You know, it’s interesting how mythologies work. Massachusetts still faces the “Taxachusetts” rap for no good reason, and even though the actual justification for the epithet has long since lapsed.
How about this: We don’t let municipalities tax enough to stay competitive:
The Boston Foundation report looks at six other cities — Atlanta, Chicago, Denver, New York, San Francisco, and Seattle — and argues that the Hub is hampered by requirements that cities and towns gain approval from the state Legislature on a variety of issues.
“There’s this web of constraints that means the city has to go hat in hand to the Legislature for a very large number of things that other cities can do on their own,” said Paul Grogan, president of The Boston Foundation. “This thicket of restrictions and regulations make Boston less competitive than it could be and less of a potent economic factor.”
Despite a nationwide return-to-the-cities movement, Boston’s population is growing at a much slower rate than that of other cities, according to the report, in part because of the high cost of housing. Nearly 60 percent of Boston’s revenue comes from property taxes, compared with 10 percent in Denver, 20 percent in Atlanta, and 25 percent in New York. “If you’re relying on prop taxes as your only source of income, you want to have them increase. Your whole tax structure works against affordability,” Frug said.
Hrm … interesting that most of us to some extent or other internalized the riff that too much regulation is bad for businesses acting in the free market; it seems to also be true with regard to cities in raising their own revenues. Let me tell you, local meals taxes have not killed the restaurant industries in New York and Chicago, folks. (In fact, they have better restaurants than Boston, IMHO.)
Maybe the cities should get to decide for themselves how to raise a good chunk of their revenues, and let their fortunes rise or fall depending on how well, fairly and equitably they raise and spend their money.
The other 40% in Boston and as much as 90% in other cities?
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I find it hard to believe that 90% of the tax revenue in Denver is coming from hotel rooms, jet fuel, motor vehicles, car rentals, insurance premiums, and a parking tax.
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That being said, I’d love for Boston to come up with something like: “We have too much auto traffic in the city — therefore, we want an additional $x per car excise tax, and $y per car parking tax. We’re going to take that money and put 60% directly into the MBTA budget, and ask that we get the other 40% to put in the city budget.”
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P.S. Doesn’t Boston have a $10 per auto car rental tax? Somehow I thought that was the case…
Comes from local aid — about 18-20% in Boston’s case, plus auto excise, Jet fuel tax and some fines and fees (like those parking tix).
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Interestingly, Springfield gets more Chapter 70 money for education than Boston (or did last time I looked), due to Springfield’s tax capacity being less than Boston’s (smaller commercial base, housing values, etc). Boston and other older cities fare well under the funding category known as “Additional Assistance, which shrunk during the Romney years, so cities bore a disproportionate burden.
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A quick look at their budget reveals that nearly 50% of their revenue comes from local sales tax. Another large chunk comes from state and federal aid. Property taxes represents only about 15% of total revenues while the rest comes from other smaller taxes and fees.
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This sort of balance is much healthier for out larger cities who should not be relying so heavily on the property tax.
Thanks for posting this Charley. This is a really important issue for a lot of local officials. Right after Gov. Patrick’s inauguration, one of my town meeting members called me to ask me if the Governor was going to follow through on his promise to allow cities and towns to impose meal taxes. It was the one of the reasons he had voted for the Governor.
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It is a particularly important issue where I live because my town, Saugus, is in the middle of a serious financial crisis. Saugus has to bear a lot of costs other similar size towns do not have to because Route 1 run through it. If Saugus was able to impose a meal tax, it could recover some of those costs. I seriously doubt if a $0.30 to 0.50 cent increase in a bill at Kowloons restaurant is going to cause someone to go somewhere else for dinner.
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There is another article in the Boston Globe today about the Governor’s plan which will include a proposal targetting the pension system:
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Both today’s Globe article and the article yesterday suggest that the local tax proposal and the pension proposal are going to be difficult to get passed in the legislature. This is why the grassroots needs to swing into action. The local tax proposal was a major talking point during the campaign and, although the pension plan policy was talked about by Kerry Healey during the campaign, Governor Patrick indicated he thought the proposal was a good one. (Sorry, no link for this yet, but I will keep trying to find one.) They are both good proposals that will improve the financial situation at the local level.
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Once the legislation starts to wind its way through the legislature, we need to let our representatives know that they should support the legislation. We also need to contact our local officials to get behind not only the local tax proposal, but the pension proposal as well.
can a town currently opt in to the state pension plan? After all, the argument of both lower percentage of transaction costs is a strong one. So is the argument that due to its size, the state pension can invest in items that local pensions can’t.
