, Newburyport, MA

April 3, 2013

Lawmakers struggle to find new way to raise taxes

By Andy Metzger

---- — BOSTON — While state officials were crammed into a meeting room upstairs hearing details of a $500 million tax proposal patched together by legislative leaders, lawmakers on Tuesday took turns airing proposals to adjust the levers on local taxes.

One proposal (S 1343) would enable municipalities or regions to pass voter referendums for new forms of transportation-dedicated tax revenue.

“This would allow local communities, either an individual community or a group of communities, to present to the public a proposal for revenue, which might take any different number of forms,” said Sen. Patricia Jehlen (D-Somerville), the bill’s sponsor, who highlighted a payroll tax or a parking tax as potential revenue raisers.

Revenue was in the air at the State House, as legislators proposed an extra $500 million for funding transportation in the House Members’ Lounge. However not all the ideas before the Joint Committee on Revenue concerned ways to boost local coffers.

Concord residents spoke for and against proposals filed by Rep. Cory Atkins that would create a local option income tax available to cities and towns (H 2492) and another (H 2491) that would allow Concord alone to tax income as a means of lessening the tax burden on property taxpayers.

“This is not a new tax,” said Jonathan Keyes, who co-chaired the local committee that looked into the idea. “It is simply a shifting of the present real estate burden to those who are better prepared to bear the burden.”

Breht Feigh, who said he is a health care CEO and Concord resident, said the bill was flawed and Town Meeting had only narrowly supported exploring the idea.

“Relying upon the local income tax for 50 percent of the town’s annual budget would likely bring significant volatility to tax receipts to fund the cost of our schools and public safety and likely would deter high-income earners from selecting Concord as a residence,” Feigh told the committee.

House Revenue Chairman Jay Kaufman (D-Lexington) said he was “concerned” about the volatility of the income tax and the constitutionality of the proposal, while Rep. Randy Hunt (R-Sandwich) questioned whether state income tax credits would lower local residents’ tax burden.

Two Cape Cod lawmakers argued in favor of updating the definition of rooms subject to local hotel and motel taxes so that vacations homes and condos would be subject to the tax as well (H 2692).

“This is a growing market. There’s a shift in the way people vacation,” said Rep. Sarah Peake (D-Provincetown). Peake said she had found 6,000 Cape vacation rentals listed with one company, and 4,000 listed at another, and said the costs for a week’s stay can range from $1,500 to $10,000.

At the same time, Peake is proposing a bill (H 2753) that she said would provide amnesty for those who had failed to disclose to the Department of Revenue income received from renting out a second home.

“Amnesties tend to work best when there’s an advantage to ’fessing up, if you will, and consequences for failing to do so,” said Kaufman. “I don’t see any language in here that addresses the failure to do so.”

Peake said she would be happy to amend the bill, and to cover her bases, she said, Peake filed a bill specific to Provincetown (H 2689).

Sen. Dan Wolf (D-Barnstable), who joined Peake in seeking to group vacation rentals with hotels, also spoke in favor of a constitutional amendment to allow for a progressive income tax (S 16 and S 17).

“The way our economy is structured now, historically is different than ever before. It hasn’t been this skewed in one hundred years,” Wolf said. A potential gubernatorial candidate, Wolf said, “I would work tirelessly to take this to the public.”

Wolf said it is “bizarre” that a mechanic or clerical worker at the company where he is CEO – Cape Air – pays the same tax rate as him.