The elimination of the states income tax is back on the ballot in November We present four distinct views on the question

Cut the waste and build the economy

Why are 1.35 million Massachusetts voters already planning to vote yes on Question 1 to end the state income tax? Should you join them?

There are three things to consider: what the debate is, government by the numbers, and why the people of Massachusetts benefit if you vote yes on 1.

Which choice, which vote is better for Massachusetts? Is it voting no, to keep the state income tax and require 3.4 million workers to keep paying $3,700 each on average every year and maintain state spending at $47.3 billion? Or is it voting yes, to end the state income tax and let the 3.4 million workers get back $3,700 each on average every year and roll back state spending to $34.7 billion?

The total state government budget for this year is $47.3 billion. The $28.2 billion “budget” figure tossed around by opponents of Question 1 is only part of the budget. There are four categories of the complete budget: statutory budgeted spending, non-budgeted spending, capital spending, and expendable trust spending. (For more information on these categories and their levels in 2007, go to pages 308-312 in the budget.)

The total brought in from the state income tax is $12.6 billion. After we end the state income tax, $34.7 billion will be left in the state budget.

The combined budgets of Massachusetts cities and towns total more than $22 billion, after subtracting state aid to municipalities. So $56.7 billion is the amount left over for our city, town, and state governments after we end the state income tax. That is way more than needed to fund every essential government service.

Fabrizio Surveys asked Massachusetts voters this question: “How many cents out of every dollar you pay in state taxes would you say is wasted by the state government?” They answered, on average, 41 cents.

One more interesting number: 45 percent of Massachusetts voters already plan to vote yes on Question 1, according to three polls. With a November 4 voter turnout of 3 million, that comes to a whopping 1.35 million votes to end the state income tax.

Voting yes will give back over $3,700 each on average to over 3.4 million Massachusetts workers. That’s each worker every year.

It will take $12.6 billion out of the hands of Massachusetts big government — and put it back into the hands of the men and women who earned it. Every year.

In productive, private hands this $12.6 billion a year will create hundreds of thousands of new jobs in Massachusetts.

This tax cut will force the state Legislature to streamline and cut the waste out of the Massachusetts state budget.

It will force the state Legislature to get rid of the failed, flawed government programs that don’t work — and often make things worse.

It will make the state Legislature accountable to Massachusetts workers and taxpayers — instead of the government employees, lobbyists, and special interests who profit from high government spending.

With less government and no income tax, Massachusetts will become a magnet to private, productive businesses and individuals. There will be more good jobs and more good workers.

It will save thousands of Massachusetts families from home foreclosures and bankruptcy.

By making the Massachusetts total tax burden more affordable, we’ll allow more of our young people to stay in Massachusetts near their families, their friends, and their homes.

And that’s why you should vote yes on 1.

Carla Howell is chair of the Committee for Small Government, sponsor of Question 1 to end the state income tax. The committee’s website is: www.SmallGovernmentAct.org.

RICHARD R. TISEI

It won’t end business as usual

Massachusetts is at a crossroads. With a bloated state budget, a sputtering economy, and a rampant loss of faith in state government, Question 1 serves as tempting fruit.

Although repealing the state’s income tax would cause a sudden and dramatic shift in the mission and scope of state government, the temptation might never be greater for voters who want to send a message to Beacon Hill that the current way of doing business is unacceptable. However, like the apple in the Garden of Eden, this fruit represents a temptation with broad consequences and a lasting after-bite.

It’s easy to understand the appeal of eliminating the income tax, since, on average, every taxpayer would pocket an extra $3,700 of their income a year. In these tough times, that money could cover a mortgage payment, a full oil tank, or a college tuition payment.

But is the antidote appropriate for the disease? Abolishing the income tax would take $12 billion in annual revenues off the table — an amount roughly equivalent to 40 percent of the $28 billion state budget — and force the state to either make drastic spending cuts or find other ways to raise money. The immediate cuts would have to come in areas like school funding, Medicaid programs, and services to the disabled, elderly, and children. Significant cuts to local aid would lead to even higher property taxes.

In my 24 years of serving in the Legislature, I have never voted for a broad-based tax increase, and I have consistently worked to control state spending. That said, I believe that completely eliminating the income tax would go too far.

The real issue facing the state is that more must be done to eliminate waste and duplication in state government. Gov. Deval Patrick pledged to do just that, claiming he would cut $1 billion in his first year in office. Instead, the state budget has increased by more than $2 billion under Patrick’s watch.

