Every tax is a pay cut. Every tax cut is a pay raise.
Citizens for Limited Taxation
|Roll Back the Tax rate||July 6, 2004|
|Barbara Anderson||Boston Globe|
YAY! Massachusetts began its new fiscal year on July 1, which means the
Commonwealth survived the last fiscal year and is still functioning.
Despite dire predictions during the past few years by the Massachusetts Taxpayers Foundation, we never did actually walk through the shadow of death. Though the income tax rate wasn't raised, the Commonwealth didn't sink.
Yes, every year during the so-called fiscal crisis, the state budget increased. The Great Four Billion Dollar Budget Gap was merely the difference between reality and wishful thinking, between available revenues and new tax revenues that would have encouraged billions more of state spending.
There were fee hikes and an unfair nursing home tax. The Commonwealth used its rainy day fund, as is appropriate when a national recession hits. Some services were cut, as is inevitable when despite an economic slowdown, the Legislature still refuses to enact reforms and sustain the governor's vetoes of wasteful spending.
So Massachusetts muddled through and, according to the Tax Foundation, still has the fourth highest per capita state and local tax burden in the nation. Relative to personal income, our tax burden is near the bottom; some economists prefer this data, as if having many wealthy citizens makes taxes more affordable for the rest of us. It seems to me that the higher percentage of wealthy people we have, the fewer people that need state services. And since in Massachusetts, it is often wealthy business leaders calling for higher taxes, we might instead expect more from them in charitable contributions to those who are in need.
Taxpayers were promised that the income tax rate hike of 1989 would be temporary, lasting just long enough to get us through that earlier fiscal crisis. After waiting 11 years for this promise to be kept, 59 percent of us voted to roll the rate back to its traditional 5 percent over three years. But the Legislature was already busy spending us into another fiscal crisis, and in 2003 it "froze" the rollback at 5.3 percent.
Now that the latest "crisis" is over, and the state has a giant surplus, Governor Mitt Romney has moved to respect the voters, defrost the freeze, and return the rate to 5 percent for 2005. Yay!
It's not just about the money. Some of us can certainly use it, coming out of recession ourselves. However, the real issue is the future of the Commonwealth.
Most of its problems have been caused by our political culture, with its waste, inefficiency, patronage, abuse of power, liberal fantasies, and fun boondoggles. But real problems are coming, caused by demographics out of our political control. As the baby boomers age and expensive medical miracles are more than ever in demand, as fewer workers support more retirees, Massachusetts will not be able to afford the increased demand for services along with its beloved "business as usual."
When that time comes, our Commonwealth's spending base must be as lean and efficient as possible, lest it lose even more productive citizens to lower-tax, more politically serious states. Tax limitation now is the only alternative to unlimited taxation later. And tax limitation this year begins with respect for the voters, another good habit to cultivate and carry forward into the expensive future.
The Legislature can begin to get the Commonwealth in line by accepting Romney's tax rollback bill and sustaining this year's vetoes. Since children are our future, they need to be able to choose charter schools. Since high medical costs are our future too, free prescription drugs will make a bad situation worse. Court spending and pay raises for deserving human service workers must be conditional on court reform and cuts in the overhead of the human service agencies. And illegal immigrants should become citizens before getting lower in-state tuition at state colleges.
Politicians must also move into the 21st century, where unions play a role but do not rule. Businesses and employees who get taxpayer dollars work for the taxpayers and should be accountable to them.
The price of long-term viable government in Massachusetts is reform and respect for the voters: restoration of the 5 percent income tax rate is one means to that end. Doing what the voters said will encourage reform, before lack of it creates a real crisis in the future.
Barbara Anderson is director of Citizens for Limited Taxation
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