- Veto the pension bill. He’ll have to make this decision within the next few days. It’s a terrible bill that sends exactly the wrong message to the public, which is (among other things) getting hammered on energy costs and is going to face a real crisis once heating bills start to roll in. In addition, as the Globe explains today in the course of urging a veto, it’s very irresponsible. This bill is exactly the kind of thing that gives the income tax repeal a fighting chance at passing.
- Get those police detail regulations done, and make them bold. It has not escaped attention that the administration has blown the statutory deadline to issue new regulations on the use of police details at construction sites. This issue is relatively short money, but its symbolic value is immense. Everyone knows that we are the only state that uses police for all construction projects, and everyone therefore also knows that it is not necessary to do so. (Are there really that many more construction accidents in the other 49 states?) This issue, perhaps even more than the fiscally more important pension bill, could determine the result on the income tax repeal. They have to get this one right.
- Ditch the casino bill. It’s a loser. The House hates it, and so does the Governor’s base. By re-upping casinos, the Gov would just restart a battle that did him no good at all, and that he almost certainly would lose again. Casinos were a huge distraction in a session that otherwise went pretty well for Patrick. There is no reason to waste the capital he has now gained on something that is both bad policy and bad politics.
- Put revising the 70% union buy-in for GIC on the front burner. Allowing municipalities to buy into the state-run Group Insurance Commission for health insurance is a great idea that could save municipalities millions of dollars, and could thereby give an important boost to the biggest of Governor Patrick’s not-yet-delivered-on campaign promises: property tax relief. But requiring 70% union buy-in was a mistake that has made it difficult for cities and towns to take that step. Revising the law allowing municipalities to join GIC should be a major priority for 09-10.
- Get the ball rolling for a progressive income tax. This is a multi-year project, since it requires an amendment to the state Constitution which could not appear on the ballot before 2012. It’s a big political risk; several previous efforts have failed. And yet, a progressive income tax is without question the best and fairest way to raise desperately needed revenues from people who can afford to pay a little more in order to relieve pressure on the property tax. There are progressive legislators in the House and Senate who would sponsor a proposed constitutional amendment, but they need the Governor’s strong, out-front backing to do it.
Here are some ways to structure the proposal that, IMHO, would greatly increase its likelihood of passing both in the legislature and, ultimately, on the ballot:
- Make it a guaranteed tax cut for low-income residents. For example, you could write into the amendment that the tax rate for people under 300% of the federal poverty level could not exceed 5% for ten years after the amendment takes effect. Instant tax cut for those who most need it.
- Similarly, make it at least a wash for middle-income residents. I’m not sure what the cutoff would be (600% FPL?) but find one, and cap the tax rate at 5.3% for that group, again for ten years following the amendment’s passage.
Are we talking about a tax hike on the wealthy? Yup. But couple it with a 10-year tax cut for low-income folks, and guaranteed tax neutrality for middle-income folks, and you’ve taken away a lot of the weapons that those opposed to this idea would otherwise bring out.
I haven’t run the numbers on this idea, nor do I have the wherewithal to do so. I’d be very interested to hear what folks more knowledgeable than I am have to say about what the tax rate on the wealthy would have to be in order to generate appreciable new revenue, assuming that my ten-year caps are included.
What are your ideas on Patrick’s policy priorities?
Please share widely!
These are great proposals. Here are a couple of additions:
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p>1. Move from defined benefit plans to defined contribution plans in public employment. Private employers figured this out a long time ago. Why should the Commonwealth bear the investment risk that almost no private employers are willing to bear anymore, and why should the public put up with the constant political and financial incentives to allow unfunded liabilities to accrue, or worse, to cook the actuarial books to make it appear that pension liabilities are fully funded when they are not?
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p>2. Develop a plan to pay down the debt of public authorities like the Turnpike and the MBTA. If this means a reduction in service, then it means a reduction in service. If it means fare and toll hikes, or tax hikes, then it means fare and toll hikes, or tax hikes. We can’t live in la-la land forever, and the recent attempt to extend the Commonwealth’s credit to permit refinancing of a portion of the Turnpike’s debt just goes to show the danger to taxpayers that these debts present. I’m a T rider, so I hate to say this, but let’s tighten our belts. Of course, a debt paydown plan must be accompanied by increased centralized control over the agencies by the governor, and a real attempt to eliminate patronage jobs and hackery of all kinds.