Much of government needs reforming. To take two examples, the pension system is broken and the Massachusetts Turnpike Authority, which is drowning in debt, needs to be eliminated. Current spending levels are unsustainable, as the economy is unpredictable and we already have a heavy tax burden impacting residents and businesses. We can’t afford to roll out new programs every year, nor to increase spending on old programs that have failed to yield results. People “in the building,” as they say on Beacon Hill, have no idea of the economic difficulties the average family is facing on a daily basis and why there is such outrage and frustration over the actions taken at the State House.

The cornerstone of Gov. Patrick’s campaign was a pledge to reduce property taxes, but two years have gone by and he hasn’t even offered a plan, let alone reduced anyone’s tax bill. Again, for the proponents of Question 1 the timing couldn’t be more perfect. Just before the November election the quarterly tax bills will be issued, and each property tax bill that is higher than the bill of the year before will be a reminder of this failed campaign promise.

Many voters across the state, when polled on Question 1, say they don’t expect the income tax to go away even if the ballot question prevails. Speaker Sal DiMasi has confirmed as much, stating publicly he would ignore the voters if the question passes. However, voters consistently say they are considering supporting the initiative to “send a message” to Beacon Hill that they are tired of business as usual.

Given the dominance that the leaders of the Democratic Party enjoy, there is no impetus to implement serious reforms. Power is centralized, and there is very little debate, at least publicly, as most important decisions are made behind closed doors.

This lack of balance could best be seen in the most recent state budget process. Every year, the House and Senate pass their own versions of the budget, and then a conference committee crafts a compromise budget with a bottom line that usually falls somewhere in between the numbers proposed by the two branches.

However, that was not the case this year. Despite major concerns about revenues, the final budget carried a price tag that was $30 million higher than the House proposal and $160 million higher than the Senate version. The governor then vetoed a symbolic $122.5 million, but at the same time asked for emergency powers to make dramatic mid-year cuts to local aid if revenues are sharply reduced.

The House and Senate spent most of the last two days of formal session overriding veto after veto, eventually restoring $56.5 million to an already bloated budget. If the clock had not run out, they likely would have continued until every last veto was overturned. This is what happens when one political party dominates through sheer numbers.

Every Republican in the House and Senate voted against this year’s budget because they know it is unsustainable and will have to be cut at some point later in the year. Given rising health care costs, the expiring federal Medicaid waiver, overly optimistic revenue projections, and other factors, the budget was built on a house of cards that could easily come tumbling down at any moment.

What happened with the budget is indicative of a much larger problem, which is the state’s voracious appetite for spending, driven in part by the many special interest (or, more appropriately, “spending” interest) groups constantly lobbying for funding to support their pet projects. The Democratic-controlled Legislature keeps spending the money as fast as it comes in, often on new or expanded programs that are of questionable public benefit, while more worthwhile initiatives are ignored and left scrambling for funding.

Unfortunately, passing Question 1 will not end business as usual. Regardless of the outcome at the ballot box, business will go forward as usual. Rank-and-file legislators will be returned to Beacon Hill by the same voters who wish to send them a message. In reality, if change is really going to occur, there needs to be a sea change. The days of one-party rule in Massachusetts must end, and a sense of balance must be restored to the Legislature.

A true two-party system would add the checks and balances currently lacking on Beacon Hill. Currently, the House of Representatives is comprised of 141 Democrats and only 19 Republicans, while there are 35 Democrats and 5 Republicans in the Senate. These majorities are among the most lopsided in the nation.

Legislators “in the building” often forget the money they spend doesn’t belong to them, or the state, but to the taxpayers of the Commonwealth. To send a lasting message, rather than voting to repeal the income tax, Massachusetts voters should consider supporting Republican candidates, both in the upcoming election and in the future, who will provide fiscal discipline and greater balance to state government.

Richard R. Tisei, a resident of Wakefield, is the minority leader of the Massachusetts State Senate.

WILLIAM F.J. ARDINGER

Keep an eye on New Hampshire

Like most political issues these days, the contest over Question 1 — to repeal the Massachusetts individual income tax — is polarized. Proponents claim that repeal is required because government agencies, by their nature, are wasteful and unaccountable. Opponents respond by characterizing the proposal as so sweeping that it would create political and fiscal chaos.

