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Would you vote to cut the sales tax to 3%?
By adamg on Thu, 06/24/2010 - 8:05am
Looks like you'll get the chance to do so this November. The Outraged Liberal argues why you shouldn't.
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Yes
And for the record I voted against the last cut in 2008 (?).
Per another post I made a week ago or so, a federal study indicated that the average worker around here makes about $40 per hour, including benefits which is already the highest of the 15 metro areas they studied. I don't have the state numbers, but the city of Boston comes in at around $60.
Everyone looks at salaries and feels they are moderate or even low when much of the cost of government is loaded into benefits - on purpose because people don't pay attention to the $18,000 medical insurance bennies or the $20,000 annual value of a pension - even for lower wage employees. We have to stop cutting people while still giving raises on top of generous benefits. That's why we no longer have mounted police and are threatening to close libraries while the firefighters get a 17% raise. It's not the wages, it's the total cost and with health care and pensions spiralling upward this is an unsustainable path - left unchecked, you would eventually only have one employee in this system.
A quick nitpick: the state
A quick nitpick: the state sales tax doesn't pay for police or libraries or firefighters. Those are paid for by municipal taxes - the meals tax, property taxes, license fees, etc. Services being cut in Boston aren't being cut because the city is low on money, but rather because Menino doesn't like them. The Phoenix did a hard look into the city's finances and found $400 million laying around that the city doesn't report and doesn't use. That's why sudden "administrative efficiencies" were found to fund a lot of extra summer jobs for the local kids this summer - because Menino likes the program.
Will I vote for the sales tax rollback this Fall? I'm still undecided. The problem is that if it passes and it causes a budget crisis, the biggest wastes in the state won't be touched. We'll still have state agencies paying two salaries to people who "retire" only to return as "consultants." No one has the guts to force civil servants to switch from the current pension system to something more reasonable. Instead, we'll see cuts to public health, education, and municipal support.
Not directly, perhaps
But a piece of the sales tax does come back to Boston. A major reason for the current hullabaloo over the BPL is not because the city has cut funding (Menino actually wants to increase city funding for the library slightly for the coming year) but because the state has cut $6 million from aid to the BPL over the past couple of years. At least some of that state money comes via the sales tax. Ditto for the MBTA, a major portion of whose funding, in fact, is the sales tax. It's not like we won't be completely unaffected by a large drop in state revenue.
I always wondered.
about the percentage of Boston residents versus non-residents that use the main library in Boston.
now is a bad time to cut taxes
I want Pete to draw a paycheck and keep us safe from harm, and teachers to draw paychecks to teach kids and give them opportunity in the future. I want BPL branches to stay open and bridges to be repaired. I want BPL firemen to get a fair raise and arrive at home fires to extinguish them.
I would advocate for the repeal of new taxes when the economy comes back and we get back to 5% unemployment. Dump the meals tax, the increase in sales tax, MA income tax in excess of 5%
You just played right into their hands
Now is the perfect time to cut taxes - it's been proven many times that it generates jobs. but to do that we have to tell the city and state workers that they get no increases in salaries or bennies - or that maybe they even get their salaries and bennies cut. Per my post above you'd have to cut city of boston workers by about 1/3 just to get them to the average of the region - which seems reasonable to me given that very few city jobs even require a college education - teachers excluded but they are only 25% of the workforce.
Now is the perfect time to
Who enacted more tax cuts than Chimpy? And look at the record!
It's not the jobs everyone should be worried about.
The Bush tax cuts end this year and some people will have to worry about the new changes (If Congress doesn't act but they will one some issue). Payroll taxes and section 179 business deductions, 529 plans now will have taxes on any withdrawls, mortgage insurance premiums are no longer deductable, and the child tax credit gets cut by 50%. Many of these increases will hurt middle income families if there isn't some compromise.
There are some more increases that would hurt a lot of people, but I also think Congress is going to keep some of the old cuts that actually did work.
The basic income tax rate is only increasing for those making 250K
Your point?
Not sure I'm following - because Clinton (and the Congress) raised instead of lowered taxes and jobs still went up? It's not a vacuum and you can't ignore everything else that was going on (like the world's biggest goldrush known as the dot-com bubble). However, from Kennedy onward, tax cuts have been shown to increase employment after a lagging period- the problem we have now is that there isn't much room to cut taxes at the federal level because we have massively increased spending (perhaps necessarily -separate argument) - although there's plenty of room to cut at the state and local level IF and only IF we halt the rapid rise in headcount and total compensation for public employees (and that DOES go for the federal level as well). You can't pay the private sector less than $40 an hour with no wage/bennie increases in sight and pay the public sector $60 an hour with annual COL increases - that system collapses under its own weight.