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p>3. Bring the fire fighter’s union to heel. This goes along with David’s thought about police details. I respect our fire fighters, but really, is there any more potent symbol of government waste today than the disability pension fiasco in the BFD?
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p>Sorry for the lack of links–these are just a few quick thoughts.
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p>TedF
The private sector is not a model for how to treat workers. That government continues to offer its employees DB plans is, in my opinion, a major part of the reason that the great risk shift has not progressed even further along, and at a greater clip, than it has. What “private employers figured out” a long time ago was how to profit from screwing their employees.
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p>Disclosure: I am a public-sector employee with a pension… and proud of it.
vetoing the pension bill, getting rid of the police details and dumping casinos aren’t even partisan issues.
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p>We’ll at least get to see who’s ballsy enough to say no to the unions.
I am not aware of any state statute that requires police details. These are local decisions, often negotiated into contracts. If local officials did not want to use police details, they have had ample opportunity to put that into practice.
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p>Would this proposal ban use of police?
Would it nullify contracts and prevent it from being a negotiated term in the future?
Would it provide incentives for municipalities who did not use police details?
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p>If not, then I don’t see this affecting any change at the local level.
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p>Have you ever seen or participated in a debate on this issue in their town/city? I have. It’s not pretty.
And yet, a progressive income tax is without question the best and fairest way to raise desperately needed revenues from people who can afford to pay a little more in order to relieve pressure on the property tax.
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p>If you support a progressive income tax but aren’t yourself currently paying the voluntary higher rate, you are a hypocrite. I’ve asked BMGers who of them pay the higher rate and never once got a response. Safe to assume no one is paying that “little more”?
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p>So, let’s see why we need property tax relief:
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p>Who here would like to pay for the $13M we spent to purchase a track of land?
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p>Or the $500K we’re going to spend to install artificial turf?
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p>How about the $2M we had to spend to clean up an oil spill that resulted from neglecting maintenance on our buildings? Or the $4M estimate to repair or replace our town hall (again because of neglect)?
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p>Would you like to send money to our subsidized day care (not for low-income families — just a simple lottery) or the town-owned orchard?
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p>Would you like to pay for the double-digit pay increase we gave to the outgoing police chief? Or chip in for the lifelong pension payments that will result?
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p>Those are exactly the types of frivolous spending decisions that would be paid for by the “wealthy”. I’d be upset if anyone except those who were authorized to make these spending decisions had to pay for them.
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p>A progressive income tax would not result in property tax relief. It would result in only increased spending. All one needs to do is look at local spending from 1995-2002. Can you point to even one community that lowered its tax bills after becoming flush with state funds? Of course not! They spent it!
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p>I’m not saying this is evil. It’s simply human nature. There is no endeavor which we couldn’t be made bigger or better (or just bigger!) if we could just spend more money.
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p>Just because I support higher tax rates for everyone in my income category doesn’t mean I have to volunteer to pay the higher rate if everyone else isn’t also required to pay it. This is a foolish argument.
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p>TedF
I never said you had to volunteer to pay the higher rate. I only said that you are a hypocrite to call for everyone to do something you are unwilling to do yourself. I stand by that statement with appreciation of your honesty and respectful disagreement with your conclusion.
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p>Imagine if the power of the “netroots” — those same people who raised thousands for the Patrick campaign — used those same skills to have people voluntarily pay more in taxes. And imagine if then the government took that money and actually did something good with it. Heck, you might win over a few skeptics.
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p>Surely, if the Dems in this state can raise $5M in one night to say “Happy Birthday” to Obama, they can do the same to enlighten us all on the benefits of higher taxes?
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p>Let’s go back to David’s statement about why we should have a progressive income tax (emphasis mine):
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p>
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p>That begs the question — Who is feeling the most pressure from property taxes? The communities with the highest average tax bills are also the communities with the highest per capita income. Why would you tax them more on income simply to return it to them via increased municipal aid? They can already raise more in taxes without the state’s involvement.
