With all attention on the Presidential race, races and questions lower on the ballot are getting much less attention than they might otherwise. That’s especially true here in Massachusetts, where a whopper of a ballot initiative, Question 1, threatens to blast a hole in the State’s finances. For those of you who haven’t yet heard of Question 1 should familiarize yourself – in a hurry.
The text of Question 1 is fairly straight forward — voting “yes” would reduce the state personal income tax rate to 2.65% for all categories of taxable income for the tax year beginning on or after January 1, 2009, and would eliminate the tax for all tax years beginning on or after January 1, 2010. A “no” vote leaves the state income tax unchanged.
The question, which was put on the ballot by libertarian Carla Howell, Chairwoman of The Committee For Small Government and is similar to a previous proposal that failed but attracted significant support at the polls. Howell and supporters claim — without citing specifics — that removing the personal income tax, which would translate to an average savings of $3,700 for state taxpayers, and slash state revenues by approximately 40%, would “create hundreds of thousands of new Massachusetts jobs” while not raising property taxes or other taxes and that it wouldn’t require cuts to essential government services.
That last assertion is vigorously disputed by pretty much everyone who works in government at the state or local level. Opponents note that:
The $12 billion in lost revenue goes to support, among other things, critical services such as public safety (fire, police, paramedics), education, infrastructure improvement (roads and bridges), and healthcare for the sick and disabled and the elderly. In other words, the money would need to be replaced, or those critical services would be sacrificed — unsafe streets, crumbling bridges, crowded and ineffective classrooms, you name it.
State leaders and even fiscally conservative groups like the nonpartisan Massachusetts Taxpayers Foundation argue that put this Passage of the ballot question to repeal the state’s income tax would be a disaster, requiring spending cuts of more than 70 percent in almost all state programs. Those include: human services programs, transportation, state parks and environmental programs, UMass and other community colleges, state employee pensions and health benefits, the prison system and courts. Mass Taxpayers also points out, in a recent press release, that well-off taxpayers would get most of the benefits from repealing the income tax: those earning more than $100,000 would save $16,295 (MTF says that’s 14 percent of taxpayers), compared to $850 for those earning less than $50,000 (65 percent of taxpayers, according to MTF). In other words, the $3,700 cited by proponents masks how the benefits would be skewed towards the wealthiest citizens in the state. MTF also raises alarms about the blowback should this bill pass, including a loss in capital investments on transportation, higher ed and economic development that fuel future growth, and a plummeting bond rating.
As many state leaders have pointed out, the State simply couldn’t afford to get rid of all that money and still function, given mandated state spending in other areas. The result is that other sources of income would need to be raised — with local property taxes and other fees and taxes leading the way. Massachusetts might have to get rid of its tax exemptions on food and clothing, as an example. Like it or not, our current state income tax is progressive, levying the heaviest burden on those who can afford to pay it. Question 1 and the workarounds it would inspire would be largely regressive: affecting the poor and vulnerable far more than the wealthy.
In short, Question 1 is a gimmick — it’s a ham fisted and poorly thought out effort to “make a point” to those hated bureaucrats on Beacon Hill, consequences be damned. As MTF notes, the state could fire all 68,000 people in its employ and still save only $5b, leaving $7b left to cut.
Anyone who has followed the annual budget debates in town knows how important State Aid is. And, while its true that we might pay more out in taxes than we get back, we’re not an island here in Belmont that can “go it alone.” We rely on a a common infrastructure and a network of state and federal programs, as well as a business climate that supports a steady flow of investment and commerce to Massachusetts and surrounding communities. Major corporations don’t look for cute little towns to invest in — they’re looking at states that are encouraging innovation, producing educated workers and building an infrastructure to support and encourage commerce. Your tax dollars make that possible. As an example, if Wyeth locates a new pharma facility in Cambridge, that’s good for us, even if we don’t get the tax revenue from the plant: Wyeth employees settle down in Belmont, they contribute to our community and have money to shop in our stores.
It’s crazy that, in 2008, with developing countries like China and India investing massively in their infrastructure and sucking precious manufacturing and high tech jobs away we’ve got to keep making this argument and watching out for the fiscal Luddites like Ms. Howell, but so it is. We can’t go backwards. We’ve got to move forwards — fighting waste, abuse and corruption in the way the state spends its money, while also channeling tax dollars into areas that will pay dividends in the future: infrastructure, education, and the development of industries like medicine, biotech, greentech. Question 1 would put an end to all that, leaving each town to, in essence, fend for itself. In short: Question 1 is bad for Belmont, bad for Massachusets and bad for our future. Vote “No.”
The Massachusetts Taxpayer’s Foundation is anything BUT a conservative group. They are funded primarily by the recipients of government largess, and have opposed EVERY tax reduction proposed in the state of Massachusetts since their founding.
The Massachusetts Taxpayer’s Foundation is a partisan political group who has a 30 year record of being in favor of higher taxes in the state.
Please post a correction.
Hey Rob. Thanks for writing.
A correction? I’m not sure that’s in order, just because you disagree with my characterization of MTF. That said, you’re not wrong that my characterization of MTF as a “conservative” group was overly broad. I changed that to just read “nonpartisan,” because that’s what the group is. It’s hard to look at their positions over the long term and say that, as a rule, they’re “in favor of higher taxes.”