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So — are towns currently allowed to choose to hand over its management to the state? If so, what is the mechanism? If not, I wonder if Patrick and the Lege might make this a compromise position.
Op Ed by the Chamber of Commerce, the well-funded advocacy group for corporate welfare queens:
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Read it. It’s a great exercise in fake data and false factual assertions, which is what the Globe likes to see on its op-ed pages.
What do you base that on? Do you work for the Globe’s editorial board? Or is it just a cheap shot that reflects prejudice more than substantiated information. Just asking.
All the evidence you need is there. Its editorial pages include a steady parade of letters-to-the-editor and guest Op-Eds that base their arguments on easily-debunked falsehoods. Occasionally, the Globe will print a rebutal days later, when nobody remembers the specifics of the original article. It’s much like what the Times, its parent company, did with decades of columns by William Safire, perhaps the industry’s most prolific manufacturer of false data. The Times’ old ombudsman replied to questions about Safire’s consistent pattern of falsehoods by explicitly stating that nothing on the Op-Ed pages was required to be verifiable.
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This is why the Globe is dying. Readers are no longer willing to swallow whatever tripe the paper wants to print, when the Internet readily offers so many opportunities to talk back and correct misrepresentations.
you think the Globe is dying b/c readers believe their Op-Eds have easily-debunked falsehoods?
footprint has the highest penetration of broadband in the country. And its readers prefer having access to multiple sources of news, not just the Globe’s offering of agenda-driven coverage–and they enjoy the ability to “talk back” to the news rather than just passively swallowing it.
I have an impression of the Globe editorial page that matches Steverino. (Steve Rino? Stever Ino?) Have no data.
…it has become nothing more than a conduit for information that is available elsewhere over the Internet, and also because, because of sites like Craigslist, advertising is drying up.
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It really is as simple as that.
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The entire NYTimes consortium is in terrible trouble (kinda like DaimlerChrysis http://www.spiegel.d… ) and they’re letting the Globe hang out to fry itself.
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Sad, but the fact should have been on the persons’ room wall. What I could not figure out was why, when the NYTimes went partially subscription, they wanted us to pay, not for their news reporting, but for their idiotorialists. Their news reportage has never been particularly spectacular, but it has been–shall we say–usefull. But, given that they want us to pay for their idiotorialists, but not for their news reportage, that means that they value their idiotorialists higher than their news reportage.
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An interesting juxtaposition.
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BTW, as I’ve mentioned on Dan Kennedy’s site, I’ll be interested in downloading stuff from the Glob site when they get beyond “tree falls on house” reporting.
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We go to foreign sites for most of our news. BBC, Guardian and Spiegel (we don’t do French, but I wish we could)
That is we tall, but how know us when fish dirties upwards?
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(Or before we translate back and forth to/from French courtesy of Babel)
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That’s great, but how do we know when the Fish messes up?
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đŸ™‚
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—>Shane
…I did. I read German, and a bit of English, and find that Internet translations of foreign languages are next to useless. Spiegel and Die Sueddeutsche Zeitung serve me quite satisfactorily.
…the REASON that municipalities don’t have the power to tax is that Boston wishes to resrve that to themselves. Optimally, they want the money to go to the state, which can then decide how to distibute it (which almost always favors Boston, oddly enough!) OR they want the towns to gain their permission, so they can control that process and tweak the bill, even if that wasn’t what the town voted for when seeking special legislation.
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Case in point – Brewster selectman Ed Lewis wants homewoners who rent out their homes to tourists to have to pay rooms tax to the town like hotels. There is a large condo development called Ocean’s Edge where a management company rents out unoccupied condos for owners – sans rooms tax. Also, bed and breakfasts are excluded from rooms tax. So – since Brewster doesn’t HAVE any traditional hotel/motels, they want a local option to be able to charge rooms tax to B&B’s and condo owners.
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Boston has been killing this for about 4 years – partly because the people there OWN those second homes, and partly because Boston doesn’t benefit.
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And again, how can you have towns doing things without Boston’s help? It might be successful, or something!
When you have economic segregation or differing natural competitive advantages between communities, and local revenue is based primarilyon property taxes, a certain amount of redistribution is necessary. If you don’t, certain communities will not be able to pay for basic services such as fire, police, and schools. They will not be able to compete with other towns that have more ability to raise revenue.