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p>The property tax relief would go to communities with lower per capita incomes? How would that equation work, and what of those who live in communities with high per-capita income but who themselves are not wealthy? We do all remember 40B and the state’s desire for every community to have “affordable” housing. Shouldn’t these people benefit from property tax relief?
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p>The ‘wealthiest’ communities already pay far more in income taxes than they receive back in state aid. For Westford, we receive about 1/3 the amount we pay in state income tax. We also have some of the highest property taxes in the state, fees for almost every service imaginable, 4% unemployment, foreclosures on the rise, etc.. And there are the unrecorded private stories — of people with high income and high debt and people who they take care of who will never appear as a “tax deduction” who are “rich” and therefore must be vile, too, huh? Not paying their “fair share” for services that they do not use.
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p>Our “less wealthy” neighbor — Lowell — has lower property taxes, no fees for school activities, more federal and private grant money. You may say they have both more need AND more use of public funds.
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p>Will they get the “property tax relief” — and will that mean all of them, even the wealthy among them — while the “middle income” in rich towns not only get just a “no income tax increase” from David, they also get a property hike voted in by the wealthy majority (who must make up for the funds diverted to their neighbors).
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p>What is their choice? To move to Lowell?
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p>For an idea touted as the “best and fairest” it seems neither best nor fair.
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p>Dweir, on the meaning of hypocrisy, “I do not think it means what you think it means.” It would be hypocritical of me to demand a tax increase and then engage in tax evasion to avoid paying the higher taxes. It would be hypocritical of me to ask others to volunteer to pay a higher tax but refuse to volunteer myself. But how in the world is it hypocritical to call for a law that would require all of us to pay a higher tax together?
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p>I think you are just confused about what hypocrisy means.
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p>TedF
I assumed that underlying support of a mandated tax increase was the belief that people of a “certain income” should pay higher taxes. Perhaps you don’t believe that and are simply acknowledging that compelling people to pay will generate more revenue than making it voluntary.
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p>Or, maybe you do believe that and are tempering that belief based on the behavior of others.
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p>I believe that 65 mph is a reasonable speed limit on the highways, but unless the rest of the traffic is obeying the limit, I’m going to go 75 mph. If not a hypocrite, than what am I?
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p>
Son, you’re breaking the law.
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p>
… …voluntary revenue sources for the state. I’d love to see you manage your monthly expenses on an employer paycheck that was voluntary. Maybe you could hold a bake sale.
Progressive tax. Let’s vote. Ok, we lost. Let’s vote again. Hmm, lost again. How about now….Think sisyphus.
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p>How to get to progressive tax. Per IRS, in 2004 (most recent), those Massachusetts taxpayers earning less than $100,000 reported total Adjusted gross income of $90.2 billion. Those earning more than $200,000 reported total Adjusted gross income of $102.2 billion.
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p>The rough math is that each .1 percent increase on those over $200K AGI folks, yields $100 million. Chump change.
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p>Lower the ‘poor’ rate to 5% and jack the rich rate to, say 7%, you lose $270 million to the poor and gain $1.7 billion from the rich. Net $1.4 billion.
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p>But the politics to get there! Class warfare? Why do you suppose it failed twice. It’s because people aspire to be wealthy, and if they do succeed, they don’t want to be fleeced by a law they voted for themselves.
and bundle the progressive income tax with a gay marriage ban.
and we have a democratic governor who could take up that mantle. Coupled with David’s ideas, I think it has a very, very solid chance of passing. It would be tax neutral, or even a cut, for the vast majority of Mass citizens.
I suspected they were around that area and that’s why I support it. The day I’m making 200k (and back living in MA?) I’d be glad to pay 6-7%, still lower than most highly-developed states, to support the commonwealth.
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p>What if we alter the plan to lower the ‘poor’ (<100k) rate to 4%, keep the middle 1-200k rate at 5.3% (that’s only effective on dollar 100,001 and up) and then put the rich to the 7?
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p>I mean, who can say no to that? It gets more revenue while taxing most people less. And the people making more than 200k tend to be the ones moving to expensive school districts and voting for overrides anyways (broad brush).