More scare tactics. No official statement has been made by the legislature that states where if any cuts will be made. It would make life easier for both sides if they did then we could argue the merits of the cut. Next time you hear that the sky is falling ask the person who said it to document the statement. This includes the newspapers and visual press. Otherwise this is an exercise in media manipulation that you are repeating.
Hi Paul,
Why is the post incomplete on the front page? There seems to be a slew of text missing.
Tony
Hey Tony. You have to click the “Read full story here” link at the bottom, or just click the heading of the post to get to the full text. I’m just trying to spare readers from a blitzkrieg of text on the home page so they can scan a few postings at a time.
Paul,
This is a great article. Another interesting artilce in the Globe by Yvonne Abraham states “If you earn $50,000 or less, like two thirds of the state, you would average just $850 back. And the lucky dogs who earn $100,000 or more, will get an average windfall of $16,000.
I find this interesting since the end result is those that have less and rely more on public services (schools, fire, police, public transportation) would see them deteriorate and those that have more and can afford to send their children to private school, have sprinkler systems installed in case of fires, drive cars into their jobs instead of rely on public transportation, get more.
While I’m sure I’ll be called a socialist for saying this, the consistent hits on those that are in need while rewarding those with more are going to cause real problems. While we may no longer have programs to help those struggling get a foothold and make something better of their lives and the lives of their children, we still will bear witness to the misery it causes them. And while many of us donate to charities to help those in need, it is illegal to fundraise for the salaries of teacher, police and fire so I don’t know what the answer is.
I do long for the old days when neighbors knew neighbors and everyone wanted to pitch in to make society better. The “what’s best for me” wasn’t as important as “what’s best for my community and how can I make a positive difference?”
I realize that things are rough with all of us losing our retirement savings and the bailout and the loans America has had to take from China, jobs going overseas, healthcare costs running amok, but if this passes we’ll really see what pain is. Angelo Firenze indicated that a large percentage of our population makes under $50,000 so they wouldn’t be able to afford an override with their $850 to try to replace the services lost.
The irony is that the poor who would be most likely to vote for this because of the extra money is so desired, will lose on a grander scale and those that get the windfall, don’t need it to put food on the table. I just hope everyone who votes takes a good look at what’s at stake here.
Anyone who wants a “vote no on Question one” sign to decorate their lawn, contact me and I’ll drop one off.
Thanks,
Anne Mahon
Wage earners with children who earn $35,000 pay $1,200 in state income tax after deductions. So, they will get more than $850 back. The “averaging” by opponents to the question is no different than the averaging proponents are doing. It’s not completely correct. In Belmont, 95 percent of the people will get at least $1,200 back if Question 1 is approved. More than the majority will get $3,700 back.
Just as an aside, reporters and editors who work for newspapers pay more in state income tax then Fidelity, Citibank, Citizens Bank, Raytheon, etc. …
Are you “getting money back” if you save $850 in state income taxes, but then see local property taxes and other taxes (euphemistically dubbed “fees”) eat it up again? The delusion here among the libertarians is that we get nothing for our tax dollars — that the money we pay is all wasted on pension abuse or fat cat toll takers or SUVs for the MassPort cronies. It’s lazy and shows a total lack of knowledge of — or even interest in how government actually works and what types of things our tax dollars actually support.
The truth is that the vast, vast vast majority of money we send to the state is used to help the citizens of the Commonwealth. It funds the infrastructure that drives the engine of our state economy, it funds the schools and day care centers and police and fire. Are there efficiencies to be gained? Yes. Are there state employees gaming the generous pension system? Sure. But that’s not $12b. It’s not even $1b.
It’s like having rats in your garage. You can look at the droppings and say “Hey, I’ve got rats in my garage. I’m gonna put out some traps to get rid of them.” Carla Howell is saying “Here’s an idea: let’s tear down the garage, that way those pesky rats won’t have anywhere to play!” Sure, it’s a solution to the problem — but is it a commensurate solution? No.
In the end, this is a gimmick, the benefits of which will go straight to the wealthy, who currently pay a bigger share of the costs in our progressive tax system. What a fitting note on which to end the Bush years.
69.3 billion is the total of state, city and town government budgets in Massachusetts this year.
This is made up of
$47.3 billion (the total state only not city and town budget)
plus
$22 billion from property taxes and other revenues every year
(really $27 billion total spending, minus $5 billion in subsidies from the state government)
Part of the state budget is lottery prize money ($3.5 billion)
This would unwise expenditure to cut, so legislators just need to look to the remaining $43.8 billion portion of the state budget and need to trim the most wasteful and unnecessary $12.6 billion part of it to cut when we end the income tax.
Ending the income tax cuts state spending by $12.6 billion
leaving $56.7 billion for politicians to spend every year.
It puts a small potion of this total budget, $12.6 billion, back into the hands of the Massachusetts workers.
Duvall Patrick is already planning a billlion in cuts this year off the top of his head, so another 11.6 shouldn’t be that hard.
Don’t forget you can always pay taxes after 1 passes if you feel it necessary. The State wil gladly accept visa, mastercard, amercian express and personal checks.