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We currently have a funding mechanism for cities and towns that is single-minded: property taxes. Which communities benefit from this? Wealthy ones, specifically those which were very wealthy when Propopsition 2.5 came in and froze existing levels of taxation in 1981 or so, and imposed an arbitrary ceiling on local revenue of $25/1000 in valuation.
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Do people realize that if the real estate market tanks by as little as 30%, there are cities and towns that will have to lay off employees because they are close to $25/1000 in taxation? Will the tanking of the real estate market lower municipal costs? Nope. Will it mean that the city or town can pay lower salaries? Not really. Costs and real estate values are not related to each other.
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If this state will allow cities and towns to diversify their revenue streams, so that different cities and towns with different competitive advantages can raise revenue differently, then we might just be able to get away from the significant amount of redistribution. If a community has low property values and poor residents, but if they could get revenue from sales tax, they could concentrate on building retail centers that draw customers from outside their city. If a community wants to remain largely free of business, but wants to keep property taxes down, maybe they could impose a small income tax on their residents.
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It is pretty clear that the only-two-option state aid/property tax mechanism simply makes communities anti-development and fosters dependence political representatives at the state level — money which is often undependable.
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If the real estate market tanks by 30%, it’ll probably be more than just cities and towns laying people off. Prviate employers too, particularly if the cities and towns turn to higher taxes to keep from laying people off.
You’re parroting the misconception that valuation somehow “creates” property taxes. A property’s value merely determines the proportion of taxes paid by each property owner.
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If property values fall by 50% across the board, then the tax rate would have to double. But the individual taxes paid by everyone would not change. There would be no increase.
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The only way there would be increases is if businesses go out of business, and then the taxes they paid would be borne by the remaining taxpayers.
And I lobbied for Boston until two years ago.
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In fact, support for the meals tax brought together legislators from the Cape, eager to make a few more bucks off tourists in the restaurants, with those from Boston and other cities that generate a lot of visitors. One of the most aggressive communities for a meals tax has been Seekonk, which benefits from RI customers.
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And actually, different programs have different funding formulas, Chapter 70 is not great for Boston, but Additional Assistance is (and it’s been cut). Boston would also benefit more from “point of sale” Lottery receipts (money coming back to the communities where tickets were bought), currently, it’s a great transfer system of funds from the cities to the suburbs, whose residents do not buy lottery tix at the same rate. Boston gets back about 6% of lottery receipts, below its proportion of population, let alone need.
We sell millions of tickets to tourists and get back thousands in lottery money.
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One person filed a bill that a town should not receive less than its agents within that town receive in commission. Casey killed it. Of course, that doesn’t even address the issue of towns that get lottery money with no vendors with their borders.
total revenue the state collects from the Cape, and total expenditures.
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PP makes it sound like the Cape is robbed blind, and all that money is spent in Boston (he rarely differentiates state from city government in the case of Boston).
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The Cape has what, 3% of total state population? Does it pay in more than 3% of the revenue? Does it collect more than 3% of the outflow?
and lost by 2-3 votes, after which the powers that be determined it to be too divisive and dropped it. Senator Birmingham was a major proponent.
in general, pushing taxation and spending to a more local level seems like it must be a good thing. I’d love to see it offset by reductions in taxation at the state level, of course, and I hope you would agree.
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Taxing and spending directly at the local level just makes so much more sense than taxing up to the state and then sending it back down again – a process that seems destined to breed waste and corruption.
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I wish the title of the whole article didn’t have to be sarcastic though. What’s the problem? Are you so oppressed by the term taxachusetts that you have to get so prominently smarmy? Sarcasm is weak, dude.
on second thought…
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Futher consideration of the title reveals that it is not in fact intended to be sarcastic. At times like this I wish I knew how to edit my posts..
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My apologies.
than “pushing taxation…to the local level” (let’s leave the spending part for another post).
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It is pegged to income, not property values, so it better reflects people’s ability to pay, which I think is fairer.
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There is no local income tax in Massachusetts, so to tap into that equitable goodness you have to tax income statewide. (There are other reasons to do that too.)
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You might have a different view of the optimal balance of state and local taxes. I feel that the balance is currently out of whack–that local taxes are too high compared to state taxes, and it would be better to raise the income tax, increase state aid, and cut property taxes.
First, I agree 100% with your basic premise that the state income tax is the fairest tax and the best policy choice fundamentally. I’ve said, and I’ll say it again here, that I would support a mc higher state income tax (10%?) if it could replace the many other more regressive taxes (and the lottery and the tolls and many fees).
