Over the past decade, our state economy has been growing faster than net spending. That means the economy has been growing faster than our budget. But during this same timeframe, state taxes and fees have been growing much slower than the economy, because state income tax cuts were slashed, and the sales tax did not keep up with changes in the economy. According to the Mass Budget & Policy Center, “If the tax revenue had grown as a steady share of the economy during these past 10 years, Massachusetts would have shown a substantial surplus and would have been in a far better position to weather the current national recession.”
Lower and middle class people in Massachusetts pay a larger share of their income in taxes than do the wealthy. We are one of only seven states which do not allow a higher income tax rate for higher income people. We could make our tax code more progressive by increasing the income tax rate, while raising the personal exemptions. Only higher income taxpayers would pay more. We could also turn to the so-called “tax expenditure” budget to seek more revenue from the corporations that currently pay little or no taxes to support our people. It might seem counter-intuitive to raise taxes in a recession—but every penny raised gets spent on poor people, who immediately spend their disposable income. A state dollar spent is worth as much as a private dollar spent.
People First focuses on the need to protect our social compact–especially in tough times, and to be honest about the fact that there is still great personal and corporate wealth in this state. A fair tax code that closes loopholes and exemptions, and shares the burden of state programs, is as important as direct appropriations for services. We must enhance Revenue First if we want to help People First.
Al Norman is the Executive Director of Mass Home Care. He can be reached at email@example.com.