I had a police officer client in my office a few days ago who insisted that Question 1, which would repeal the Massachusetts state income tax, will definitely pass. When I heard that, I knew I had to at least write something to try to convince that tiny proportion of the population that listens to what I say to vote against this.
Why is Question 1 so bad? The facts are well-presented by the Massachusetts AFL-CIO in its aptly titled “Times Are Hard Enough. Let’s Not Make Them Worse”. The facts include:
- The income tax proposal will cost the Commonwealth more than $12 billion in revenues, about 40% of the state budget.
- This is a binding proposal that will become law effective January 1, 2009
- It will have dire consequences for our communities, putting:
- Education at risk with:
- Larger class sizes
- Fewer after school programs
- More school closings
- Health care at risk for:
- Working families
- People with disabilities
- Public safety at risk with:
- Fewer emergency response personnel
- Longer 911 wait times
- Fewer police officers and firefighters
- Our infrastructure at risk with:
- Unsafe bridges
- Broken roads and more potholes
- Cuts in service to public transportation
- Put our fragile economy and job market at even greater risk
For those of you who believe that eliminating $12 billion from the budget will get rid of the supposedly inefficient state workers, consider that the entire state payroll is about $7 billion. That leaves $5 billion left to cut with no more state workers to lay off!
Where does the $28 billion state budget go if not to the state workforce? It goes to places like nursing homes to care for elderly and disabled, to hospitals to pay half the cost (the Federal Government pays the other half) of the care for those on Medicaid (many of whom are elderly), to contractors to build roads and bridges and schools, to local aid to cities and towns, and to pension funds for retirees.
There is a common misperception in this state, fueled by the ideologues on talk radio, that we pay more taxes than the rest of the country. Actually, the state and local tax burden in Massachusetts is 9.5% of income, slightly below the 9.7% national average. This places us 23rd nationally among the states. (If you don’t believe me, check out the web site of the nonpartisan Tax Policy Institute).
So while there are many good factual reasons not to vote for this, it is disturbing to me that something like this is even on the ballot. We used to be a country where people banded together to try to make everyone’s lives better. My grandparents’ generation agreed to tax themselves to have a strong economy and get out of the Great Depression. My parents’ generation agreed to pay taxes for a strong military to defeat the Fascists in World War II. Rich people used to pay a lot of taxes in the U.S. In the 1940’s and 1950’s, the highest wage earners paid over 80% on income over $200,000. As recently as the 1970’s high income earners paid 70% or more on what they earned over $200,000. [For a chart on tax rates, see http://www.truthandpolitics.org/top-rates.php#fn-1].
Since the Reagan presidency and its mantra that “government is the problem” and “the less government, the better,” taxes have become the third rail of American politics. This has worked out great for the very wealthy, who have seen their tax rates decline to less than half what they once were. For some super-rich, who make billions of dollars running hedge funds, all of their income is taxed as capital gains at the 15% federal rate. While their tax rates have been reduced, those earning the most money have seen their incomes soar. In 2006, Chief Executive Officers of large companies averaged over $10 million in total compensation, 364 times that of the average worker. As recently as 1980, those CEO’s made 42 times what the average worker made.
So, while the rich have gotten richer and paid lower tax rates, what has happened to the rest of society? We have, at least for the past 10 years, basically tread water. But while our wages have been flat, our expenses have increased: medical, housing, transportation, education. Caught in this squeeze, it is no wonder that some of us jump at an opportunity to stop paying state income tax. But eliminating state income tax is not the solution; it will only reduce services that we all need and make things worse. What is really needed is an overhaul of the tax policy to put more burden on the rich and an increase in the real wages (adjusted for inflation) of working people. Hopefully, a reform of our labor laws can help with the wage problem. But that’s for another article.
Bottom Line: VOTE NO ON QUESTION 1!