The point
The point is that you can only demonstrate your assertion of a direct tax cut -> employment increase relationship after a lag if you adjust the duration of your lags differently for each incidence. Basically, you cherry-pick the business cycles and synchronize them retroactively with the policies you favor. You can "show" anything given enough freedom to make up the rules. That's how you make ideology look like math. QED!
Once again, if your principal budget complaint is with high public-sector salaries and benefits, that must be addressed through collective bargaining. Perhaps you should join up with the City negotiating team and 'stick it to those bums.' Because using that as a pretext to lower sales taxes is only going to result in service cuts and fee increases, not address the problem you identify.
Role play
I think most economists would beg to differ but I'm sure you can google something that says otherwise.
You are correct - end of the day it has to be bargained. But you can't get blood from a stone. The city's revenues (unless they come up with a new source) can only increase about $50-75 million a year (most of that in property tax - state aid is level or declining and "other" might get you $10-20 million - property tax goes up by about $60 million each year by formula). Health care increases absorb about half of the increase. Pensions eat up most of the rest. Add in inflation, state assessments etc. and we are already in the hole. God forbid borrowing costs go up or we are really screwed.
Now to give raises you have to start looking for places to cut. About 8000 of the city's 16,000 workers are cops, firemen and teachers - and there is little if any fat in that number - even for a budget hawk like myself. Add in support for those depts of about 4000 (mostly in the schools-aids, monitors, bus drivers, janitors etc.) and that leaves you with 4000 people to do everything else in the city - DPW, parks, IT, finance, libraries etc. and now you are down to maybe a few hundred generally low wage people that can be cut without doing real harm to core services (these are generally the "hack's hacks" because the plain old hacks are already gone).
So now you have no heads to cut and every dollar in extra revenue is spoken for in additional overhead. You are a union negotiator sitting at the table and the city throws that on the table when you ask for a COLA.
Your move - where does the money for your raise come from? (there's actually a good possible answer which I am guessing the mayor may be counting on and if any union heads reading this want to pay my $500,000 consulting fee they can have the answer)
Doesn't go too far enough
I'd support lowering the sales tax, or better yet, getting rid of it entirely. But only if we raised income taxes to compensate for the loss of revenues to the state, and only if we added brackets to the income tax so that lower incomes were assessed a lower percentage of tax, and higher incomes were assessed a higher percentage of tax.
So essentially, I'm just in favor of more progressive taxes, is all. Plus this would get more people from Mass. to shop for big ticket items locally, rather than predictably going to New Hampshire, and might allow us to draw in people in the same way they've done, until our other neighbors follow suit.
Unfortunately, so long as we've got a bunch of small government nincompoops involved, it seems unlikely that we can improve our tax system here.
definitely vote NO on a tax increase
I mean, why would we want to force the government to improve efficiency and cut out of control spending? I say we should just give 100% of our money to the government so they can take care of us and we won't have to bother with decisions on how, why, and where our money is spent.
It's nice to know that
It's nice to know that there's still someone who wears Tax and Spend Liberal proudly.
Depends on the rate.
If I make 60K and have to pay 10K in taxes, but have a 2% sales tax, isn't that better than if I make 60K and pay 13K in taxes with a 3% sales tax?
Not that those are the numbers we are dealing with, but the concept is the same.
And no one should go out of their way to NH to buy anything.
I like the idea of cutting
I like the idea of cutting the tax in order to try to force a tighter budget, but we have a number of large debts (like the MBTA) that need to be taken care of.
Maybe the bill could be "Mandate that x% of sales tax revenue go directly towards paying off debt". The goal being - eliminate our debts which in turn frees up funds that were being used to pay down the interest/debt. You know, the sort of financial planning the average person should be aiming for ...
I'm going to vote for it...
Then I expect the legislature or Deval to pull a Fineran, and ignore a successful vote.
Read today's Herald story on the Department of Probation, where the average number of sick days taken a year is 12.5. And ask yourself how many you've taken? It's crap like that that gets questions like this on the ballot, and gives them a chance to pass.
The MBTA is the only transit
The MBTA is the only transit system in the country that did not cut service or raise fares this year. NYC cut service AND raised fares. DC raised their already extremely high fares, and implemented peak of peak surcharges. Chicago cut service. LA cut service. San Francisco did major service cuts. The list goes on.
Why did the MBTA not have to do this? Because we raised the sales tax, which was enough to keep the agency running.
Of course, on the flip side, cutting taxes is a great idea. Nothing helps small business and the local economy like laying off thousands of government workers!
