is no dispute that this promise
was made. And there is no disagreement that it was broken months later
when legislators found that the economy had worsened and the state faced a
huge deficit. That year, after contentious debate, lawmakers decided to go
back on the 1989 pledge and instead raise the income-tax rate still
higher: to 6.25 percent - writing into the law that this rate would fall
back to 5.95 percent in 1992.
Senate President Thomas F. Birmingham,
who was not in office in 1989, says he would try to abide by such a
promise if there was one. But he says any pledge made in 1989 was broken
the next year, and it is preposterous for Cellucci to suddenly hold it up
for fulfillment eight years later.
"In 1990, the circumstances
didn’t allow the promise to be kept," he said. "Members took a
very different vote in an election year, withdrawing the temporary nature
of the tax increase."
Besides, says Birmingham, the
legislative process is an evolutionary one and legislators have the right
to change their minds and pass new laws as they gain new information.
Anderson disagrees, comparing the tax
increases in 1989 and 1990 to criminal offenses. This week and last, she
and Birmingham exchanged tough-talking letters arguing over the existence
of the promise.
"Just because they committed a
second offense doesn’t mean they don’t have to pay restitution on the
first offense," she said.
Cellucci, however, argues passionately
and at every opportunity that the 1990 Legislature intended to reduce the
tax rate to 5 percent at a later date, even though this was not written
into law.
"I was there and Senate President
Birmingham wasn’t," Cellucci said.
"I don’t understand why Speaker
Finneran and Senate President Birmingham can’t keep the promise that was
made by the Democratic leaders in this State House in 1990, that this
would be a temporary tax increase," he said.
Yet, the State House News Service and
Senate Journal accounts of the legislative process that year paint a
murkier picture. Those records show that Cellucci and eight senators tried
to pass an amendment sunsetting the 1990 tax increase to 4 percent by 1995
and failed.
"In my mind, that shows that they
tried to make the tax hike temporary and they failed and they knew
it," Birmingham said.
But neither Dukakis nor Voke
remembers any of the specific votes. Both men say their memory is that all
tax hikes were meant to be temporary, to be cut as soon as good times
permitted. And certainly these times are as good as it gets.
And yet, Dukakis today stops short of
demanding an immediate repeal of the income-tax hike. The reason, he says,
is the Weld-Cellucci administration encouraged and approved $1.1 billion
in tax cuts over the past eight years, many of them to businesses, making
the affordability of another $1.2 billion tax reduction questionable.
"Those tax cuts have overwhelmingly
benefitted special interests and the wealthy," Dukakis said. "To
Barbara Anderson or anyone else who calls for that tax cut, I ask,
‘Where were you when all of these special-interest tax breaks were being
voted?’"