Have you ever thought, “why must I pay so much in taxes?” This year you may have the chance to change the income taxation system in Massachusetts. During this year’s election there will be a ballot with three questions on it. A question I covered last week involved decriminalizing marijuana. This week I am covering a sensitive subject that has raised furor since the colonial era, which is Question One on the ballot: the repeal of the state’s income tax.
The first recorded history of an income tax in Massachusetts appeared in Plymouth in 1643. An income tax law was enacted in 1916 to cope with new ways to raise revenue upon entry into World War I. Before then, Massachusetts relied mostly on property taxes as a stream for revenue. The most recent action on the income tax issue occurred in 2002, when the legislature overturned the voters and Governor Cellucci’s initiative to rollback the rate from 5.85 percent to 5 percent, and it was held at 5.3 percent.
Today, Massachusetts depends on the income tax to provide around 40 percent of its income, which is roughly $11 billion out of the approximate $28 billion budget. That money is used to fund our public programs, such as covering health care costs, education, and welfare initiatives. It is also used to fund items that affect our daily lives; maintaining roads, law enforcement, and public transportation.
The group that is trying to repeal the income tax law is known as the Committee for Small Government. Their website is smallgovernmentact.org. The group is headed by locally known libertarians Carla Howell and Michael Cloud. CSG led a drive to end the income tax statue back in 2002, when it shocked everyone by registering 45.3% of the final voting. The group is trying to expand on that success by reintroducing the question again on this year’s ballot with hopes of eliminating the tax.
The committee’s goal of repealing the tax is to dramatically reduce government spending. They estimate that the repeal will return, on average, $3,700 to all Massachusetts workers annually. The group claims since the $12 billion returns to private hands, it will generate “hundreds of thousands of jobs in Massachusetts”, will make Massachusetts attractive to outside companies and citizens that want to conduct business and live here, and will force the legislature to cut wasteful programs and instill accountability. They state that if the tax is repealed, the state will still be “swimming in an $18 billion budget.”
What the group is proposing is, first, a reduction in the state’s personal income tax rate to 2.65% for all categories of taxable income for 2009 and then to eliminate the tax for following starting in 2010. It would repeal taxes on income “received by estates of deceased persons, by certain trustees and other fiduciaries, by persons who are partners in and receive income from partnerships, by corporate trusts, and by persons who receive income as shareholders of ‘S corporations’ as defined under federal tax law.” Basically, if you are receiving income from work, interest from bank accounts, dividends from stock, and capital gains from sales of stock or other assets, the Massachusetts government would be unable to tax it.
The group opposing the tax elimination initiative is “Coalition for Our Communities”, comprised of municipal and state officials and members of the AFL-CIO. They are calling this drive to end the tax as a “reckless idea” that will cause chaos and create a catastrophe for the state. Supporters of the group include Governor Deval Patrick, who calls the income tax repeal unwise and “a price for civilization”.
Compared to the CSG, which is having a difficult time raising funds, the coalition is successful in raising funds, due to the involvement of national teacher unions that have a huge stake in this result. The group has raised approximately $1.3 million, with $1 million coming from those teacher unions noted, compared to the CSG, which has raised approximately $270,000 and is actually holding a deficit in what is owed to liabilities from cash on hand.
The coalition also has a website, votenoquestion1.com. It states that if the proposal passes it will drive up local property taxes due to the need for a new stream of revenue, damage education by enlarging class sizes, cutting after school programs and closing schools, cut funding for health care for seniors, low income families and the disabled. Public safety would be at risk with fewer emergency personnel, and our infrastructure would strangulate.
I have mixed feelings regarding this proposal. On one hand, I want to stick it to the Massachusetts legislature by telling them that enough is enough with all the spending programs for government dependants, toll workers, and unions. Make government efficient and while you are at it, return to us some of our hard earned dollars. I think about the past and how citizens supported the income tax rollback and were denied by our elected officials. This would give retribution for that act and give life to the phrase “power to the people”. Then, on the other hand, I know that there is a “price for civilization” as the Governor describes and that we need taxes to fund very basic tasks of the state. We know how bad our winters are. Let’s say there is a blizzard and roads cannot be plowed because of the lack of funds; what do you think of the proposal now?
I have issues regarding the claims brought up by both parties involved with the ballot question. I agree with the No Coalition that if citizens reclaim their taxed income, it is not going to spur hundreds of thousands of jobs. Maybe some, but past economic evidence completely disproves the more grandiose theory. I agree with the CSG that companies and people will move here, but not in huge droves. Look at income tax free New Hampshire; you do not see companies rushing to relocate there. I disagree with the Coalition that there is going to be a huge catastrophe with the repeal; however, I am no fool and with abolishment, the state will need funding for programs and will obtain it by raising fees, other forms of taxation, and even tuition.
After careful deliberation, I cautiously support repealing the income tax. I believe it is our rights as citizens to demand accountability and efficiency by the government with our taxed funds. By approving the removal of the income tax, we are sending that message of civic responsibility loud and clear. While it is appropriate to maintain taxation for funding our infrastructure and education, I believe more can be done to cut wasteful programs and spending. Knowing the Massachusetts legislature, they will not approve such a drastic measure. With that history, I hope that a compromise between the citizens and elected officials can be made for a reduced income tax rate, but not for a complete elimination of the income tax. Because after all, there is a price for civilization.