I can say no to that. I can always say no to class warfare. I aspire to someday make over 100K. I think all income should be taxed at the same rate.
…until you consider the real numbers. As an example (very round numbers to keep the math simple) say there was a flat tax of 10%. Take a household income of $30K, which would be taxed to the tune of $3000, leaving a take-home pay of $27K. This $3000 will be missed by the family. On the other hand a household income of $300,000 would be taxed $30,000 and left with $270,000, which is still plenty to live on, and a household making $3 million would be left with $2.7 million and barely notice the $300,000 in taxes. Ten percent is hardly the same to everyone.
it is 10%. Math doesn’t change. It is unfair to tax different people at different rates. It punishes achievement. It is wrong. I can’t say it more simple than that.
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p>There we go.
…but need does. A family making $30K can use every cent they can get, but one making $3 million can more than afford $300K.
I don’t know the history of past attempts changing the tax rate scheme or why it failed.
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p>But, one of the most difficult aspects is defining the formulas and cutoffs.
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p>A family making $30K doesn’t really make $30K. They also receive subsidized or free health insurance. Possibly there are other “incomes” they qualify for such as food stamps or housing.
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p>For sake of discussion, let’s say the cutoff for these forms of aid is $30K. If you make the cutoff, your income including this assistance might total $35K. But, if you don’t make the cutoff, then your income might be $31K. In this way, government actually creates an incentive for the person earning $31K to not make so much money.
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p>Granted, this incentive competes against the desire to earn substantially more income. But, I know people who dare not risk getting and losing a job because for a brief period of F/T employment, they would lose their housing allowance.
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p>People will resent paying for benefits for others when they can barely afford the same for themselves. I think this goes all the way up the income chain — just look at the complaining that goes on because one community receives 5% more aid than another “like community”. At the root of these complaints is why should they get theirs when I’m not getting mine?
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p>For progressive tax advocates, contrasting $30K against $3 million is easy. The problem is that those earning $3 million are few and those earning $30K are many.
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p>Therefore in order to generate the money government requires, it defines ‘rich’. Suddenly, the guy earning $80K is rich and qualifies for the higher rich rate.
Income over 90k or 100k or whatever doesn’t get hit for that 15%. Big deal there, they’re actually paying less than us.
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p>You ok with that?
First, it’s not 15%. It’s 12.4% for self-employed or 6.2% for employees.
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p>And second, it’s social security. SS was to be a retirement system whereby you received as benefits an approximation of what you paid into the system, with the poor recipients getting a minimum payment regardless of contribution. That was the intention at the inception.
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p>So yeah. I’m ok with someone’s contribution ceasing at a certain point if, by contributing more they’d receive no more as benefits.
Are we talking strictly gross income? Then I could see a scenario where this will have a more significant impact to the wealthy. Are we in a system now that allows those with wealth to adjust dollars from income and that is taxed at a higher rate. But with a flat tax I could see how that would increase the overall burden to the wealthy and not the middle class.
The less income one has the smaller the percentage of it that is disposable, that is not devoted to meeting necessities. When they go out to the cinema, those who are earning $27,000 do not watch movies that are 10% smaller than those who earn $30,000. They don’t consume 10% fewer calories or need 10% less heating.
Then how about something like this:
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p>The first $50K of income is tax free.
Income between $50-100K is taxed at 4%.
Income between $100K-200K is taxed at 5%.
etc.
Slightly progressive, is still progressive.
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p>If the electorate ever caves and allows a progressive system within the Commonwealth, the slippery slope will take care of the rest. It will only take a few years or a perceived fiscal crisis to conclude that the 4% should be 6% and the top rate of 5% raised to 10%.
Now, everyone pays 5.3%. Why wouldn’t a “perceived fiscal crisis” cause the rate to be hiked to 6%, or 7%, or whatever? Why does adopting a progressive tax structure make that kind of “slippery slope” more likely?
It serves to pit classes against one another and allows one group to suffer a tax increase at the hands of the majority. i.e. it’s a fiscal crisis, we must raise taxes but only on the rich. Divide and conquer politics.