As is often the case with polarized political contests, the Question 1 debate might benefit from a different, and less vituperative, perspective. In that spirit, I offer a look at the Commonwealth’s tax dilemma from the point of view of a tax policy attorney in New Hampshire, a state that has never had a personal income tax on wages, earnings, or capital gains.

I know that many Massachusetts readers will question what they could possibly learn from New Hampshire. After all, it was then-Boston Globe columnist Mike Barnicle who once wrote, “Granite State natives are a mentally-challenged lot of easily confused white people who think buildings with elevators qualify as tourist attractions and spend enormous amounts of money in tattoo parlors or gun stores.”

Let’s begin by dispelling some myths. While some might believe that New Hampshire’s tax system stingily constricts government services, the truth is that our government provides the same general panoply of public programs that most states do. As one example, New Hampshire’s most important priority is K-12 public education. According to 2005 data, New Hampshire spent $10,077 per pupil, ranking it 12th highest in the nation. By comparison, Massachusetts spent roughly $10,555 per pupil (ranking 10th).

But there can be no question that New Hampshire’s tax system is dramatically different from those in other states. It imposes no tax on individual earned income or capital gains, nor does it impose any general retail sales tax. As a result, just over 60 percent of New Hampshire’s total general revenues come from property taxes. In contrast, property taxes constitute 36 percent of Massachusetts’ total general revenues.

Because Massachusetts and New Hampshire have very different histories and demographics, it is unlikely that policymakers or voters would ever recommend replicating New Hampshire’s entire tax system in the Commonwealth. But they cannot dismiss the fact that the existence of New Hampshire and its tax system, along with other states that compete to attract good businesses with good jobs, places very real constraints on tax policy decisions in Massachusetts.

In today’s very mobile economy, the fact that New Hampshire offers an “income-tax-free” environment for employers and workers just 30 miles north of Boston will increasingly be an important factor pressuring Massachusetts to reconsider many long-standing policy positions, including the proper scope and role of the income tax.

It has become trite to cite the growing influence of an integrated global economy over economic and legal matters. Still, some policymakers close their eyes to this new reality, often defending the status quo by relying on outmoded theories and arguments that were developed during the 1930s, 1940s, 1950s, and 1960s — before the forces of a free-flowing global capital market were truly unleashed.

These forces operate like a hurricane storm surge. They pour in over political borders, eroding the foundations of longstanding traditional political and economic institutions, built in times of less mobile capital. These institutions naturally resist change. Such attempts to delay the change demanded by the global economy are doomed to failure, either by slow erosion or by catastrophic events.

In this context, New Hampshire may be understood as just one of many jurisdictions, along with Massachusetts, competing for economic capital in a global marketplace. As a competitor, our state has strengths and weaknesses. Our top competitive advantage is in the market for entrepreneurs. We offer these important agents for job creation some important benefits: access to a good labor force, a good public school system, a small business level tax but no use tax on business purchases, and no income or capital gains tax. In effect, New Hampshire’s choice against levying an income tax offers entrepreneurs a lower “price” for building a new business than does Massachusetts.

Understanding tax policy issues as arising within this competitive context should shed new light on some long-held tax policy misperceptions. For example, under the old “closed economy” view, a tax on corporate income was viewed as a progressive tax, because it was born by capital, not labor. But under an “open economy” view, economists now argue that domestic labor, not domestic capital, bears most of the long-run burden of a corporate income tax due to the ability of capital to move across borders much more freely than in past years.

Under an “open economy” view, who actually bears the burden of a personal income tax? In an environment of perfectly competitive jurisdictions, a state that imposes a very burdensome income tax may well drive businesses and their jobs to neighboring states that offer a lower tax burden. In such a case, the employees who lose their jobs may be viewed as bearing the true burden of the income tax. Of course, we do not live in a perfectly competitive environment, nor are taxes the only criteria governing location choices. But there can be no doubt that taxes play a very important role.

The fact that Question 1 has returned, just six years after a similar referendum to repeal the income tax, may be seen as a symptom caused by the pervasive influence of an increasingly interconnected global economy. In this new era, all traditions and institutions must be continually scrutinized to see if old assumptions about tax policy and structuring the public sector remain appropriate. Indeed, the presence of New Hampshire, offering a very different tax system just to the north, should serve as a clarion call to remind Massachusetts’ policymakers that these traditions and institutions can no longer be protected from the gale force winds of competitive global markets.

