The state lottery may not be an issue for the state party. It’s not mentioned in our platform. Few, if any candidates, have made its abolition a stump issue. The very people we’d like to protect from the lottery will be the very people most vehemently opposing that protection. But these are all political problems. There’s no reason why we shouldn’t discuss the highly improbable. Many rights we enjoy today were recognized after such conversations took place.
But reality also counts for something. The lottery cannot simply be abolished. It provides nearly $1 billion in aid to cities and towns. As of last year, state aid was down 36% from pre-recession levels. As of this year, it is down 45%. The resulting local aid cuts have been more severe in lower-wealth communities. More troubling is the fact that General Local Aid is now supported by lottery revenue alone.
We’ve had a spirited discussion here of the morality of the state lottery, and I know my fellow BMGers have the best of intentions, but does anyone seriously think we can just $164 million from Boston’s budget? I am not a lottery enthusiast. I understand the arguments against it. But as a selectman, I know what Unrestricted General Government Aid means to my town, namely a police department. Would the working-class people in my town who play the lottery be better off without a functioning police department? Would their kids be better off with fewer teachers? Would they be better off paying more in property taxes? The fact is, the lottery provides the local aid that keeps many cities and towns afloat.
I doubt very much there is any voter interest in eliminating or reforming the lottery. It would be as popular as trying to prohibit alcohol. Every municipality in the Commonwealth would oppose doing so. There are more important issues that need to be completed before we get to a place where we can try to eliminate the lottery. So instead of scapegoating our state treasurer for his promotion operation of the lottery or turning the lottery support into a litmus test for governor, let’s focus on something already on the table: a Constitutional Amendment to allow a graduated income tax.
Ask your gubernatorial candidates if they support the proposed Constitutional Amendment to allow a graduated income tax. The amendment was filed last week by Senators Stan Roseberg (future Senate President), Peter V. Kocot, and Jason M. Lewis. (Rep. Jamie Eldridge sponsored the House version). This amendment would allow for a graduated income tax. Here’s Stan:
Since 2001, funding for local aid is down 45 percent, early education and child care down 28 percent, public health down 25 percent and public higher education down 31 percent.
We cannot go on like this if we hope to promote a compassionate, civilized and just society, something I think benefits everyone.
That is why I have filed a Constitutional amendment — S. 17 — that would allow for progressive taxation and support a proposal by Senator James Eldridge’s (D-Acton) that would do the same.
Neither proposal establishes rates, but passage of either would give the Commonwealth another tool to tackle the fiscal challenges we face.
It’s important to note that of the 34 states with a graduated income tax, two-thirds (23) have rates that average out to be less than our own 5.25 percent income tax rate.
Clearly, graduated rates can be instituted in a thoughtful manner without burdening those that cannot afford it.
I believe this is the right and just thing to do and I will continue to work for a graduated income tax.
For this sobering, reality based post and proposal. Happily surprised to see Stan Rosenberg on board with this. He also endorsed Grossman so perhaps we can see some true legislative partnerships form and engagement from the Corner Office on these issues. I would argue this should go very high on the priority list. It’s attainable-along with a minimum wage increase, casino repeal, paid leave, and gas tax increase.
Without losing yet another attempt at a passing a Constitutional Amendment. I’m under the impression we can simply raise the income tax rate to say 7% and then provide a series of deductions, and capping them, so that higher income folks pay closer to the 7% and lower income folks pay in the 4% range (for example).
Am I wrong about that? David? Bueller?
Given the track record of Constitutional Amendments for a Graduated Income Tax, it’s tough to get excited about that strategy (I think it is 0 for 4 in my lifetime).
Yes, you can raise the rate. Yes, you can raise the exemption. Maybe you can even scale down the exemption as income rises, to a point. But if you go too far, the SJC will toss it.
thinking about the Campaign for Our Communities. I’ve written about that before. It doesn’t seem to have gotten anywhere.
I don’t know anything about previous attempts to get a Graduated Income Tax, but the last 30 years were hardly conducive to doing so. I’m guardedly optimistic.
First, this amendment is fraught with danger. It provides no tax brackets, which would allow legislatures to move the rates into double digits and there is no income cutoff on who would pay the higher rates.
Also, passing this amendment would excuse Beacon Hill from making any reforms to the tax code or look at how revenue is collected. Don’t you think before we ask workers to pay a higher income tax, that rich universities like Harvard with its $30 Billion endowment fund, to start paying something and help pitch in so Springfield can have fully staffed teachers and police? Can they pay something to the state, before putting a bullseye on the backs of those who work and already contribute?
Pass this amendment, and the lottery will continue to siphon monies from the poor, who can least afford it. Beacon Hill can figure out how much revenue to raise and programs to streamline and find efficiencies, and then come back to us with a real proposal of how to move Massachusetts forward, with everyone contributing their fair share, without having to rely on a lottery system, which is nothing more than a huge tax break for the well educated and high income earners.
