For one example, we have a concentrated higher ed capacity, virtually the primary export industry of the state, yet all Deval can do is raise public tuition. Pfui! Why not establish a loan forgiveness program with teeth, repopulating our schools, investing in green industry (we are the largest producers of solar panels!), and proving the value of bilingualism in a global economy with interpreters and international service centers? Mike Capuano’s 8th Congressional district has the lowest high school graduation rate in the state, and the highest concentration of college and graduate students on the planet. This kind of town-gown colonialism insults the very idea of America, and de-stabilizes half the neighborhoods in the metropolitan area. A loan forgiveness program with real commitments – not Tisch-like trivial tasking – to serious work for credit and for money both in and after college would give those students resumes that sell even in a tight labor market, while delivering critically needed service to just those communities – Chelsea, Everett, Revere, Quincy, and, of course, Boston and Springfield and Worcester – most in need.
Why not capitalize on universal health care rather than bemoan its cost? ONLY a universal system can realize the profits of prevention. DPH recently released the tentative numbers of new HIV/AIDS cases, showing a 30% decline in the last 18 months. That has nice humanitarian value, but in terms of the Commonwealth it represents nearly a billion dollars lower liability. And DPH did not have sense enough to point that out when the good Governor cut their budget by $70,000,000. Ridiculous! Does he think he’s governor of Nebraska! Finally he gets a department that actually makes money and he decides to cut it’s very soul!
This failure of imagination leads to a despair of delivery, and a depression as deep as any since Hoover. And his best Secretaries flee, while the paper pushers, the gnomes who counted votes in the last election, run the show. This will be a very sorry one term governor until he wakes the hell up.
So, what kind of surcharge are we talking about? How temporary? How do we define high incomes?
I’ve heard the same thing for the past 15 years I’ve lived in Massachusetts. It doesn’t matter what the economy’s like, somebody will always have pretty good reasons for taxing more and spending it through the government.
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p>If you think it through, needs and desires are endless. Politics is about weighing the costs and benefits.
… a 4 for implying that politics is somehow divorced from ‘needs and desires’.
Some blue massers would buy Penicillin for All even if it meant we taxed all the farmers out of business and died of starvation.
Requiring a balanced budget during a recession is totally counter-productive. Perhaps we need an amendment to our state constitution to allow the governor or the legislature to declare an economic crisis and suspend the balanced budget requirement? That would allow the state to start investing in the kinds of progressive programs that Joe suggests.
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p>I definitely agree with the necessity of universal health care, paid for and used by everybody. If China can do it, so can we.
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p>By the way, odd poll there with no options and referring to 2002.
no state can have a budget that isn’t balanced and that it’s a federal issue.
I read recently that something like 17 states do not have a balanced budget requirement. Not sure which ones, though.
It’s pretty easy in Mass to preside over an unbalanced budget. All the Government has to do is say:
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p>1: We’re going to spend in excess of current revenue sources;
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p>2: We’re going to fund the short-fall with Bonds.
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p>See? The budget is balanced, but on the back of long term debt. This, in all likelihood, will fail because:
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p>IF the current budget’s expenses exceed revenues, then why is that shortfall unlikely to be different in the future?
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p>And, IF it’s an event that will continue in the future, the rating agencies will immediately tank the bond ratings.
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p>And IF the agencies downrate the state’s debt borrowing rates will rise, and as I recall, each .25% point rise costs the state about $50 million in debt service because much of the State long-term debt is in variable rate bonds.
States can do whatever they want with their own budgets. It just so happens that most (all?) states require themselves to balance budgets, either through state laws or their state Constitution.
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p>Which leads to a possible way around this: the feds could enact a law essentially invalidating state balanced-budget provisions. That would allow states to deficit-spend. But I don’t know whether it would be a good idea. Lenders aren’t accustomed to states borrowing on an unbalanced budget, so it might backfire. Which is probably why no one has suggested it.
The Legislature raised the balance in the Rainy Day Fund from $641 million to $2.3 billion from FY03-FY07 (following large post-9/11 withdrawals in FY02 and FY03).
