Massachusetts Ballot Measure Would Abolish Income Tax

July 7, 2008 - 7:29 PM

(CNSNews.com) - While the Boston Tea Party is viewed as the most significant tax revolt in the history of Massachusetts, voters this fall will have an opportunity to make a statement of their own.

A ballot measure before voters on Nov. 5 would repeal all state personal income taxes, and in return cut $9 billion out of the commonwealth's $23 billion budget. For a state that critics nickname "Taxachusetts" because of its multitude of taxes and tolls, that would be a dramatic change, according to the Libertarian Party of Massachusetts.

The likelihood of its passage is questionable, but support is growing, state Libertarian Party chairman Elias Israel said. A recent Boston Herald poll showed 37 percent of voters supported the measure.

"The Massachusetts voters are not as uniform in favor of big government as it may seem," Israel said. "There are a lot of voters who realize that private companies have had to downsize, yet the government keeps getting bigger."

The effort started last year when Carla Howell, the Libertarian candidate for governor, and Michael Cloud, the party's candidate for U.S. Senate, collected more than 120,000 signatures to have the measure put on the ballot. Howell and Cloud are co-founders of the Committee for Small Government.

Cloud said voters are fed up with the state's wasteful spending and the Legislature's decision this year to delay a tax cut that voters approved in 1998.

In 1991 then-Gov. Michael Dukakis, a Democrat, proposed a $10 billion budget. Since Dukakis left office, three Republicans - William Weld, Paul Cellucci and Jane Swift - have served as governors and the budget has ballooned to $23 billion, Cloud said.

"We're pruning back the ridiculous growth of the last 10 years," he said. "This is just a commonsense rollback that needed to be done a long time ago. The legislators are not listening to the voters, so we're writing the law ourselves and trying to change it."

If voters repeal the income tax, citizens would no longer have to pay taxes on wages or income from interest, dividends and capital gains. Despite costing the state $9 billion of its budget, the proposal would create new jobs and spur the economy, Cloud said.

The president of the Boston-based Massachusetts Taxpayers Foundation said Cloud has no basis for his predictions. Repealing the income tax would create problems for the state without producing any economic boost, Michael J. Widmer said.

"There is no way this would be an economic incentive of any shape or form," Widmer said. "The kind of crisis that would ensue would discourage economic investment and destroy our bond rating. This would wreak havoc on our economy."

In fact, Widmer said, the income tax repeal would probably trigger tax increases. According to his estimates, local property taxes would have to rise by 50 percent to make up the difference for some government-mandated programs.

"This is far and away the most radical tax cut to reach the Massachusetts ballot in the state's history," he said. "It would usher in a major fiscal and political crisis."

But Cloud said the state would still be able to easily produce a $14 billion budget from its 5 percent sales tax, business and corporate taxes, various tolls and other licensing fees. He noted that is still more than Dukakis' spending plan of 1991.

Cloud estimated 14,000 government jobs would be lost if the measure were approved. But those would be easily absorbed by the 300,000 to 500,000 jobs created by abolishing the tax, he said, citing figures from a Beacon Hill Institute econometric study.

Widmer also disputed those numbers. He said even if the repeal created that many jobs, there would not be enough people in the state to fill them.

This year's Republican gubernatorial candidate, Mitt Romney, does not support the ballot measure, but remains committed to trimming government waste, a campaign aide said.

"We are in the middle of a fiscal crisis in Massachusetts and trying to close a budget gap," spokeswoman Shawn Feddeman said. "[Romney] believes our schools would suffer greatly should a measure like this pass."

Democratic candidates Robert Reich, the former U.S. Secretary of Labor in the Clinton administration, and Warren Tolman, a former state senator, also oppose repealing the income tax.

"It would be reckless to gut the state's resources at a time when we need them the most because of the economic downturn we're still recovering from," Reich spokeswoman Dorie Clark said. "People need social services and there are important areas where the state needs to spend money."

The other Democrats in the race, Massachusetts Treasurer Shannon O'Brien and state Senate President Tom Birmingham, did not return calls to CNSNews.com.

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