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Second, I would argue in favor of creating a local income tax which you rightly note does not yet exist. A local income tax would have all the positive (progressive) benefits of the state and federal income taxes. It also would help shift some property tax burden in places like Boston on to those who commute in to work (hundreds of thousands in to Boston every day). Winning this is easier (if coupled with a definite property tax decrease) than winning an increase in state income tax.
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Finally, I would argue that certain local taxes should be raised in a political climate that makes an increased state income tax about as practical a solution as single-payer health care. Yes, we can and should work to change this political climate but in the meantime….
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…. certain local option taxes would be quite progressive and raise much needed funds that coould offset the generally rergressive property tax. Both a restaurant tax and a “utility tax” (on them, for use of public ways) would be less progressive than an income tax but more proportional than the property tax.
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Sure, some of the cost would be shifted back to consumers but richer people go out to eat more than poort peeople. And (with their bigger houses and communications systems) they also spend more on utilities (as do local businesses) than the average poorer person.
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In any event, that’s my two cents.
progressive taxation is illegal under the Mass. Constitution. A big across-the-board income tax hike would be unnecessary if the state could impose a somewhat higher marginal rate on top earners.
Agreed. But we can all amend the Consitution thanks to Massachusetts citizen referendum law which allows… oh, wait, forget that.
The legislature pased this amendment, twice.
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The voters rejected it.
I do see Peter Porcupine’s point. While the income tax might be a better way to tax people, there are significant political issues with it, because when the state legislature comes up with the redistribution formula there is no guarantee that it is being done in the most efficient way, and there is also resentment from communities having money redistributed away from it.
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Clearly each city and town has differing abilities to pay, if you only look from the perspective of revenue coming from residents. Lawrence can’t pay for nearly as much as Wellesley, and Lawrence needs to pay for a lot more than Wellesley.
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But if cities and towns had the ability to create their own blend of taxes, might that not be a better approach? For example, let’s lay down a menu of potential revenue sources, some already co-opted by the state:
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1) Income tax.
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2) Property tax.
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3) Excise tax.
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4) Gas tax.
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5) Sales tax (including goods, services, & meals)
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6) Liquor/cigarette tax.
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7) Hotel tax.
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8) Estate tax.
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9) Local tolls.
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10) Corporate taxes on companies within a town’s borders.
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11) Lottery sales.
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There may be more.
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Each city and town is different, with different problems, and with different natural abilities to raise revenues. If the state said “OK, the property tax is off, now every community gets its revenue from sales tax collected within your border” Wellesley would be screwed while Boston and Springfield would kick into high gear.
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Springfield has Mass Mutual, a multi-billion dollar Fortun 100 corporation within its borders. I’m not sure what the tax rate is on Mutual corporations, but it’s quite possible that the “subsidy” that Springfield receives would be non-existent if you count the revenue that MM pays to the state towards Springfield’s tax bill.
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My point is that if there is just one standard way to raise revenue, there will be winners and losers, but we can’t let people lose, so subsidization is necessary.
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If there are many different ways to raise revenue, then there is a better chance that there is a good plan for each city or town, and subsidization will become less important.
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Let me say, as someone living in a community that is heavily subsidized (Springfield), when the state aid is flowing, things are good, but when the state freezes aid (which has happened more often than not in the past 15 years), 60-70% of the city’s revenue is frozen, as opposed to a smaller wealthier town where most revenue comes from property tax, with its guaranteed 2.5% + new growth annual increase. Those frozen years are a substantial problem, because that means annual revenue increases at maybe 1-2% for several years in a row, forcing cutbacks and layoffs. Contrary to popular belief, “starving the beast” is not the ideal way to gain efficiencies in any organization.
I have ALWAYS thought that auto excise tax is the absolute best predictor of income.
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I know too many little old ladies, with taxable income of $9,000 per year sitting on insurance and annuities worth millions that have food stamps, because their income qualifies them, who won’t tap into that money and let us pay for their nursing home bills with Medicaid because THAT would be invading capital. Likewise, I know too many self employed plumbers, who gross $100,000 per year, but who are treated like Fortune 500 companies in terms of regulation and paperwork for an eventual net of $27,000 – and remember every PENNY that they can’t PROVE is business related is taxed at 1/3.
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HOWEVER – there are no rich old ladies driving around in 1987 Delta 88’s and there are no plumbers trying to find money for school fees for the three kids and wondering which one they’ll tell can’t play a sport because they can’t afford all three driving around in Lexus 500’s.