The lottery is the most regressive tax on the poor devised by man and we can lead the way, show the nation, this type of funding is abhorrent and should be shunned. Don’t listen to the naysayers, this is after all, Massachusetts. We have led the country before on many issues, let’s lead here!
Make up the revenue shortfall, Dan?
Efficiencies and someone comes up with the answers? If that worked we”d be all set right now.
Last year, Deval said he could generate 1.9 billion in revenue by increasing the income tax to 6.25% and lowering the sales tax to 4.25%. So some combo of the two will get us have way there.
Now Mark, how about this novel idea. To make up the rest of the shortfall, how about we tax all univerisity endowments over a billion dollars at 2.5%? That would raise some nice coin, no? Did you know in 2008, our MA legislature considered instituting a fee on assets over $1 billion at these private universities. “In addition to Harvard, the legislation would affect Amherst College, Boston College, Boston University, Massachusetts Institute of Technology, Smith College, Tufts University, Wellesley College, and Williams College.”
“Lawmakers estimate that by assessing a fee for assets exceeding $1 billion, they would raise about $1.4 billion a year, a significant influx for a state budget of approximately $28.2 billion. Amounts up to $1 billion would not be assessed under the plan.”
This should be an easy compromise. The people of Massachusetts should not embrace an inferior proposal made by Stan Rosenberg. simply reject his simplistic class-warfare tax scheme which asks nothing of the wealthiest in this state. I say we should embrace and demand a fair tax policy as I mentioned, while at the same time, putting the MA lottery on the ash heap of history. We can do this, just demand leadership from Beacon Hill.
http://www.boston.com/news/local/articles/2008/05/08/lawmakers_target_1b_endowments/?page=full
I’ll check the link out at lunch.
Alabama’s top rate kicks in at $3,001. Georgia’s at $7,001. Idaho’s at $10,350. Maine’s at $20,900. Mississippi’s at $10,001. Missouri’s at $9,001. Montana’s at $16,400. New Mexico’s at $16,001. Oklahoma’s at $8,701. South Carolina’s at $14,250. Virginia’s at $17,001. So those 11 other states are “graduated” in a way that the top rate still kicks in for those making below the poverty level. And out of the states with real graduated income taxes, some of the top rates are still below the MA 5.25% rate. Arizona’s top rate is 4.54%. Kansas’ is 4.9%. North Dakota’s is 3.99%.
Massachusetts rate of 5.25%, combined with a personal exemption amount that is among the highest in all states, and a refundable earned income tax credit (only available in 22 states) makes Massachusetts’ personal income tax system fairly progressive even with its flat rate.
Massachusetts has pretty much exhausted how much progressivity it can build into its income tax without having a true graduated income tax. The problem here is that, compared to most of the states you cited, Massachusetts has a more top-heavy income distrubution. We have a decent number of very high-income people here paying their 5.25%, whereas in most states with comparable wealth concentration (e.g. NY, NJ, MD, DC, CA) they’d be paying a higher rate. Even Georgia and Virginia’s “highest” rate is higher than ours, though because it kicks in so low it falls more heavily on middle-income families than I’d like.
In the end it doesn’t much matter whether 34 or 23 or only 20 other states have a “real” graduated income tax. It’s the right policy for us.
MA certainly seems like it has a more top heavy distribution than the states I cited with “graduated” income taxes in name only. Then again, there are other states that may have a similar income distribution to MA that impose a flat income tax at a lower rate – IL has a flat rate of 5%, PA a flat rate of 3.07%, CO a flat rate of 4.63%. Other states that may be similar to MA don’t impose an income tax at all – WA, FL, maybe TX? Are you aware of a reliable list that ranks states by top heaviness of income distribution?
None of this disproves or proves that a progressive tax would be good for MA. But I think it begs the question of how other states seem to manage without one. And I strongly disagree that MA has exhausted the progressivity it can build into the personal income tax without a constitutional amendment. See the posts above about raising the rate while establishing a higher standard deduction.
Florida and Texas have no income tax, but in Texas property taxes are very high anywhere that wants to have decent services (the New Hampshire approach). In Texas and Florida the state and local government barely functions. Not the model to emulate.
PA has a state tax of 3.07%, but allows no exemption at all and towns assess income tax as well, usually 2%. Philadelphia and a couple of other cities charge close to 4%. In Colorado as well there are higher income taxes in Denver and some suburban counties, and sales tax in Denver is double the state rate.
This paper has some data on which states are top-heavy. A lot of good info from a couple of years ago.
We have some leeway with raising the rate and the exemption, but it’s less effective than having a higher rate on income over, say, $400,000. Based on past precedents I could imagine the SJC striking down a law that raised the exemption to something like $35,000 for a couple on the theory that it’s an impermissible end run around the proportionality requirement in the constitution. Unless we get an amendment first, there’s only one way to find out.