Blue Mass Group

Reality-based commentary on politics.

Budget choices and consequences

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Our governor and Legislature are at a critical juncture, faced with the choice between making sweeping cuts that could have far reaching consequences for the health and well being of the state or raising new revenue to support the public structures that keep our state and its economy functioning smoothly.

At its deepest level, the conversation is about what kind of state we want to live in and how we are going to pay for it. But so far, the discussion has been relegated to cuts.

Governor Patrick’s announcement he plans to lay off 2,000 employees sent shockwaves through the state yesterday. State officials are anticipating a revenue shortfall of $600 million for this fiscal year and $2-3 billion for next year. As advocates point out, cutting 2,000 jobs doesn’t simply mean 2,000 people are out of work.

It also means services and programs will be cut. Higher education, public health, human services are all on the chopping block. Patrick is also seeking powers under state law, to make cuts in the judiciary branch and to Local Aid. This means the cuts could also affect everything from the judiciary branch to schools, fire and police departments.

In times like these, the public systems we have built in Massachusetts are more important than ever – job training programs, social services, our public higher education system which is training the skilled workforce that attracts businesses to our state and grows our economy.

Leo Sarkissian, executive director of Arc of Massachusetts, a group of organizations providing care for the developmentally disabled, is among those calling for new revenue. “Replacing the recent increase in the sales tax with a progressive income tax would not only address a large portion of the shortfall but would lead to a more stable and equitable tax policy,” he testified this week in Framingham, during a meeting sponsored by the Legislature’s Joint Committee on Revenue as part of its listening tour.

Last night on Emily Rooney's Greater Boston show (view here, 10min, 30seconds into the program), Somerville Mayor Joseph Curtatone said leaders in the state need to have the courage to “deal with the gas tax,” noting that critical state transportation infrastructure projects will not likely be funded without a gas tax.

Also on Rooney’s program, Mass Municipal Association Director Geoff Beckwith agreed. “It’s not a question of whether a gas tax gets passed, it’s a question of when,” he said. “The longer we wait, the more we’re going to put off investments in our economy.”

A legislative committee is looking into the state’s Tax Expenditure Budget, a document which lists exemptions, like the state’s lack of a tax on real estate transfers and the revenue the state forgoes for each ($2.6 billion for the real estate transfer tax. $6 billion for not taxing services).

A tax break benefiting large corporations in Massachusetts grabbed headlines Monday after legislators learned it would cost the state $535 million over the next seven years. Want to learn more about the Tax Expenditure Budget? Come to ONE Massachusetts’ Tax Expenditure Budget Training with Peter Enrich:

Location: 30 Winter Street, 9th Floor,

Boston, MA 02108

Date: October 22, 2009 – 5:00pm – 7:00pm

(cross posted on ONEMassachusetts.org)

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  1. In times like these, the public systems we have built in Massachusetts are more important than ever – job training programs, social services, our public higher education system which is training the skilled workforce that attracts businesses to our state and grows our economy.

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    p>For instance, our Commonwealth has done a good job of administering the food stamp program by developing a program with our Dept of Agriculture that got recipients — including the newly unemployed — double the value of food stamps at Farmer’s Markets this summer.

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    p>That nice little bit of good management can play a role in stimulating our economy according to an July article in the Wall Street Journal.

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    p>

    The president’s stimulus plan has been aimed primarily at the top of the economy, pumping money into banks and car companies and state and city governments. But it also has put more money into the hands of the poorest Americans by boosting monthly food-stamp allocations. Starting in April, a family of four on food stamps received an average of $80 extra………………..

    Money from the program — officially known as the Supplemental Nutrition Assistance Program — percolates quickly through the economy. The U.S. Department of Agriculture calculates that for every $5 of food-stamp spending, there is $9.20 of total economic activity, as grocers and farmers pay their employees and suppliers, who in turn shop and pay their bills.

    An important investment of our tax dollars don’t you think?  

  2. How very generous of it!

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    p>So all revenues/assets belong to thh’state’ and we are graciously allowed to retain some for our own selfish uses?  As the ‘state’ in its allwise beneficence can aid us better than we can ourselves?