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Auto excise tax is collected and retained by the towns – no Boston involvement (and when I say Boston, I almost always DO mean Bacon Hill). Renters pay auto excise, not the hypothetical higher rent that can be collected by a landlord to offset a property tax hike – before the increased insruance bill arrives!
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To me, auto excise is the least regressive of all taxes, because we drive what we truly CAN afford, not what we APPEAR to be able to afford.
Have you really not thought this one through? Even if it is a good predictor, that is only because no one is using it to predict anything.
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If your ability to pay taxes was suddenly based on the car you’d drive, everyone and their uncle would buy a 1977 Delta 88 to avoid taxes.
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I would also say that there is a statistically significant number of people who either drive above or below their means. Why? Because the auto industry’s marketing machine affects people. There’s usually no need to drive anything more than a cheap car, but people are perfectly happy driving around $50k cars. Why? Because they can finance them, and because the marketers tell them that they’ll be someone if they drive a nice car.
you’re right that the tax scheme runs the risk of changing behavior. But, (a) you don’t have to make the difference between the 88 beater and the 2007 Lexus to be so much that many people are likely to make that sort of change. Cars more “in the middle” would have an even smaller financial incentive to change, so you’d see even less of that.
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I know you used an extreme example, but it seems to me that people aren’t going to go from their heated leather seats to a spring poking them in the butt while they drive. All taxes have outliers, and this one would too. But, if the outliers tend to be in different places for different taxes, a suite of progressive taxes can get a “net” fairness pretty closely.
I’m a big fan of this proposal. I’d also request that the town have the ability to skew the tax based on weight or MPG — heavier cars create a disproportionate amount of damage on roads, and large vehicles both (a) tend to make it harder to park, and (b) tend to make it harder for everyone else to see, all the while (c) are far more dangerous to other vehicles when in collisions, and (d) are far more likely to kill a pedestrian in the event of a collision.
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I’d also like to see towns be allowed to tack on $0.01 to $0.05 gas tax — it’s small enough that it’s “in the noise,” and it allows towns who want to encourage mass transit to make one more move in that direction. Hell, have the state “split” the revenue with the town: if the town puts a $0.02 tax, the state gets a penny and the town gets a penny.
I ride the bus. Besides, with the extra cash, they could expand (or even start!) some mass transit.
I know lots of people who are content to drive a car into the ground, for as long as it’ll run – and to spend frugally when they buy it in the first place. Then I know people who have spent every nickle and dime they have for their cool car that they really can’t afford… and so live much more poorly for it.
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I used to think that income tax is the best tax – and I still do – but there are always going to be people who get out of paying any tax somehow. Maybe, it’s the neighbor who runs a small day care center in her basement with 4-6 children… and pays no income tax. Maybe it’s the filthy rich CEO who sets up a trust fund to get out of paying estate taxes when he or she dies. So, while I think the onus should be on income taxes, other taxes are necessarily, if only to assure that everyone is paying at least close to what they should.
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However, our state tax formula is out of whack. Property taxes aren’t very progressive, yet are exceptionally important to towns and cities. Too important. They need more options and different ways to raise revenue, badly. I support Deval’s meal tax idea and I’d support a very small (1-2%) sales tax too. However, I wouldn’t support a town income tax… though, I would support a reforming the state income tax via ConCon so we could create state brackets.
…even if it ISN’T a wise choice.
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Unlike the person sitting in a house they inherited, now worth $1.2 million – that they may have to sell because the property tax is so out of whack with their income.
In my not-at-all humble opinion, it is an outrageous myth that people “may have to sell” property that they acquire on the cheap and for which they supposedly don’t even have enough income to pay the property tax.
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Give me a $1.2 million house and I’m sure I’ll be able to figure out how to pay the taxes even if I really, really want to keep living there (even though I make about $40K per year).
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I’ll join you in setting aside the estate tax issues for now (let’s assume that someone inheriting such a valuable property is also inheriting enough liquid assets to pay that tax).
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Then, I ask how old I am in this hypothetical? If I’m over 65 and have a low-income, I can defer all Boston property taxes (other cities I assume have this same program?) until my death or sale of the home. Problem solved.
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If am under 65 (or live in a town without a program like this), I can still get a reverse mortgage and/or a home equity loan. I own a house worth over a $1 million! And it’s all paid for! Lucky me! It certainly seems like the least I can do to get a reverse mortgage and/or a home equity loan that will cover my unaffordable expenses associated with keeping this house(including my approximately $10,000 a year tax bill).