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p>Then (as the economy tanks) they’ve withdrawn aboutabout $300 million in FY08, another $800 million for FY09 and plan to lower the balance back down to $888 million through withdrawals and failure to suplement the fund in FY10. Probably this will go even lower unless the economy turns around faster than expected.
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p>The FY10 budget also relies on a conservative estimate of $711 of one-time revenue in the form of federal Medicaid matching dollars. This number will certainly go up as the state gets an infusion of what looks to be over $1 billion for each of the next three fiscal years.
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p>Given the accounting involved with these two “transfers” alone (not to mention the dozens of other ways spending is moved “off-budget”), there is plenty of flixibility for legislators. There is no need and we should not end the nominal balanced budget requirements included in state law that save us all from what would otherwise certainly be massive annual debt payments.
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p>A surcharge on higher incomes is unconstitutional. I guess your point is that instead of balancing the FY 2009 budget, the Governor should kick off a multi-year campaign to amend the Constitution. How about the mendacity of nonsense?
Which is why we liberals who don’t have to run for public office tend to favor raising the income tax in conjunction with spending restraints bur as opposed to authorizing casino gambling or raising other more regressive taxes.
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p>Yes, Massachusetts has a one-rate income tax (currently 5.3%) which makes it less progressive than a graduated income tax.
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p>Yet, we also have a No Tax Status threshold ($8,000 for an individual), and for others a low-income tax credit ($14,000), and a relatively generous personal exemption ($4,400). These levels are basically double for joint filers.
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p>Each of these rules exempt from taxation lower income earners more than higher income earners since, obviously, the exemptions will be a larger portion of lower income earners’ incomes.
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p>Ultimately, it is estimated (by others much better at math than me) that taxpayers with the lowest 20 percent of incomes pay almost none of their incomes in personal income taxes. The middle 20 percent pays 3.5 percent of their incomes in personal income taxes, while the top 20 percent pays about 4.3 percent of their incomes in income taxes.
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p>For the future, I would at least like to see a return to a higher rate for dividends and interest, which would slightly increase revenues while adding to the progressivity of the state personal income tax. A higher rate on capital gains would also help.
But, yes, the most important and best thing we could do for the overall long-term health of our state government is to increase the state income tax rate. Every percentage point would be worth about $2 billion. Well worth a multi-year fight.
Not sure where you got your statistics, but I just divided the total Mass income tax I paid last year by total taxable income and it was 5.65%. One data point.
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p>Further, there’s already a higher rate on capital gains. It’s 12%.
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p>Last, the fight to raise income tax in the downsized economy is justs a loser: employment numbers down, retail spending down, consumer spending down, housing prices down, 401(k) and pension funds down, endowment funds down, wages down, auto sales down. But, taxes and therefore the size of State government, up? That’s the very reason tax increases aren’t getting much traction.
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p>And, I don’t see how you can play the stimulus card at the state level since there’s realistically little deficit spending.
The state income tax is 5.3%. And has been since the Legislature froze the rate there in 2002. And has been since the Legislature froze the rate there in 2002. Here’s the DOR page but googling will get you many other sources:
http://www.mass.gov/?pageID=do…
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p>One data point.
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p>Further, I know there is currently a 12% rate on short-term capital gains (and that 12% is higher than 5.3 %). I was (rather ineloquently, I admit) restating my point there about a return to a higher rate for dividends and interest. In fairness, this rate all applies to the sale of collectibles.
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p>HOWEVER, the long-term capital gains tax rate is just 5.3% (though that is up from the varying smaller rates in place for much of the 1990s and the early part of his decade). As you probably know, the vast majority (over 90% is the estimates I’ve heard) of capital gains is taxed at the ordinary 5.3% rate.
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p>I was (rather ineloquently, I admit) essentially restating my point there about a return to a higher rate for long-term capital gains (which is at the heart of the issue since almost all capital gains are long term gains from a state tax perspective). This isn’t really so much about the hundreds of millions this could raise but about restoring more progressivity to the flat state income tax.
