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Massachusetts Liberal

Observations on politics, the media and life in Massachusetts and beyond from the left side of the road.

Tuesday, October 04, 2005

Fool me three times

One of the more popular myths perpetrated by the Right is that they are straight-laced fiscal conservatives who count pennies and spend not one dime more than they have. Democrats are free-spending wastrels who booze the night away and never worry about the bills.

While W, Termite Tommy and Sen. William Frist, R-HCA, make a shambles of that theory on the federal level, we have a similar history here in the state people still love to call Taxachusetts, despite the reality.

And now comes Willard Mitt Romney, eager to assume the mantle of GOP fiscal leadership in Washington, to prove it yet again.

"It's pretty clear Massachusetts is back and hitting on all cylinders," Romney said in a rare visit to Beacon Hill. He needed the time in the Corner Office to declare that the Legislature should give it back and cut taxes down to the 5 percent level approved by voters.

Well couple of things you might have missed while you were in New Hampshire, South Carolina, Iowa, Michigan, New York (hey, is he really Howard Dean?) Cities and towns are hurting here. Property taxes are up, municipal payrolls are down. And far from being pork heaven, municipal payrolls consist mainly of teachers, firefighters, police officers and public works employees. Higher taxes and fewer services is what we have, thanks to tax demagoguery going back two decades. (Sorry Barbara -- I like you personally but...)

Let's look at the facts. Massachusetts has schools struggling to improve their quality. Roads and highways are in abysmal shape (thanks to and including the Big Dig, that on-time, on-budget product of four GOP administrations). Skyrocketing energy costs are going to take a huge bite out of personal and governmental budgets this winter as many folks will be faced with the choice of heat or eat.

Let's also look at history, starting with 1986, when presidential politics helped create perhaps the worst fiscal crisis in state history. Actually, we need to go back even further, to 1975.

Michael Dukakis walked into office and found the presents left him by the Sargent administration. To deal with the mess, the Legislature passed a 7.5 percent income tax surcharge that came to be known as the Dukakis surtax. It was one of the factors in his loss to Ed King in 1978.

OK, back to 1986. The Massachusetts Miracle was going gangbusters, prompting one Dukakis III cabinet officer to exclaim, somewhat embarrassed, "we're rolling in it." Dukakis, on the presidential campaign trail, was tired of having the surtax hung around his neck and agreed to its repeal.

Fast forward two years. Massachusetts was on the leading edge of the next recession -- only it would eventually prove to be more of a depression here. The bottom was falling out, even as Dukakis was campaigning on "The Miracle." The slide was accelerated by a vast reduction in state revenue -- caused by surtax repeal. The answer to the problem was a boost in the state income tax to a temporary 6.25 percent. It gradually rolled back to 5.85 percent and aided in recovery.

It also aided in the election of William Weld, the first of four GOP governors who played games with the income tax. He asked and the Legislature agreed, to eliminate a new sales tax on services. But he left the income tax hike in place -- giving him the room he needed to let the state finally recover.

Fast forward again. Acting Gov. Paul Cellucci is looking for something to help him keep the job he inherited from Ambassador-wannabee Weld. Despite a series of targeted tax cuts (targeted to businesses, not citizens) that had trimmed state revenues, Cellucci needed a hook and the tax rollback was it. Of course it took some, shall we say temporizing...

"The governor said the public was told the income tax hikes of 1989 and 1990 were billed as temporary. Cellucci consistently gets this point half right. The 1989 hike, from 5 to 5.75 percent, came with a promise it would be rolled back. The 1990 hike from 5.75 to 6.25 percent entailed no such promise. Lowering the rate to 5.5 percent would fulfill lawmakers' 1989 pledge, and in any event, overall state taxes have now been lowered more since 1990 than they were raised during the budget crisis." (Source: Statehouse News Service, March 29, 1999 roundup. Subscription required.)

In 2000, Cellucci got his wish when voters approved a proposal to roll the income tax back to 5 percent. Months earlier, the tech bubble burst and Massachusetts was beginning to head back down thanks to sharp losses in tax revenues -- losses exacerbated by the income tax cut. We are now finally getting out of that hole.

By then Cellucci had taken off for Canada. The Legislature stepped in, halted the cuts so the levy now stands at 5.3 percent and put in place a sensible plan to let it slide back down to 5 percent as conditions warrant.

Which brings us to today. Romney is eyeing Washington and the income tax. Energy prices are through the roof and Congress is eyeing cuts in Medicaid and education to pay for the drunken sailor effort to atone for their Brownie-led "recovery" plan for Katrina. Be afraid, be very afraid.


Anonymous Anonymous said...

While clearly important, the heart of this debate for many of us residents has little to do with the economics of the tax cut. If the legislature of this state feels it knows better than the people it is governing, then it should amend the constitution to remove the referendum process entirely. I don't know how the Democrats can claim to be the "party of the people", yet continue to disregard the will of the people.

The funny thing is, Democrats are proving one of the reasons why we are a Republic and not a Democracy... we are not generally subject to the will of the masses, we are subject to the will of our elected officials and the protections afforded by our state and federal Constitutions. They just missed the part about the Constitution.

September 15, 2006 1:48 PM  

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