NewburyportNews.com, Newburyport, MA

July 11, 2013

Tax man taking another bite


Newburyport Daily News

---- — Barely noticed in the state’s $34 billion spending plan is an item that should make us all sit up and pay attention -- a $500 million tax increase that will hit every smoker, driver, and computer data-based business in our state.

Add it up, and that’s a lot of people who will be getting a significant tax hike.

The money is ostensibly going to “infrastructure improvements” to the state’s highway system, but already there is an argument over whether it is enough. The governor thinks a bigger tax hike is needed, and a showdown with the Legislature is expected on Friday. All of our local Democratic lawmakers voted to support the tax hike, while the handful of Republicans left in the Statehouse voted against it.

This is a state that already ranks in the top 10 for highest per capita taxes, according to a variety of surveys. Now that burden is set to go even higher. We think lawmakers should stop the run on taxpayers’ wallets and take the harder but more responsible course -- review how money is spent, and spend it more wisely. It can be done, as is witnessed by families across the state who stretch their dollars, and private businesses that retool and reinvent as the economy changes.

The most odious of the proposed tax increases is a 3 cent per gallon hike in the gas tax -- which doesn’t seem like much until you consider what else lawmakers slipped into it. The tax hike is permanently linked to the rise in inflation, a practice that is rarely used in tax law. That means that in the future, lawmakers won’t have to vote to raise the gas tax -- it will automatically increase, no fingerprints attached. That’s politically convenient for the Legislature, but irresponsible to taxpayers, and cowardly as well. If lawmakers want to raise taxes, they need to make the case for it, every time.

Lawmakers are also looking to gain about $160 million from a tax on certain computer services, billed by supporters as a “business to business tax” that will have no direct impact on consumers. Yet its full implications don’t seem to be widely understood.

“State leaders could hardly have chosen a more perfect tax to undercut the future of the Massachusetts economy. This is the most sweeping computer and software services tax in the nation. It strikes at the heart of the state’s innovation economy and will stifle job creation for years to come,” said Michael Widmer of the Massachusetts Taxpayers Foundation. He estimated software design businesses will pay as much as $500 million in new taxes under the deal, far more than the $160 million lawmakers are expecting.

The last of the taxes will hit a group that’s already been heavily taxed -- smokers.

Smokers have no doubt gotten used to being turned out and tapped out by society -- forced out of restaurants and bars, pushed out of most every public indoor space, shunned in many outdoor public spaces. They have also become easy pickings for tax hikes, and they are about to take another hit for their habit. Under the tax plan, the tax on a pack of cigarettes will be $3.51, second only to New York’s $4.35.

Nevermind that Massachusetts spends only a tiny fraction of the money it collects on cigarette taxes to actually help smokers stop smoking. The state is profiting from smokers’ addiction, and it’s anticipating $117 million in new taxes... to be spent on highway repair. Keep on puffing away, smokers, we’re counting on you to fix our potholes!

Citizens don’t have to set the way-back machine for very long ago to recall the 2008 “crisis” that resulted in a substantial increase in the sales tax, to 6.25 percent. It was a particularly hard blow for businesses here that must compete with “tax free” New Hampshire. That sales tax solution to the state’s temporary financial crisis has become a permanent drain on our wallets. And it wasn’t enough. Now we have another set of taxes proposed to solve our highway problems.

The business-as-usual approach is tapping citizens for a few more bucks here, a few more bucks there. The harder way is to look at how tax money is being spent, tightening the belt, reducing waste, getting rid of obsolete programs, and reprioritizing how money gets spent. Residents and private businesses are forced to make those decisions every day. Our state lawmakers need to see to it that our state government lives by the same rules.