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Or, horror upon horror, I can sell the old family place with all its’ sentimental value and move in to a house that is more suited to my needs.
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The continuing failure in public discourse to acknowledge the equity value of a new home is truly baffling. And, yes, I agree with Healy that some seniors are now “over housed,” in the sense that they live in places that they cannot afford.
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However, I would argue that virtually anyone can live in even the most valuable property given two conditions. First, they must truly own it and not be “renting” it from the bank. Second, they may have to compromise on their heart-felt desire to pass on the property to their heirs debt-free.
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Does this make sense?
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But not to a Cahoon or Bearse, that has had the same house since 1730. The ‘inherits liquid assets along with the house’ is the flaw in the argument. As often as not, that isn’t so. I’ve only had my house for 30 odd years, so I can’t get the horror in a reverse mortgage. But imagine if everybody in 300 years had to take the equity out to pay taxes.
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This is a recent phenomenon – say, last 20 years or so – that property tax began to so outstrip income. Really, it comes with the advent of market based appraisals. Perfectly fair, unless your basis price for your property is a basket of corn and seven fine salmon.
I don’t know any Cahoons or Bearts but I honestly don’t get what your are saying.
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One is lucky enough to inherit one’s great, great, great grandfather’s now very valuable house. But he got the house orginally for a basket of corn and some fresh fish.
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How are you now in any different situation than someone who inherits a house that has only been in the family for 30 years? It’s still worth ten times the price paid for it, right? You could still chose to either sell the place or get a reverse mortgage, no?
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Or are we back to arguing about the estate tax?
We live in a meritocracy, not an aristocracy. There is no right to free and clear inheritance in our society. Our founding fathers opposed the European feudal system.
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Show me anywhere where a property tax is even 1/3 the cost of an average mortgage? When I bought my house, with 20% down, my property tax bill was about 1/5 my mortgage cost, and I live in an area with high tax rates but relatively low property values. I also bought when mortgages were rock bottom. For someone living in most of MA, where houses cost $400k and up, the typical property tax cost is probably around 1/10 the mortgage cost.
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If the Bearse’s can’t gain enough skills to pay 1/5 to 1/10 of what an average Joe would pay for housing, then why should that hard-working Joe shed a tear for them?
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ConCon tried and twice passed an amendment such that Mass could enact progressive tax bracket. Voters voted it down.
That was then. It could be different now. Don’t forget, at one point citizens in Massachusetts were pro-life, anti-gay, and even long ago pro-slavery… things change, often times in as little as a decade.
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Plus, it all depends on how its marketed. I don’t know anything about the ad wars back then, or if there were even any, so I can’t comment about them. However, I’m sure there would be an effective publicity campaign out there which would convince a majority of the voters to support progressive income tax in Massachusetts.
Is the Bob Shrum problem, or maybe Shannon O’Brien problem:
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It will be the people vs. the powerful, with the latter paying more in taxes so the people don’t have to.
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Hmm, thinks everyone, I have a suspicion that I might be deemed a “powerful” in this formulation because the “working people” always seems to mean somebody other than me.
Make the amendment easy to understand and very clear. Then, have a corresponding law that would go with it that’s equally clear: have no more than 4 or 5 brackets, so it’s easy to understand, etc. That way people won’t think it would be that ambiguous and could be used against them.
A ConCon Amendment to allow progressive brackets?
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Geez, I don’t know. The very notion of using the ConCon to take away the rights of a minority (i.e. to force the rich to pay a greater percentage than the poor) seems very unfair.
So it’s just taking away the rights of a majority…
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Regardless, except for the crazies, few people complain about the national income tax – which has brackets. Most people tend to think it’s the fairest kind of tax we have.
Except for the vocal minority, few people complain about the national defense of marriage act – which discriminates against one small group. Most people tend to think that a marriage between a man and a woman is the fairest social policy we have.
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We have a flat tax right now. Not regressive, if you’re talking about the income tax. I pay 5.3%. You pay 5.3%. In a progressive system, only the top earning taxpayers, pay the top rates. They’re the minority. Why should the majority, by amendment, be able to compel the minority to pay at a higher rate?
When you’ve got more, you’ve got more to lose. More to lose by theft. More to lose to fire. More luxuries to not have if you get sick or die. More income to lose if the economy tanks. A slicker car to get destroyed if the state doesn’t maintain road safety. And on and on and on.