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    p>Despite the face that we supporers of thh’state’ work and take risks to earn rewards, and when we fail we cannot unilaterally raise our wages so we must hope to plunge into utter poverty so the ‘state’ can properly assess our needs and allot us our share of what once was our own labor and initiative?

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    p>The ‘State’ is not some independent Yabba-the-Hutt entity entitled to tribute from the members of the Commonwealth…oh, wait.  Maybe it is…

    • We are a “Commonwealth” after all which means that some of our wealth is commonly held.  It is still ours, but in our collective bank account rather than individual accounts.  I’m obviously not saying hand it all over, but the state is a collection of the people deciding together how to spend the money and if less is being collected in taxes that is by definition “forgoing” revenue.  As long as such revenue is raised by elected representatives it is legit, though the amount, type, and what it gets spent on is certainly up for debate.  I wouldn’t say it is generous since if anything the state is LESS able to be generous about public services the less revenue it collects.

    • Peter, I’ve been going nuts trying to find the site for the article/book that argues that the risk taking wealthy should pay more in taxes to support government because America has the laws (copyright, intellectual property, among others)and the systems (stock market) and (gasp) regulations, never mind the tax credits and various loopholes that lower the risk and support individuals who wish to invest their personal energy, time and captial into growing and maintaining their personal wealth and at some point we hope create jobs with a living wage.

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      p>The only quote that sticks in my mind is one from Warren Buffet who said he never could have gotten rich in Bulgaria (or some other underdeveloped country.) No offense to Bulgarians.

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      • He’s also been known to say that if there is a class war then his class is clearly winning.  He’s also bothered by the fact that his secretary pays a percentage of her income in taxes than he does.

    • Peter I finally found the source for the Warren Buffet quote in an old article in Tom Paine by by George Lakoff and Bruce Budner.  

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      Several main progressive values support the idea of progressive taxation. One is the belief that the common wealth should be used for the common good. Another is responsibility, the responsibility that citizens have to pay for the benefits we receive from our common wealth. And still another is fairness. These values intertwine on the question of progressive taxation…………….

      ….. Differing concepts of fairness drive this debate. While many progressives say it is only fair that those who earn more pay a higher percentage of their earnings as taxes compared to those who have difficulty making ends meet, conservatives respond by asserting that it is unfair to “punish” the financially successful by making them pay more……………….

      An important point often lost in this debate is an appreciation that the common wealth, which our taxes create and sustain, empowers the wealthy in myriad ways to create their wealth. We call this compound empowerment – the compounded use of the common wealth by corporations, their investors, and other wealthy individuals.

      ………………….As Warren Buffet famously observed, he likely couldn’t have achieved his financial success had he been born in Bangladesh instead of the United States, because Bangladesh had no banking system and no stock market.

      Ordinary people just drive on the highways; corporations send fleets of trucks. Ordinary people may get a bank loan for their mortgage; corporations borrow money to buy whole companies.

      Ordinary people rarely use the courts; most of the courts are used for corporate law and contract disputes. Corporations and their investors – those who have accumulated enough money beyond basic needs so they can invest – make much more use, compound use, of the empowering infrastructure provided by everybody’s tax money.

      The wealthy have made greater use of the common good-they have been empowered by it in creating their wealth-and thus they have a greater moral obligation to sustain it. They are merely paying their debt to society in arrears and investing in future empowerment.

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      p>And of course it was Bangladesh, Warren could not have gotten rich in, not Bulgaria. With or without Yabba the Hutt

      • Judy – the state FOREGOES taking our money?

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        p>THAT is what I reacted to.  What is your attitude to THAT, not changing the subject?

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        p>BTW – When Buffet says his secretary pays more taxes (percentage-wise) than he does, he highlights another point.  The VERY rich, using legal trusts, off-shore accounts, municipal bonds, etc., often pay less taxes than the middle class, as they have the leverage to protect their money and divert it from counting as earned income on which taxes are paid than those who use their earned income to live.  And they will continue to be able to do so, which is why the soak-the-rich tax schemes of the Democrats hit the middle class in teh gut, epecially business owners who aren’t exactly Crassus.  But the state DID forebear taking eerything…

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