Deval Patrick on Tax Reform
To support our education initiatives, my budget will propose that we increase the income tax by 1 percentage point--to 6.25 percent. To make that increase fair to all according to their ability to pay, I will propose that we double the personal exemptions for every taxpayer and eliminate a number of itemized deductions. Making those changes gives us a tax code that is simpler and fairer. These changes our sales, income and business taxes will be competitive with other states in the region.
In that spirit, we will again propose a series of measures that give cities and towns greater authority over local decisions. That includes raising new revenue through a modest meals and lodging tax, eliminating the outdated exemption the phone company enjoys from paying the same local property taxes everyone else has to pay, and encouraging as much regionalization of local services as practical. If we cannot provide direct aid, let's at least untie the hands of local communities to capture the savings and raise the revenue within their reach. Let's enact a municipal reform package this spring.
PATRICK: Well, no is the answer to that. I think itís a mistake to roll the income tax back to 5% right now. I think we can do it but we have to grow the economy so that we can afford to do it. I think its interesting to be lectured on taxes by the Lt. Gov., whose administration is responsible for $985 million of new taxes and fees. Thatís whatís come from this administration. What I want to do is cut the property tax. I want to expand the senior exemption for property taxes and the circuit breaker. I want to extend them to low and moderate income home owners. I want to eliminate all those nuisance fees for playing on a high school team or parking in the school parking lot, and I want to restore local aid so we can get property taxes down and keep them down.
HEALEY: By rolling back the income tax weíll put more money into working peoplesí pockets, and I have a plan to take pressure off our local taxes as well by reforming our pension system, and allowing our cities and towns to invest their pensions with our state treasurerís office. That will take literally hundreds of millions of dollars that is wasted right now and put it back onto the plate of our cities and towns and that will relieve the pressure on local taxes.
PATRICK: Weíve been playing the fiscal shell game with this administration. This is an administration that talks about rolling the income tax back and is responsible at the same time for proposing $985 million in new taxes and increased fees. $1.8 billion in increases in property taxes. Thatís all about shifting the burden. Letís be clear and candid with each other. People are ready for the truth. We can afford a 5% income rate when the economy has expanded to enable it.
PATRICK: Small wonder people say, give me my money back. But the tax to cut, is the property tax. Thatís the one squeezing people, and the only way to do that is to that is to restore state aid to cities and towns. And the only way to do that is to postpone the income tax and invest in ourselves.
REILLY: No one has a right on taxes to substitute your judgment for the will of the voters.
GABRIELI: I disagree with Deval [as saying] ďhereís what you canít do.Ē Iíve put forward a can-do plan: We can cut the income tax by taking 40% of income growth [towards tax cuts], and leave 40% in there for continuing local aid and investments. But I can hold down the property taxes just as well. I donít think we should ignore the voters.
The sharp disagreement occurred during a face-to-face meeting between the two men before a key constituency--local officials. ĎíI am not in favor of any additional tax burdens on the people of Massachusetts,ď Reilly told the local officials.
But Patrick said he would support increases on what are known as local-option taxes, saying they would help cities and towns manage their budgets without having to raise local property taxes. ĎíIím interested in trusting you -- the local officials,ď Patrick said. ĎíI know whatís happening in your communities.Ē
The nation's governors urge you to include state countercyclical funding as part of your legislation to stimulate the economy. This would include $6 billion in Medicaid assistance by freezing scheduled federal FMAP reductions and increasing all states' F Congress approved $20 billion in assistance to states, including $10 billion in Medicaid and $10 billion in block grants. The governors' current stimulus proposal is essentially the same, with the exception that it is a total of $12 billion as opposed to $20 billion. This proposal can be enacted quickly, as there is precedent and it is timely, temporary and targeted.
Additionally, governors appreciate federal efforts to use tax policy to get additional money into the hands of consumers and businesses to stimulate the economy. When considering tax changes to spur economic growth, governors urge Congress and the Administration to follow the maxim of "Do no harm" by avoiding changes at the federal level that would diminish state tax revenues or force state actions that would undermine the effectiveness of federal efforts.
We look forward to working with you to enact the appropriate stimulus program.