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People who have a higher income have much larger disposable incomes — and that’s what the graduated income tax is getting at methinks. If you make $20k per year, you don’t have much after housing, food, and medical care. If you make $200k, you can purchase far better necessary goods, and still have plenty of money left over. $2k to a guy making $20k a year is worth more than $20k to a guy making $200k a year. They both required 5 weeks of working, but the guy making $20k a year doesn’t have any wiggle room — the guy making $200k a year does.
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Taxation isn’t like a civil liberty, so quit framing it that way. There is no obvious “fair” in taxation. Should we all contribute $x? Should we contribute $x per $y in income? $x per $y in wealth? Should we give allowances for food, health care, children, blindness, farm income, income from interest in state, MBTA users?
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Taxation isn’t about fairness, because there’s no obvious fairness. Taxation is about creating a system that encourages good behavior and pays for the civil services that society wants.
Taxation isn’t like a civil liberty, so quit framing it that way. There is no obvious “fair” in taxation.
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If the government can arbitrarily take your property, lien your bank accounts, levy your wages, then it can starve you. Economic freedom and freedom from unfair taxation is a basic civil liberty.
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Tax policy could eliminate anything if the majority so voted: power to tax, power to destroy. Remember?
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That’s the entire premise behind progressive taxation–that it’s more “fair” to tax the rich at a greater rate because they have more discretionary income. It’s more fair, some say. Taxation is almost all political and therefore only based on someone’s view of fairness.
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Your progressive argument is that rich minority have more to give, therefore they should give more to the majority because the majority says so. SSM proponents want the right to marry, majority wants the status quo and the majority says so.
taxation and SSM aren’t related, except that government meddles in both.
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That makes them both related to carbon emissions, highways, fluoride in the water, 7th grade history class, moped insurance, and the shape of the electrical outlets in your house.
Well I’m not sure you own the definitive list of “civil liberties”. On my list I include economic freedom which includes the right against unfair taxation and taking of property from the minority by the majority.
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My opinion isn’t original: here for example, page 11.
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Odd to protest that the SSM opposition majority are depriving the minority of a right, then suddenly find it reasonable for the majority to implement a tax-the-rich change to the constitution, which by design takes more property away from a minority.
Many towns in Mass. only have between 10K & 20K people. I am not sure that there would be enough economic activity in these smaller towns to generate substantial dollars that would allow offset to property taxes.
Certainly the local option would be a boon to even mid-size cities in central Mass like Framingham and Marlboro. I am not sure there would be any benefit for towns like Hudson, Maynard, and Clinton.
As mentioned in another thread, officials in Seekonk have long been strong supporters, as have some Cape officials. Sturbridge could probably benefit, as well as some of the Western Mass. towns. It’s not a panacea, just an “option”.
If cities like Boston, Springfield, etc. could increase their budgets through meals taxes, etc. – they wouldn’t need as much local aid. So even for small towns with few restaurants and stores, they may be able to get a bigger slice of the Beacon Hill pie if the more urban/busy areas could be better able to fund their own services, etc.
Ryan – check out how cities like New Bedford took more than 100% of their education budget – granted by the skewed Ch. 70 formula – and used the ‘surplus’ to buy fire trucks. Check out how Boston ‘overstated’ its local aid needs one March, and found they HAD all that money, and so used the ‘extra’ cash to give all the Boston City Councillors a raise! I remember Tom Menino telling David Brudnoy that they HAD a study, and REALLY, it showed they all WERE underpaid, so naturally, when the extra money cme along…
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Then tell me why we’ll all do beter if the big cities can incease their taxes, and they won’t need as much local aid…
You’re operating under the flawed assumption that a city like New Bedford’s expenses are 100% in line with its revenues. That’s patently false.
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The only towns I can just about guarantee that have revenue in line with their expenses are those that leave significant chunks of tax levy on the table year after year. They have the ability to spend more, but they don’t. They aren’t following your “all government is fiscally irresponsible” meme.
