The House and Senate have great momentum. Ethics reform moved through the House. Transportation reform moved through the Senate.
Like Massachusetts, New York State is facing massive budget shortfalls. Making cuts can only go far before you start losing hundreds of teachers and police and other public servants. So New York is taking the right step — it’s raising taxes on people who make over $300,000 a year to 8.97%.
Since 1980, the super wealthy have pulled away from everyone else. Wealth inequality has steadily grown. In fact, most families are making less now, adjusted for inflation, than they were in the 1970s. Only the rise in the top fifth, especially the meteoric rise of top 1%, has brought the average up.
The time is right to introduce more progressivity into the Massachusetts tax code. It’s true, we need the 19 cent gas tax increase Governor Patrick has proposed. In fact, we need at least 12 cents just for crucial investments in public transportation to make our economy green and competitive in the future, let alone roads and bridges, as Representatives Carl Sciortino and Alice Wolf have boldy pointed out. The Greater Boston Chamber of Commerce and the Mass Taxpayers Foundation and the Business Roundtable back them up, calling for a 25 cent increase.
Yet the gas tax, unfortunately, a regressive tax — just as MBTA fare hikes and Mass Pike toll increases are regressive. To some extent, the gas tax is an excise tax, that is, it is better if people drive less, and good to give people some incentive to drive less. But gas prices alone have little impact on people’s transportation options. It takes walkable neighborhoods, better public transit, and wise regional and local planning to get people out of their cars. The gas tax has a much smaller impact on a wealthy person than a poor or middle class person.
Increasing the progressivity of the income tax in Massachusetts can help. By increasing the personal exemption dramatically and raising the actual rate, as Representative Will Brownsberger proposed here on Blue Mass Group, we can save low-income and middle class families a bundle, while recouping the money from those who have more ability to pay.
Well said, and right on target.
but people do want to see the reformer actually reform something before jacking up the taxes, you know, just like he said he would during the campaign? There’s a reason why the poll numbers are tanking. Before taking this step, why not root out the redundancy and waste, the crazy-ass pension plans and all the rest of it.
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p>I think after that’s done…people might be more receptive. All the bad press of late isn’t going to put people in a receptive mood.
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p>I know there aren’t too many fans of Therese Murray’s push for “reform before revenue” but a real reformer isn’t going to give up the best leverage they’ve had in decades.
…or what the economy looks like, a progressive tax is simply economic justice. I wanted it during boom years and Republican governors, and I want it now.
But we have an ugly stew of incompetence and mismanagement in our government There is no sense throwing more money at that until it’s fixed. This is the best leverage we’d had in decades to get something resembling reform. If you think of the average taxpayer as a shareholding in Commonwealth of Mass, Inc…understand that we want a restructuring of the company before we add any more paid in capital.
I support a progressive tax code. But I like to think I’m sane. So I won’t waste my time debating this more Massachusetts when I KNOW what the results will be.
than a gas tax, which I think will hit middle and low income people the hardest. I will support a gas tax but only if it will be used responsibly for infrastructure improvements, that jobs go out for bid, and not to fund 20 new oversight positions for friends and family. Sorry, I’m having a hard time trusting here.
I would like to see a progressive tax with a gas tax, but all this with across the board reform.
I can’t possibly drive any less than I do, so a gas tax will not compel me to drive less. It will just take more from my household budget. I know many people who also drive as little as they have to, and have already bought the smallest car they can functionally use.
But, we can also do other things
* Ensure the tire pressure is correct
* Take extra weight (books, golf clubs, etc) out of the back seat and trunk
* Make sure the air filter has been changed recently
* Not speed
* Anticipate red and green traffic lights and simply coast when it won’t cost you any delay whatsoever
* Never idle when the car is in park
* Not accelerate so quickly, especially on local roads
* Go easy on the AC, including parking the car in the shade when possible in summertime
* Anticipate traffic delays and schedule accordingly
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p>Do all of those things well, and you can easily shave your gasoline consumption by 10%. Already do all those things most of the time? Do them all of the time.
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p>Then, next time you’re in the market for an automobile, know that your choice at that time does have an impact, and that purchasing a higher mpg vehicle can help insulate you from future gas price hikes, due to tax or other factors.
