In 1989, the state legislation raised the Massachusetts state income tax from 5% to 6.25% as a temporary measure to overcome a budget defecit. By 1999, this "temporary" increase was still in place, although it was at 5.95%. In an affirmation of the democratic process, the citizens of Massachusetts gathered enough signatures to put a referendum on the November election ballet, proposition 4, which proposed a multi-year reduction of the rate back to 5%. In November of 1999, the people of Massachusetts passed proposition 4.
Now, faced with another budget crisis, state legislators are again looking at the state income tax rate as a way to, "raise revenues". They have proposed that the current rate of 5.6% be frozen, or even raised, in order to provide, "additional revenue" to balance the budget.
Sound familiar? It should.
Sound fair? No way.
When the citizens of a democracy take the initiative to put a referendum on an election ballet, the legislature should listen. The people of Massachusetts have spoken, and they have said they want their tax rate at 5%.
Next week will be a critical week. The state house of representatives will be holding discussions on the tax issue. Don't be fooled by the language you hear. Nobody wants to say that this is a tax increase, or a freeze in the tax cut, so they are using language like this:
''This budget says what will happen if we do not consider revenue enhancements,'' said Stephen E. Collins, excecutive director of the Massachusetts Human Services Coalition. ''Obviously, they are trying to prove the case for the need for revenues, and I think they've made a very legitimate case.''
"We realize we're part of an elaborate dance here, and it's a dance we're willing to partake in because we think revenues need to be raised to take care of this situation."
Revenue enhancements == tax hike
The need for revenues == tax hike
Revenues need to be raised == tax hike
Another possible outcome of next week's discussions is a really shifty move. Rather than increase or freeze the actual tax rate, the legislature may vote to decrease the personal income tax exemption. This is the $4,400 exemption that is taken out of your gross income on your taxes. Don't be fooled, this is a tax hike, since it results in you paying more taxes, even if the overall rate is lower.
Folks, I'll be fair here. The legislature does appear to have the constitutional right to adjust the outcome of a public referendum (although I'd like to see the legal precedent or a challenge to this one). However, one of the principals of the American form of democracy is that elected officials are supposed to do what the citizens who elected them want. And even though there are groups arguing for a tax hike so that certain unfortunate budget cuts don't happen, these are small numbers of people compared to the voters in 1999.
Tax revenues are like an addiction. The state legislature is acting like an alcoholic celebrating a week of sobriety by drinking.