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Massachusetts Liberal

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

Wednesday, February 14, 2007

Long overdue debate

I can hear Barbara Anderson warming up on the sidelines already, with the Herald editorial chorus behind her ready to sing the latest version of "no new taxes." And as I look at my property tax bill, my water and sewer bill and my trash pickup bill I might be tempted to join them.

But I won't.

The fact is Massachusetts has a problem -- and it is not high taxes. The Taxachusetts canard was discredited a long time ago. What Massachusetts has is a tax fairness problem that has not been addressed and is driving people from the state.

Deval Patrick appears to be aiming to make the point one way -- the pain budget -- putting out a fiscal 2008 that will reflect the realities of the state's current revenue and tax climate. We're already hearing from the GOP naysayers who insist it's just Patrick reneging on his campaign promises.

But the problem in Massachusetts is with who is taxed and how much, as well as a lack of controls over some of the principal budget busters, health care and pension costs for state and local employees. And those are problems everywhere -- except of course at businesses that don't provide either.

The Boston Foundation report lays out a problem -- where municipalities need to go hat in hand to the Legislature for everything, including tax options. And the story notes the dilemma, quoting House Speaker Sal DiMasi's reluctance to touch the subject,

Then there is the equity issue. This three-plus year-old assessment of state policy is accurate, because nothing has changed -- except to get worse.
The state's business tax ''burden'' -- business tax paid as a percentage of personal income, a commonly used proxy for profits -- is about 16 percent below the national average and has fallen about 15 percent over the last decade. The tax ''burden,'' ... is what businesses want to know when making location decisions, and on that score Massachusetts is competitive and then some.
Boston and other Massachusetts cities and towns have a problem in what they can't do:

Nearly 60 percent of Boston's revenue comes from property taxes, compared with 10 percent in Denver, 20 percent in Atlanta, and 25 percent in New York. "If you're relying on prop taxes as your only source of income, you want to have them increase. Your whole tax structure works against affordability...

Like many other US cities, Boston currently can impose taxes on hotel rooms, jet fuel, and motor vehicles. Other cities have an array of other taxes . Denver, for example, has a car rental tax. Atlanta taxes insurance premiums. San Francisco has a parking tax.

Every other city looked at in the study also collected at least a portion of the sales tax generated in the city. But sales taxes from Boston and other Massachusetts cities go into a statewide pot, and the funds are distributed through local aid that varies from year to year -- removing some local incentives to increase economic activity, according to the study.

What's long past due is a rational discussion of taxes, not one punctuated with cries of Taxachusetts and legislative fear. The Patrick budget sounds as if it will be the first part of the debate -- showing people what their tax dollars pay for. It will be up to the legislators and fair-minded people to discuss whether this is all there is or whether there are alternatives.

My fear is we still won't have that debate -- and people will continue to vote with their feet and leave. And my property tax, water and sewer and trash pickup bills will continue to go up anyway.

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Anonymous Anonymous said...

Very well put. What possible argument can state officials give against giving cities and towns the right to make these decisions on their own? After all local officials are held intensely to account by the electorate.

I just chaired a citizens' review committee in Newton that documented a systematic underinvestment in City infrastructure. Shouldn't the people in our city have the right to decide what is the most equitable way of raising funds to support the quality of schools, fire stations, roads, and parks? Why should THAT decision be solely in the hands of the folks on Beacon Hill?

The answer, so far, has been the historical one, that cities and towns are the creation of the state. To me, that is not persuasive.

Maybe this has seldom been allowed beause Legislators and Governors have feared that municipalities will "use up" the tax-paying capacity of the public, making it hypothetically harder in the future to pass state tax increases. I wonder. Do other readers have other theories?

February 14, 2007 6:57 AM  

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