To tax or not to tax; Officials speak out on Question 1.
With the pollsters and pundits predicting an easy victory for Barack Obama over John McCain in Massachusetts, the most controversial issue facing voters in the Commonwealth may be ballot Question 1. This initiative seeks to eliminate the state income tax by 2010.
Proponents of Question 1 have said repealing the state income tax will cut state government waste and stimulate the Commonwealth's economy. Carla Howell, chairman of the Committee for Small Government, in Wayland, said passage of Question 1 will create hundreds of thousands of new Massachusetts jobs, will not raise property taxes or any other taxes and will not cut or require cuts to any essential government services.
With the state income tax eliminated, Howell said more than 3 million residents would be spared forking over $3,700 each year.
"Massachusetts workers, taxpayers and their families need your help," she said. "Please vote yes."
While Question 1 does not raise other taxes or enact cuts, opponents said it would create a fiscal situation in which such tax raises and cuts would be forced upon municipalities.
"This legally binding initiative would slash state revenues by more than $12 billion a year - nearly 40 percent of the state budget," said Peter Meade, chairman for the Coalition for Our Communities, in Dorchester. "It would force dramatic cuts in state aid to cities and towns, driving up property taxes and reducing funding for vital local services."
"I think voters will realize this $3,700 in their pocket will quickly be evaporated by other costs and that services will be cut," said state Rep. Harold P. Naughton Jr., who is opposed to the initiative.
Naughton, who represents Northboro, said a repeal of the state income tax would definitely lead to both increased property taxes and a reduction in municipal services. There would be less police on the streets, less firefighters to respond to fires and other emergencies and less teachers in the public school systems.
"People would see 55 or 60 children in a classroom," he said. "People need to take a hard look at this."
Naughton said the state budget is currently about $28 billion and eliminating the income tax would cut it by about 40 percent, or about $12 billion.
"Local aid makes up about 25 to 30 percent of the state budget," Naughton said. "With 40 percent of the state budget off the table, of course local aid would suffer."
With no state income tax, towns would be forced to raise property taxes to maintain services. However, towns cannot raise property taxes by more than 2.5 percent each year under the Proposition 21/2 legislation. This legislation would need to be repealed in order for towns to raise property taxes more than 2.5 percent, and even that may not make up for a reduction in local aid.
The next move would be laying off town employees.
In addition, Naughton said the federal government reimburses the state with millions of dollars for expenditures, such as those involved with Medicaid, hospital payments and the new state health insurance program. If the state puts less money into theses areas, the federal government may put less in as well. In some cases the federal government matches the state dollar for dollar.
"It's a fairness issue here," Naughton said. "Everyone who is working pays some level of income tax. Not everybody pays the property tax. Renters do get affected, but it's the direct property owners that pay that tax. As it is, eventually we're going to have some in-depth discussion about how much we rely on the property tax."
Naughton said cutting local aid would be a bad move.
"Local aid is the state's way of spreading responsibility around," he said. "It balances the scales. It balances the books. It makes it so towns don't have to rely any more heavily on the property tax.
Naughton took proponents of Question 1 to task for their claim that repealing the income tax will only eliminate government waste.
"Show us where it is," he said. "You constantly hear people say that. I'm happy to attempt to cut waste when it is demonstrated. That's what is always said, and the state, like any bureaucracy, can do things to streamline itself. But, that's surgical. Let's cut out the fat. Question 1 is a sledgehammer. It's like taking a sledgehammer or a meat ax to the state budget. Combined with the fiscal problems we are already having, we could be looking at a perfect storm."