Senate President Robert Travaglini (D-E. Boston) has released a package of proposals designed to help working families make ends meet. The centerpiece (at least IMHO) is a targeted tax cut designed to help low- and moderate-income families with dependents who are under 12, over 65, or disabled. The mechanism is simply to raise the standard deduction for taxpayers making $75,000 or less and who meet those criteria.
Now, tax-cut purists will (and already have – see Barbara Anderson’s quote in the Globe article linked above, and this Herald editorial) decried Trav’s plan as cheating the voters who have already said they want an across-the-board rollback to 5%. And it’s true that Trav’s plan isn’t across-the-board. But Trav’s plan is a lot less expensive than the rollback, and it delivers far more tax relief to some of the folks who most need it than the straight rollback would.
Reducing the tax rate for everyone delivers far more tax relief to the really wealthy than to the less well-off – not the best way to design tax policy, IMHO. Another approach – and the one advocated by some at the federal level – is to reduce tax rates for lower income brackets, but our state Constitution does not permit that. So if you want to deliver targeted tax relief, you have to use a construct like what Trav is proposing. Would the voters have backed that over the rollback if given the choice? Hard to say. Does that matter? Depends who you ask.
Another part of Trav’s plan, which has also received a good deal of attention, is a requirement that employers offer up to 12 weeks of paid leave to employees to care for newborns or adopted children. (Federal law requires 12 weeks of unpaid leave, and doesn’t cover all employers.) The financing would come from a new mandatory payroll tax deduction supposedly between $1.50 and $2.50 a week. Honestly, I can’t say I’m that psyched about this particular proposal. Sure, it’s really generous and everything, but do I really have to shell out yet another payroll deduction for my co-worker who wants three months off to care for her new kid? I’ve seen first-hand how difficult it is for smaller businesses to hold things together when an employee takes a months-long leave for parenting or other purposes. They try to do it because it’s the right thing to do, and they can usually figure something out (usually, the other employees do a significant amount of slack up-picking). But to insist that they do so and that they pay into a fund to make paid leave possible seems a bit much to me. Maybe I’m just feeling curmudgeonly this evening.
UPDATE: To clarify the nature of the paid leave program: it is not limited to new kids. It also covers caring for a sick family member, as well as recuperation from one’s own serious medical condition (a form of disability insurance).
Imagine what those of us who are past child rearing think of it!
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Having to hold the job open is bad enough – especially since it’s a one way committment. You hold the job open, they change their mind, never come back, too bad for you. Now we get to finance this too? Oh, btw – is this in ADDITION to unempoyment and our new health surcharge?
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And it speaks volumes that you admit that the state cosntitution forbids a progressive tax rate, but you wanna sneak one in anyway through the back door. Don’t talk to me about sacred rights anytime soon if you only want to obey the mandates you agree with.
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The only good thing about this bill is the timing. Thanks to the enormous pig pile of legislation due to the slovenly work ethic of Messrs. DiMasi and Traviglini (say what you will about Tom Finneran, he kept legislation moving along) there is scant chance of this even getting out of committee, much less acted upon.
And it speaks volumes that you admit that the state cosntitution forbids a progressive tax rate, but you wanna sneak one in anyway through the back door. Don’t talk to me about sacred rights anytime soon if you only want to obey the mandates you agree with.
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This trick has been used on the state tax forms for many years. Have more dependants (and hence, less income per family unit)? Pay less. Blind (and hence, less income in general)? Pay less. Every deduction lowers a segment of the population’s effective tax rate, and this is no different. That it’s being explained in the 5.3% to 5% tax rate shift is really the irrelevant part.
You think it’s inconvenient for businesses to have child leave for all of three months, unpaid?
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Excuse me, David, but can you imagine how inconvenient it is for new parents to have to find child care for a newborn? Newborns are very difficult — they don’t sleep well, for health reasons they should be breastfeeding, and the mother is still utterly discombobulated from giving birth. It’s a dizzying time. In many European countries they have far more generous mandated paid leave.
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If you’re serious about supporting women in the workforce, and serious about supporting families and kids and public health, this bill is good. Come on, $2.50 a week? That is curmudgeonly.
Yeah, I’m sure it sucks to not get paid when you don’t work, but that doesn’t mean that we need to take another tax out of our paycheck. It’s like $130 a year. That’s not trivial, as much as they try to trivialize it with the same nonsense tactics used by shady car salesmen (breaking down payments by week). And when everyone takes advantage of it It’ll probably go up to multiple hundreds of dollars per year. Who exactly decides when you’re eligible to take three months off for being sick? I know a lot of people who would suddenly become “sick” a whole lot more. It’ll just become like so many other awful social programs (created from the best of intentions of course) that make the hard-working subsidize the lazy and incompetent. You want three months off if you have a baby? I want a million dollars. You can’t always get what you want. And you certainly shouldn’t be able to get it at taxpayer expense.
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http://www.boston.com/business/healthcare/articles/2006/04/26/only_in_mass/
The social program this one most resembles, IMO, is Social Security. Like Social Security, it uses an employee tax to fund an insurance program that pools everyone’s risk through the government, and then pays in the case of need. Where Social Security handles the big things like retirement and permanent disability, this one handles the smaller gaps: having a child, getting a serious injury you’ll recover from, or a family member’s hospitalization.
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You’re right that “who decides when you’re eligible” is important. If this program were to simply say you can claim it whenever you want, it would be quite flawed. I doubt that’s what will happen. As with Social Security, there will be some well defined standards, a documentation requirement, and penalties for fraud.
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Social Security does have flaws, but on balance it has been amazingly successful, boosted our economy, and improved quality of life for tens of millions. I think this program has the potential to be similarly successful on a smaller scale.
As usual, folks like me catch it in the teeth. We would exceed the sunset threshold on a joint basis, by a margin of 30K, but yet still struggle greatly in order to meet a modest mortgage, pay off student loans, and keep two kids clothed and fed. We like many young families with professional salaries,we are one large car bill away from deepeer debt. Yet including tax releif for us would be “delivering far more tax relief to the really wealthy” as if I were Elmer J. Fudd, millionaire, who owns a mansion and a yacht, and uses the word “summer” as a verb.
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Though I am a Democrat, or at least an Independent who rarely votes for a Republican, it seems to me that a political problem with Democratic economic policy is that it always seems to assume that everyone who is not in grinding poverty is, by definition, fantastically wealthy, who should be perfectly capable of adding a few more deductions to the old paycheck to help oput those less fortunate.
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The truly wealthy, who can afford it weasily, don’t have to pay anyway, because they have far greater flexibility when it comes to tax planning than I do.
is simply a mathematical one. Someone earning $1,000,000 a year saves about $3,000 if you reduce the tax rate by 0.3%. Someone earning $50,000 saves about $150. I didn’t say anything about whether people in your income bracket deserve a tax cut. I’m just saying that by reducing the overall tax rate, inevitably people who truly are “really wealthy” get a much larger tax cut than the rest of us.
I think Trav’s “tax cut” is a bad idea right now. I spell out my reasoning more specifically in a post on my blog but basically I object because I don’t think the tax cut is a real benefit. Based on some projections in the Globe for a family of four making $60k the “cut” will result in about $150. That isn’t much especially considering that in order to do the cut the budget needs to have an extra $70 million lying around to pay for it. My belief is that in order to come up with the $70 million the Senate and House will cut important services that this family relies on to a tune far greater than $150 netting a loss for families instead of a gain.