What Is Massachusetts Ballot Question 1?
What is Question 1? Simply put, it’s the elimination of the Massachusetts State Income Tax. Does that sound like a good idea? Do you know how you’ll vote?
This photo, taken in Arlington, is not intended to be an endorsement of my position – it’s rare that I advocate a political position. However, I have yet to see a ‘Vote YES on Question 1′ sign. It’s a somewhat devisive issue, but I’ll try to frame it and give you some places to do your own research.
The sign was, however, inspiration for me to write a bit about this important vote. Massachusetts currently has a 5.3% flat-rate state income tax. This money is obviously a huge source of revenue for funding state programs. The proponents of this ballot initiative believe that the elimination of the income tax will provide several benefits:
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Forcing the state to eliminate wasteful spending
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Put more money in the pockets of Massachusetts residents who need it (estimated by proponents to be $3,700 on average for each resident of Massachusetts)
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Create new jobs
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Will not trigger a rise in any other taxes or a cut in any essential government services
Opponents of the measure believe there will be major negative consequences:
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Reductions in state aid to local cities and towns
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Increased property taxes and development of other new taxes
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Reductions in state funding for schools
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Threatening public safety due to cuts in essential services (police, fire and emergency medical)
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Prevent infrastructure projects for roads and bridges
Source for both: Massachusetts Elections Division 2008 Information for Voters.
The folks over at YourArlington did a really nice job on this issue and I encourage you to visit them and let them know you appreciate it. Here’s a 30 minute video and debate they released today. It’s notable because it starts with ‘person in the street’ interviews with Arlington residents. It then moves on to a debate with a participant from both sides of the issue.
The Public Square — What’s Question 1? from Josh Lobel on Vimeo.
Having watched this in full, I found Michael Widmer to be a much more effective spokesperson for opposing Question 1 than Rich Aucoin in supporting it. But there are some facts that can be checked. First of all, there are, in fact, eight states with no state income tax. They are Alaska, Florida, Nevada, New Hampshire (although they do tax dividends and interest income), South Dakota, Texas, Washington and Wyoming. We can quite easily examine the sales tax in those states. Property taxes are much trickier. I’ve included Massachusetts in the table below for reference.
Sales Tax Rates for Selected States
For reference, the highest state sales tax is California at 7.25%. But there’s another factor to consider: Proposition 2½. This law enforces a 2½% cap per year on the rise in property taxes. If you believe that the sales tax shouldn’t get much higher and prop ½ means property taxes can’t get higher quickly, it’s not clear how the state will makeup the loss of a large percentage of its operating budget. Unfortunately, Mr. Aucoin was unable to provide a meaningful answer to this question other than a few examples of wasteful spending and pointing the finger at the statehouse and saying they are hiding the necessary details to make that determination.
Then there is the issue of the $3,700 average reduction in taxes. Massachusetts has a flat income tax – the same rate is applied regardless of income level. This study suggests that 40% of residents will see less than that amount. I think Mr. Widmer made a troubled argument here, suggesting that, ”the average of 2/3 of the lower income, middle income people is $850.” Huh? He also stated that, “this would be a tax break for the wealthy.” It’s hard to claim that it’s a tax break for the wealthy when the income tax is being eliminated for everyone.
So both sides have some problems stating their positions. However, both side agree that the intitiative would take $12 billion dollars out of the state budget. It’s pretty hard to see how that wouldn’t have a large impact on the ability of the state to function well.
Comments
Comment from DaveO
Time October 11, 2008 at 9:15 pm
Yes, those are good points. For a low income family (Widmer mentions those with an $850 per year income tax burden) an extra $70 or so a month is no doubt very helpful. You mention the impact of service cuts, but there will surely be a scramble for new sources of revenue as well. A 2½ increase in property taxes would hurt a lot more for folks at lower income levels. There more I think about this, it feels like a Libertarian, idealogical stance. I don’t personally see it as a socially equitable one either.
Comment from Mike
Time October 21, 2008 at 7:43 pm
I look at it this way. If the state has to cut its budget by 40% because we
eliminate the state income tax (according to their TV add). They are still taking
another 60%. So, If you save $2,000 in state income tax, the state is still taking
$3.000 out of our pockets in forms of sales tax, gas tax, excise tax, just to name a
few.
Please, spare me the song and dance about cutting programs. The state needs to cut
the entitlements in this state and get rid of all the corrupt politicians. The only
thing is most of the people in this state are too stupid to know where the money is
coming from for all these programs.
All the public giveaways are coming out of our pockets you dummies.
Time to send a message, VOTE YES
Comment from brad
Time October 22, 2008 at 8:32 pm
no, the state has to cut the budget by 70% after what they are mandated to do.. wake
up and stop being so selfish and greedy.. i understand that it’s tough times out
there but look around and realize that we’re not driving on dirt roads (NH) and we
have programs that actually do something for our community. approving question one
will be one mistake that we won’t be able to get back.. look down the road, try two
or three years, we’ll be in crisis mode. then people will be like, “oh, thats where
that money went. i never knew. oops”. it’s not too late to wake up and realize
that eliminating that revenue will throw us to the sharks with nothing to protect
us… vote NO, and your conscience will thank you for it later… thanks
Comment from LOUDelf
Time October 27, 2008 at 12:21 pm
DaveO-
Well put commentary! Very objective.
Kevin Loughlin-
There’s a problem with your argument: Mass has a flat tax. So while you can twist
some numbers, they still don’t change the outdome. Everybody pays the same 5.3%
rate. So, someone earning 3 times the income, pays 3 times the tax. Someone making
$35k/year may need that extra money much more than a higher income person as
fixed-priced items are a higher percentage of their wage (gas, food, etc), so I’m
not quite sure how this would affect lower income more adversely. In fact, I submit
that the lower income brackets might benefit MORE from this.
Comment from Paul
Time October 30, 2008 at 6:03 pm
Do you people even know where most of the state income tax goes towards, building
stupid roads and bridges and also directly into the pockets of greedy, evil
politicians. Enough with the corruption. The threats are ridiculous. with the 2.5
proposition they cannot raise our house taxes. Building better roads? In case you
haven’t noticed, Boston has some of the worst roads in the country, they haven’t
done anything about it now and never will. It will hurt at first, but wee need to
take the state back in our own hands. Enough with overpriced taxes
Comment from Kevin Loughlin
Time October 11, 2008 at 10:19 am
While the income tax is eliminated for everyone, it favors the citizens who are better off financially, for two reasons.
Doing the math shows that to get $3,700 in savings from the elimination of the state income tax would require an income of about $70,000. (5.3% of $70,000= $3,710)
A person with an income of $35,000 would save $1855, while a person with an income of $150,000 would save $7950.
The person making $35,000 or less is more likely to be subjected to the state budget cuts required by the loss of revenue. In this way the elimination of the state income tax is not as equitable as it is portrayed to be.
This is a simplistic view as it does not factor in the deductions that reduce your taxable income, which are more often than not applicable to the higher income brackets.