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.
Click
here to read "A Report Card on Fiscal Policy"
by the American Legislative Exchange Council. It is available as an
Adobe Acrobat PDF file.