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p>We can all do better. Every single one of us.
But if the government were to apply the same types of point by point savings measures in how they spend taxpayer money, then we wouldn’t even need to discuss a gas tax. I’m not sure why the blame is always placed on drivers. I know some are completely irresponsible, but I think for the most part people try to conserve and cut costs. I hate driving, I don’t do it unless I have to. When I run errands, I combine many into one trip. Honestly, I could not drive less than I already do. Except I do throw caution to the wind once year and spend a week at the Cape, and drive anywhere I choose to go with reckless abandon for completely self-serving reasons. It’s called vacation, and I will not be giving that up any time soon.
but with respect to
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p>I think you’re entirely wrong. The 19 cents a year would be worth approximately $500 million a year. You really think you can find $500 million in wasteful spending within transportation to avoid this tax hike?
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p>Look, there is waste. Of course there is. Any organization bigger than 10 people is going to have inefficiencies and bad decisions and the occasional plum job. Nobody is arguing that these avenues shouldn’t be pursued and squeezed. But I think that if you have an honest approach to the budget, you’ll find you can’t come anywhere near that kind of money in savings. So sure, find the savings. The “reform” part of the discussion will help do that, if only by streamlining the organizations so that it’s harder to create mini-fiefdoms within the organization.
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p>But, the facts remain:
1. Everybody can cut their gasoline consumption in the immediate term, and in the longer term.
2. There is nowhere near enough waste to find $500 million a year. The infrastructure needs investment.
3. Reform is clearly on the agenda and being pursued.
4. Higher gasoline prices reduce gasoline consumption every single time. There’s data at the state and national level, over time periods from weeks to years.
5. If the USA is going to have a super 21st century, we’ve got to wean ourselves off of oil consumption. Given price sensitivity (4), a gas tax is an incredibly effective way of doing it.
6. Climate change.
7. A gas tax is regressive, but having poorly functioning roads, trains, subways, and buses is even more regressive because the poorest won’t be able to keep their jobs due to transportation difficulties.
and I look forward to seeing it’s benefits. I am going to try to trust that it will be used fairly and wisely. I will also try to explain to people in my travels (so many are raging about it)why the gas tax is important, and how it will benefit our state. If the gas tax produces obvious results statewide, it will be a “win” for everyone. That’s what I’m hoping for.
raging about taxes and reform, it’s because I still have a hard time believing that it is wise to take more from the struggling middle class and lower income people, at least in our current economic condition. I am trying to compromise.
it is hard. I’m glad that you’re open to the discussion and willing to have it like an adult, complete with honest dialogue and an interest in facts and good debate… unlike some other types floating around here.
I’m humored that the same people that complain about the Federal income tax and the gross inequalities often want to emulate that mess on the state level. One tax rate across the board tends to get a bigger bite of the wealthier than increasingly higher rates that will be subject to all sorts of deductions. And, yes, deductions will enter the formula as politicians seek tax relief for their wealthy contributors.
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p>Oh!, that we could save money in this state, but Justice4all’s call will fall on deaf ears in the state house. They’re still running “business as usual” (Modified Position) for the state — they won’t change until the bow of our ship of state slides under the waves.
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p>Oh well, a newer, more complicated return will serve to increase the wealth of the accountants and lawyers that prepare the returns. It’s an ill wind that blows no good.
There are lots of bitching about instituting a progressive income tax in MA (isn’t it unconstitutional?) but maybe we could have a Wealth tax instead. There are thousands of people who are living large due to family wealth, inherited wealth and “spot” wealth (book, movie deals, jury awards…). These people may have low to moderate “income” and thereby pay very little tax while they sit on millions in wealth. I’d do it if I was them. You have $10 million in the bank and work at an average job making $60-100K and pay lower taxes. Obviously you would have to include investment income on the interest but there are so many ways to hide this income using legal investment rules/trusts…
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p>Make the billionaires and millionaires pay taxes on their wealth and that would be enormous compared to any “income” taxes they generate.
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p>This may be a stupid idea (I’m sure you will all tell me if so) but it’s still an idea.
“Spot” wealth, as you describe it, has already been taxed. The person with $10mm in the bank already paid $6.5mm is income tax. You want to chip away at what’s left every year with a wealth tax. At what level do you stop?