That’s why it’s not 5.00% any more.
is that politicians love raising revenue from anything other than broad based tax increases. Bonds, lotteries, cigarette taxes, ‘closing corporate loopholes’, fees, tolls, soft drink taxes, fur taxes, adult entertainment taxes, privatization. Any source of revenue where the majority of people don’t actually see they money going from their pockets to the MA general fund. Progressive top tax rates would be another source of low hanging fruit for politicians who don’t want to make tough decisions. They can just increase taxes on ‘the rich’ without having to really examine structural budget problems or do difficult economic analysis to determine which sources of revenue can be increased with as little possible negative affect on the MA economy.
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p>Maybe a progressive personal income tax is the best way to do that. I’m not per se against a progressive personal income tax. But I’d have to see a more specific plan showing the specific rates, the income levels where the different rates would kick in, and an analysis of the affect the new tax system would have on the overall MA economy. Simply arguing that its “fairer” to have a progressive tax system or dreaming that a progressive tax system would raise enough from the top 1-2% to give a tax break to the bottom 98-99% just doesn’t cut it.
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p>Looking at the bigger picture, there is another recent post about publishing and publicizing the budget so that people actually see how the state general fund is being divvied up. I think thats a good idea. I think MA should publish and publicize its revenue streams as well. People should know how much each product and activity would cost without taxes, and then how much it costs after taxes. Lets make the state finances transparent and simple so that everyone knows exactly how much they’re putting in and exactly how much is being spent. No more raising revenues through these opaque means that politicians love. The ideal state finance system would raise revenues through broad based taxes and divvy up the revenues in a transparent manner.
So you’re for the proposed amendment? Welcome aboard!
I will not be in favor of plans to increase the revenues of government until I can support corresponding spending plans.
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p>What I am offering is merely a suggestion which I personally find more palatable than the schemes outline above.
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p>Additionally, I would suggest that any resident of the state — regardless of income requirements — be eligible to receive benefits such as health insurance, housing, food stamps, services from social workers — anything that is paid by state income tax dollars.
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p>My belief is that most people will not take advantage of such services whether it be out of personal pride or the restrictions they place on personal freedoms or out of a sense of what is “right”. However, you may just find that more people will feel willing to support programs which they themselves could benefit from if they so chose.
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p>Consider this: Imagine if your public library were only available to those residents who met income eligibility requirements. If your income was too high, you’d have to choose some other route — purchasing your own books, starting a private “membership-based” library, etc..
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p>Knowing that you were excluded from using the public library, would you be more or less inclined to support a tax override described as necessary to “save the library?”
the progressive income tax were revenue neutral? Would you support it (or oppose it) just on fairness grounds?
Does that tax schedule increase geometrically?
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p>Income between $50-100K is taxed at 4%.
Income between $100K-200K is taxed at 5%.
Income between $200K-400K is taxed at 6%.
Income between $800K-1.6M is taxed at 7%.
Income between $1.6M-3.2M is taxed at 8%.
Income between $3.2M-6.4M is taxed at 9%.
Income between $6.4M-BillGates is taxed at 10%.
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p>I like it!
… because I spend the first $1,000 of my $27K a year exactly like Mr. Carr spends the last $1,000 of his first $1,000,000. Our pain at the loss of the $1,000 and it’s impact on our lives is exactly the same, because the math says 1K = 1K.
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p>Right. /snark
The first X dollars you make (pick a number, say 200% of the poverty level) you do not pay taxes on that.
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p>If $X = $20k and and the tax rate was 6%, and you made:
$20k you would pay 0 in taxes.
$120k you would pay $6k in taxes.
$1,000,020k you would pay $60k in taxes.
$10,000,020k you would pay $600k in taxes.
$20,000 you would pay 0 in taxes.
$120,000 you would pay $6k in taxes.
$1,000,020 you would pay $60k in taxes.
$10,000,020 you would pay $600k in taxes.
$20,000 you would pay 0 in taxes.
$120,000 you would pay $6k in taxes.
$1,020,000 you would pay $60k in taxes.
$10,020,000 you would pay $600k in taxes.
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p>Sometimes, I really wish I could edit my posts!