William F. J. Ardinger is a shareholder and treasurer of the law firm of Rath, Young and Pignatelli, P.C. and is the director of the firm’s tax practice group. He is a former member of the New Hampshire House of Representatives, where he served on the Ways and Means Committee.

SANDRA L. FENWICK

Huge cuts will bring high costs

Across the united states, families are being squeezed financially as the costs of driving their cars, heating their homes, and feeding their families have all skyrocketed. At the same time, they have seen the value of their homes and retirement plans decline, and many worry that their jobs are in jeopardy.

To add insult to injury, seemingly every day we read about some abuse of taxpayer dollars — from a firefighter on disability leave who competes in bodybuilding contests to a proposed increase in pension benefits for state retirees even as the state faces a billion-dollar deficit. (To his credit, Gov. Deval Patrick vetoed this proposal.)

Under these circumstances, it is understandable that Massachusetts voters might consider supporting the ballot question to repeal the state income tax, either because they want to vote themselves a pay raise or because they simply want to “send a message” to political leaders.

But this would be the worst step we could take as citizens of our Commonwealth, and the Massachusetts Taxpayers Foundation urges voters to resist this impulse. We have much to be proud of in this state. Many of the things we cherish most about Massachusetts depend on public support, including our world-class system of health care; our beautiful beaches, parks, hiking and biking trails,

and other open spaces; and our leading public education system, which consistently tops the country in student achievement and SAT scores.

We as a state have wisely invested in these resources because we understand how important they are to the quality of our and our children’s lives, as well as to our state’s economic future. By supporting this ballot question, we would be throwing away these investments and forfeiting much of what makes Massachusetts a special place to live and raise our families.

To put the tax repeal into context, voters should understand one basic fact: The income tax accounts for $12.5 billion, or approximately 40 percent, of the state budget. Proponents of the tax repeal contend it’s really “only” 25 percent of a $47 billion state budget, but the $47 billion includes some double counting and is overstated by 50 percent. They misinterpret official state budget sources which include fund transfers, gross lottery receipts before winnings, fiduciary revenue, and capital spending.

No individual, family, or business could possibly cut 40 percent of its budget without dramatic consequences. That will certainly be the case if Question 1 passes. And keep in mind that if all 68,000 state employees were fired, it would save only about $5 billion.

Repealing the income tax would be a major blow to the Massachusetts economy, both in the short and the long term. The state would likely see a large drop in its bond rating amidst fiscal chaos, which would be a huge deterrent to business expansion. In the longer term, the large cuts in spending on education and transportation would seriously undermine the state’s competitive position and discourage private investment for years to come.

At a time when business is looking for more and more skilled workers, is this the time to cut spending on education? At a time when workers are increasingly dependent on mass transit, is this the time to slash spending on transportation?

This is not simply a matter of economic theory. These questions will determine the opportunities our citizens will have — or not have — to find good jobs that pay decent salaries over their working lives. Passage of Question 1 would send Massachusetts to the bottom of the list of states in which to invest.

Our citizens will pay a high price in other ways as well. Because of huge cuts in aid to cities and towns, there will inevitably be large layoffs of teachers, public safety, and other municipal employees, as well as dramatic increases in property taxes. Property taxes fall more heavily on lower- and middle-income families than does the income tax, so if Question 1 passes we will see a shift of the tax burden from the wealthy to those individuals and families who are already struggling to make ends meet.

If your son or daughter is attending the University of Massachusetts or a state or community college, you can plan on paying much higher tuition and fees. If you have a family member who is being supported by the human services system, you will see either a sharp reduction in that service or its elimination altogether. Don’t count on using state parks and beaches, since they will surely be closed. And we will certainly see much more rapid deterioration of our roads, bridges, and transit systems than is already taking place.

The consequences for public safety will also be enormous, with cuts of 40 percent for state and local police, district attorneys and sheriffs, the statewide court system, and state and county prisons.

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As citizens we expect a lot from our governments, which we often take for granted, even if we are sometimes justifiably angered by the excesses or abuses of taxpayer dollars. I urge voters not to let their frustrations lead them down the self-defeating path of repealing the income tax. Our citizens, and the Commonwealth, will pay dearly if Question 1 passes.

Sandra L. Fenwick is chair of the Massachusetts Taxpayers Foundation and chief operating officer of Children’s Hospital in Boston.