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p>Last, I don’t disagree that raising the income tax in a downsized economy is a political loser. It’s too complicated to explain to voters. As a non-elected official, I still maintain it is the best policy alternative to casinos, a gas tax, and large cuts in spending on important state priorities (like health care, education and infrastructure). For the record, I’m against any state spending or tax cuts that aim to “create jobs” or provide a “stimulus.” But that’s an argument for another day.
Higher income taxes are not really a loser, Patrick won even though Kerry Healy wanted to cut the income taxes to 5%.
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p>The capital gains tax is much more damaging to the economy, because the money it targets goes straight to expanding the most productive jobs in the state. Bill Clinton owes his presidency to cutting the capital gains tax in 1997.
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p>Massachusetts had cut the rates to 0% for the 90s and had a great expansion, but we missed the entire 2000s boom because Swift raised capital gains and Romney left them there.
Ahh yes, if only we just stopped taxing the rich. Then that money would trickle down to the workers and things would be so much better. Yawn.
I didn’t say that, I said you can raise income taxes and still win. People expect services from the state and have to pay for them somehow.
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p>But the tax on capital gains is a discouragement of investment in productive jobs. The only way you earn a decent wage from working is to connect capital with your labor, such as an investor in your company buys a computer so you can move up from a typewriter.
You mean…raise the income tax? Sorry Mr. Mendacity of inspiration, but the big words and fluffiness isn’t going to get past this crowd. If you want to raise the income tax, then say “we should raise the income tax”. Mitt Romney knows it — now you know it.
I have a suspicion that they would spend the last dime and borrow more—as soon as the collapse appears imminent they would resign their seat and move out of state and pray that no one tracks them down. The ignorance and grasping greed of our present crop of politicians is really stunning. The average schlepper in Massachuseyys hasn’t a clue. he and his wife continue to go to work and pay higher taxes and say nothing and more incredibly, they vote the same hack back in(that is if they even vote).
(1) The state is broke, and will have a hard time raising the funds to spend on “stimulus”;
(2) Most towns and cities are worse off than the state;
(3) Higher taxes to fund a “stimulus” in recessionary periods is always a bad;
(4) States cannot print money. So sorry;
(5) I bet more people in MA received net benefits from the state government than people who pay in (no cite) so political change is not forthcoming.
I honestly don’t see how economic stimulus really works to create jobs or fix an economy or how spending into debt is wise fiscal policy-havent we been attacking the Republicans as deficit spenders? isn’t fiscal conservatism our philosophy now?
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p>Someone will have to pay for this down the road. I agree that a universal healthcare plan will save the state money in the long run and save many small and large businesses, I also agree that investing in education, especially debt forgiveness, is a great long-term idea. What I disagree with is the idea that making this longterm investments will reap short term gains economically. I simply do not see the data or the statistics anywhere to even justify that proposition.
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p>What you are talking about is not short term economic stimulus which I have been arguing could be produced by reducing taxes in certain areas, mainly consumption, while raising them in other areas that affect wealthier people that can afford them. Also we have to save essential state services and cut the waste. The main reason I considered voting for Prop 1 was because I felt it would empower this Governor to make the cuts he so far hasn’t had the balls to make. Police details. Killing the tollbooths. Merging the highway authorities. Privatizing Massport. These were all ideas he discussed during the campaign to trim money, instead he is cutting the same way Romney did on the backs of the poor, the sick, the elderly, and students and his only idea of innovation was casinos an idea that has produced a disaster here in Illinois and in neighboring Indiana since the social costs outweigh the economic gains.
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p>We can save social services while trimming the waste. Sack Trav from the pension board, reform the lottery commission, sack people that we are paying who don’t do their jobs, decrease legislative and judicial pay, cut state pensions. There are so many more cuts we should be making first before we immediately go to the hospitals, schools, etc.
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p>In any case if the Gov is making cuts I dont see how he can get stimulus without spending into deficits which are rightly unconstitutional, or getting loans which would be just as fiscally irresponsible.
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p>Perhaps if this federal stimulus package had more aid to states and less pork barrel projects we could stimulate MA on the feds borrowed dime.