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p>Inherited wealth is taxed when transferred to someone other than a spouse. Of course it was already taxed in the hands of the transferor when they earned it. You want to third bite at the apple post transfer. When is enough enough?
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p>I would like to see this long list of legal ways to “hide” income. Please share it.
but spot wealth doesn’t face a 60.6% tax.
6.5mm in tax on 16.5mm of “spot wealth” leaves 10mm in the bank.
sorry, had it flipped.
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p>Of course, then you take that money and invest it, and pay 15% on dividends and cap gains, which is a lower marginal tax rate than a middle class guy who actually works for a living.
Dividends are corporate profits that have already been taxed at 40%, roughly. Given that they are taxed twice then corporate profits are subject to tax at a roughly 52% rate (if you live in Mass and the dividends qualify for the 15% rate, which not all do).
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p>Congress has in its infinite wisdom decided that it wishes to encourage long term investing via a tax incentive. Good policy? Of course, the market has made this question less relevant since there aren’t a lot of gains being realized these days. Assuming we invested our spot wealth in the stock market then that 16.5mm is now worth about $5mm (or less if we invested the money before we wrote the check to pay the taxes).
Well, we do tax wealth, or at least, the intergenerational transfer of wealth, through the gift tax and the estate tax. Or at least we used to. Massachusetts has its own estate tax, which it wisely uncoupled from the federal tax after the Bush phase-out of the estate tax was enacted.
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p>I take it, then, that you’re with me in opposing an extension of the Bush tax cuts, at least as they relate to the estate tax? Or perhaps an increase in the marginal rates on the Mass. estate tax?
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p>TedF
I want the Bush tax cuts to continue forever but I am totally ok with removing the Estate Tax portion of that bill and restore the $1 million per-spouse exemption from before. I am a little confused why Congressman Earl Pomeroy (D-ND) introduced a bill (H.R. 436) to retain the estate tax with a per-spouse exemption of $3.5 million, essentially freezing in place the estate tax rules in effect this year. The Obama campaign has favored a similar approach to dealing with the estate tax.
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p>Do you know what Obama’s position is to continue the current $3.5 million per-spouse exemption? Also, does anyone know if this estate tax can be avoided by having trusts (like Ted Kennedy and many other “rich” people have setup)?
I’d rather see the entire concept of “income tax” replaced (not supplemented) by a consumption (sales) tax, provided that this is accompanied by an annual or monthly cash payment, distributed to every taxpayer, to address the regressive aspects of any consumption tax. I strongly suspect this would have to happen at the federal level in order to be workable at the state level.
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p>Frank Zappa made the case very well in his 1989 autobiography.
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p>No income tax, and most especially no progressive income tax, is ever going to hit the truly wealthy. This is because the very concept of “income” is essentially arbitrary above a reasonably well-defined threshold. Once the growth in an individual’s total assets exceeds the consumption of that individual, then “income” is whatever the individual wants it to be.
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p>Therefore, the actual effect of any income tax — especially a progressive income tax — is to make it more difficult for a taxpayer to enter that hallowed group. A second effect is to penalize those who consume less and save more, because the effect is to tax the resulting growth of accumulated savings. A third effect is to force an enormous segment of the economy into the black market of undeclared (and therefore untaxed) earnings. As a result, huge segments of the population end up denying themselves access to social security and medicare benefits.
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p>By the way, there is no way — mathematically — to design a graduated income tax that doesn’t penalize either singles or couples, so long as marital status is reflected in the tax rate.
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p>The practical effect of a national consumption tax, therefore, would be to broaden the tax base and by so doing spread the tax burden more fairly. The regressive aspects of this can be addressed by paying each taxpayer a floor amount of something in the vicinity of $40-50K/year (in 2009 dollars, presumably adjusted for inflation). For the working poor, this can be a lifesaver (remember this is in the context of ZERO income tax). For the upper brackets, it would be negligible (some might even choose to donate it to charities).
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p>It isn’t likely to happen in our lifetime, but I think Frank Zappa was right on the money when he proposed it two decades ago. It is, literally, one of the only things that segments of the rabid-right may be correct about.