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October 20, 2008

Impacts of Question 1 up for discussion

By Katie Curley

NEWBURYPORT — At a time everyone could use a little extra money in their pockets, Question 1, a proposal to repeal the state income tax, may seem like a good idea.

However, local officials are urging residents to think it through first.

City Councilor Ed Cameron is hoping a forum scheduled for this week on Question 1 will shed light on an issue that he believes not everyone understands.

"I think people don't understand the impact if it passes," Cameron said. "It sounds like a good idea saving a few thousand of personal savings, but that's 45 percent of state revenue, and with the cuts this week, there is not as much fat in the state government as people think."

The proposed law if approved, would reduce the state personal income tax rate to 2.65 percent for all categories of taxable income for the year beginning in January and eliminate the tax indefinitely after Jan. 1, 2010.

Gains and losses

Currently, Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming have no income tax. New Hampshire and Tennessee limit state income taxes to dividends and interest income.

According to a report by the Massachusetts Taxpayers Foundation released earlier this month, if the measure passes, the state would be forced to slash most agency budgets by more than 70 percent. According estimates gathered by the political action group Vote No on Question 1, the city of Newburyport would lose $12 million in education funding and an additional $2.6 million in state aid.

The Committee For Small Government, the group behind securing the question on the ballot, say there is no doubt Massachusetts residents want the question to pass.

In 2002, the committee advanced a similar initiative then called the "End the Income Tax Initiative." The measure received 45 percent of the vote, said committee spokesman Rich Aucoin.

Committee Chairwoman Carla Howell said that this time around voters are looking for change.

"People have seen and gotten much more aware of government waste this time around," Howell said. "The Big Dig is a glaring example, and people are more aware of the services they are receiving and what government employees are being paid. And it's unfair and unsustainable."

Howell said the current economic turmoil will move voters to hang on to their money and pay off debts so as not to head into foreclosure, or to have a financial cushion if credit lines shrink.

"We know we have a broad base of support for the idea," Aucoin said. "Throughout the years, we have asked people if they are willing to give up some government services if it means putting money in their pockets, and people say yes. There is no doubt people want this; it's just a question of will the fear tactics used dissuade people."

Citizens for Limited Taxation, based in Marblehead, is also a chief supporter of the bill. The organization's blog notes a yes vote will give voters the chance to tell law makers what they think of their "tax-borrow-and-spend agenda, and hopefully to end their reign of unaccountable profligacy squandering our hard-earned money."

More than meets the eye

The local Democratic Town and City Committees of Amesbury, Newbury, Newburyport, Salisbury and West Newbury will gather next week to discuss the impacts of Question 1 and how it will affect residents locally. Featuring a panel discussion, Cameron hopes the meeting does dissuade voters of the dangers of buying into the idea, which according to recent polls, 46 percent of Bay State residents are for.

In light of budget cuts made to local nonprofit organizations earlier in the week, Jim Keenan, executive director of the Boys and Girls Club based in Salisbury, feared his organization would see additional cuts should the question pass. The Boys and Girls Club was one of the nonprofit organizations hardest hit, with a $100,000 cut in funding.

"Cutting the income tax is worrisome," Keenan said. "That's why revenue is down to begin with (declining tax revenues). If Question 1 passes, I would see more cuts coming."

Cameron, who is against Question 1, quoted presidential nominee Barack Obama, saying the question is "like using a hatchet when you need a scalpel."

Cameron said he believes people would regret a yes vote, as it would cut millions of dollars from already lean city budgets and wipe out state funds.

"I know people aren't happy with labor negotiations and people may talk about clothing allowances, etc., but the bottom line is there is no fat in the city budget," Cameron said. "Getting rid of the income tax may save a couple hundred thousand, but the bottom line is budgets are tight in cities across the state."

Cameron noted repealing the income tax would put more pressure on each city and town to come up with money to fund road repairs and school services.

"This forum is designed to get people aware of the question on the ballot and get them information," Cameron said.

But Aucoin said the Committee for Small Government believes there is plenty of excess in the state and local government that can go.

"It would cut state spending $12.6 billion," Aucoin said. "There is waste in every budget in the state whether city or town. We refuse to accept when people say there is no waste at the local levels. Some have more waste than others, but we need to address that, as taxpayers can't afford to keep spending."

If You Go

Information Session on Question 1

When: Thursday, 7 p.m.

Where: Newburyport City Hall

Who: Open to all voters

For more information: Contact Ed Cameron at 978-518-0786

QUESTION 1 AT A GLANCE

On the ballot: This proposed law would eliminate the state personal income tax for all tax years beginning on or after January 1, 2009. The personal income tax applies to income received or gain realized by individuals and married couples, by estates of deceased persons, by certain trustees and other fiduciaries, by persons who are partners in and receive income from partnerships, by corporate trusts, and by persons who receive income as shareholders of "S corporations" as defined under federal tax law. The proposed law would not affect the tax due on income or gain realized in a tax year beginning before January 1, 2009. The proposed law states that if any of its parts were declared invalid, the other parts would stay in effect.

A YES VOTE would reduce the state personal income tax rate to 2.65% for the tax year beginning on January 1, 2009, and would eliminate the tax for all tax years beginning on or after January 1, 2010.

A NO VOTE would make no change in state income tax laws.

Proponents: Committee For Small Government, Citizens for Limited Taxation

Reasons:

Save money for taxpayers

Seven states have no income tax

Government budget reductions

State spending would be cut and streamlined

Take $11 billion out of Massachusetts Big Government and back in the hands of the people

Force state to get rid of programs which don't work

Opponents: Rep. Michael Costello, D-Newburyport; Gov. Deval Patrick; Coalition For Our Communities; League of Women Voters; National Education Association

Reasons:

The state would lose 40 percent of its income and would lose $11 billion in revenue

It would put education, health care, public safety and infrastructure at risk

Social service agencies could be devastated

Fragile economy and job market would be affected

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Impacts of Question 1 up for discussion
by By Katie Curley , , Mon Oct 20, 2008, 03:58 AM EDT

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