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Larger cities are not being served well by the “one size fits all” Proposition 2.5 law. They are constrained. So New Bedford bought fire trucks — are you contending that they wastefully threw away perfectly good fire trucks to do so? I doubt it. Chances are they bought them because they needed them. Their method of funding was certainly questionable — I’ll take your word on that, even though you have been wrong on such items in the past — but I doubt that New Bedford had much room in their general government budget to do so, because general government aid has been flat over the years, and the state pretty much tells towns how much property tax to spend on their schools, leaving little wiggle room.
is a bit of a stretch, raises for the City Council represent a miniscule portion of a $1.7 billion budget.(anyway, there’s only 13 of them, compared with 200 state legislators). Fine if one wants to oppose the raises, or support them, but the fiscal impact is negligible and has little relevance to local aid numbers. The city (along with other communities) usually lowballs expected numbers in its budget filed on April 15, based on the fact that the state no longer gives an early determination on local aid.
…but Menino – on the air – CHOSE to use a Ch. 70 overage (his word) to justify raises to the City councillors and staffers. And I point this out to Ryan to demonstrate that there is NEVER enough local aid for a city – if it comes over the transom, they’ll find a way to spend it, never-you-mind what it was intended for or if other municipalities are being shorted in the process.
Anyone interested in reading the original versions of this week’s “Boston Bound” report can find them in the following:
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Power Plays in Massachusetts: Home Rule is More Myth Than Reality by David Barron, Gerald Frug and Rick Su from 2004 Annual Report of the Taubman Center for State and Local Government
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Overruling Home Rule by David Barron, Gerald Frug and Rick Su from Commonwealth Magazine Winter 2004
why tax competition among municipalities is good. The notion that cities should harness their “competitive advantages” to reap more revenue for themselves seems like the sort of thing a “progressive” blog would eschew. Now a blog that functions as an echo chamber for the Patrick administration, on the other hand… (I love the “Dear Leader” tone of “Patrick’s ‘municipal partnership’ plan: another in a continuing series of good ideas.”)
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A tax regime based on state-level redistribution is the closest thing to fair and equitable we’re likely to get in this country. A system of public finance based on local “competitive advantage” – or, as some would have it, “natural competitive advantage” – is Charles Tiebout’s frictionless (and so nonexistent) world decked out in Michael Porter’s entrepreneurialism-fetishizing regalia. There are no win-wins when munis try to compete on taxes. There are only races to the bottom as they try to foster… wait for it… a “better business climate.”
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I live in Chicago doing research on taxes and municipal finance, and I almost fell out of my seat reading TBF’s report. No idea why TBF – or anyone – envies Illinois’s approach to municipal finance. We have more local taxing districts than any state in the country, and what we’re left to do is navigate between the gross inequities wrought by the property tax system and the time- and money-squandering game of leapfrog cities play trying to make themselves more “competitive.” Know what the big debate is over now in IL? Ratcheting up the state income tax to smooth out local fiscal inequities. (No word yet on a solution to the better-business-climate nonsense.)
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Why not a modified Ontario-style property tax system that pools locally collected property taxes at the state level and apportions them to munis based on need? The property tax is somewhat regressive, since there’s no perfect correlation between the property tax bill and one’s ability to pay it, but this regressivity is only really apparent in gentrifying areas, and there could be mechanisms put in place, based on property value growth rates, to target these areas for aid.
In theory, I agree with you, but politics is about power, not need, and when the money is pooled at the state level, it tends to be distributed to the powerful, not the needy. Also, remember that the needy are a loathed group these days, it really stinks to be one of them.
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I dispute that a city like Springfield is actually one of the loathed “needy”. How about we do a big-picture accounting on the city? We have a fortune 100 company within our borders. We contribute quite a bit to the state’s Lottery pool. We have companies that employ tens of thousands, kicking in plenty to the state’s income tax coffers. We have an abundance of liquor stores, adding to that tax bucket. We are ideally located at the intersection of two interstates, plenty of traffic streams through our borders on their flight to their gated suburbs.
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We are deemed needy simply because our property taxes, which have been artificially constrained by a statewide vote (not a local option vote) of Proposition 2.5, do not meet out revenue needs, and we are prohibited to use any other revenue mechanism to help ourselves. This means the state to kick in the difference that it takes to meet basic requirements such as police, fire, and schools, and we are constantly treated with the same disdain applied to a welfare queen.
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To give you a bit of flavor, our state-mandated education foundation budget is $250 million. We are legally constrained to collect $150 million in property taxes; any more violates the $25/1000 hard cap (which Springfield has hit at least twice since the law went in, not because of increasing expenses but because of low property values). Why are we being forced to be insolvent?
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So to me, the ability to control my own destiny sounds pretty good right now. I think that is a pretty progressive goal too — instead of providing for people, give them the tools to provide for themselves (whereas a conservative would say that anyone who can’t get the tools to provide for themselves deserves nothing).