The other big ticket item the
The other big ticket item the sales tax went to is to pay for roads, like the Big Dig payments, to stave off toll increases. So it wont just be the T that will be more expensive if people vote to cut the sales tax, it will also be driving, whether through a gas tax increase or more tolls. One nice thing about sales tax is that it gets out of state tourists to kick in for services in the state, whether at restaurants or stores.
American
No, I want them to cut taxes AND maintain current levels of service. No, scratch that. I want them to cut taxes and INCREASE current levels of service! No, no, wait! I want all of my money back from paying taxes for the past ten years, I want them to close City hall, I want more street lights, AND I want them to increase levels of service on the MBTA and more roads (although God put those in, so I'm not sure its up to us to question). Aren't we Americans damn it? Where are our rights? I want my rights not "choices" between taxing and spending.
Non-snark: Who the F goes to New Hampshire to shop?
ha!
That was awesome!
I predict that the people who vote for the tax cut will be the usual suspects. The ultra rich who hoard their money and then the lower income people who seem to always end up voting against their own economic interests.
voting against their own economic interests...
Wouldn't the rich person who votes for tax increases also be voting against their own economic interests?
Is that a bad or a good thing?
No. The rich benefit far more
No. The rich benefit far more from taxes than the poor do. Roads for their businesses, financial law, the civil court system, the military, those all do a lot more for the rich than the poor. And I'm not saying that's a good or a bad thing, but it's the truth.
If Canada invaded tomorrow, the life of the poor wouldn't change much at all. The lives of the rich would be changed forever. They have much, much more to lose.
There are a lot of poor though.....
who get money (housing, food, welfare, benefits, etc) from the government. Take that money (or protection away) and they don't have much do they?
No, but they didn't have much
No, but they didn't have much to begin with. And various welfare benefits are nowhere near as expensive as the other things that taxes pay for.
Yea but you have to put it in perspective.
When the rich lose government services, they have to sell their summer home. When the poor lose their services, they can't eat.
That was kind of my point.
Depends on what government
Depends on what government services you're talking about. If the police go away, the rich suffer a lot more than the poor. Unchecked crime in Natick is a lot bigger kick in the nuts than unchecked crime in Dorchester would be.
Now, if the police are cut down in such a way that the poor areas suffer disproportionately from the police cuts, then sure, the poor suffer more. And that's the way it usually works, because Natick Finds A Way to keep the cops paid. But in a strict sense, if there were no police in Natick and no police in Dorchester, the two places would equal out pretty quickly, and the rich would have lost a lot more.
You sure about that one?
I think "unchecked" crime in Dochester would be pretty bad right now and would be worse than unchecked crime in Natick. Hell, the Natick Mall could just hire a private security firm to protect all the rich interests if they wanted to. Unless that was the point you were getting to (that rich can afford to pay for just the services they need?)
I think "unchecked" crime in Dochester would be pretty bad right
now.
I have to agree with Pete. "Checked" crime is pretty bad right now, if by 'crime' you include 'murder'.
How do the rich benefit more?
The poor don't benefit from roads (their food spontaneously appears?)? The poor don't benefit from financial regulation (and aren't about to benefit from the new consumer protections about to be enacted?)? The poor don't benefit from the civil court system (this would come as a surprise to any landlord in Massachusetts)? Even with respect to the military - lots of poor people who have entered the modern military have benefitted greatly (relatively high pay, GI bill, etc.) from their service - as they should have.
I agree with you that the rich have much more to loose in a Canadian/European style economy than the poor do, but I just do not see how the rich benefit far more from taxes than the poor do.
The poor benefit from roads.
The poor benefit from roads.
However, the rich get their food delivered, AND they get to ship their goods over them.
The poor benefit from consumer protection laws, but the rich benefit from them as well, plus and estate law, and the SEC, and the rest.
The poor can sue their landlords. But their landlords can sue the poor, can sue their builders, can sue everyone they have financial interactions with. That's a lot more people, and a lot higher stakes.
The poor can get some GI Bill money and military jobs, but the rich have the sovereignty of the USA and the validity of their deeds and property because of the military.
I'm not saying that the rich lose more under a Canadian/European system. I'm saying that the rich lose more under CHANGES in the system: With war, all property claims, the economy, the infrastructure, everything that makes the rich rich, is called into question. The poor will be poor either way.
Rich Canadians would lose just as much in an invasion by the USA. The potential upheaval of not having a military is a far greater economic risk to the rich than the poor. It has nothing to do with what system is replacing which system: it has to do with the fact that the act of replacement is almost always incredibly bad for the economy.
The Poor Vote Against Their Economic Interest More Than Anyone
No one votes more against their own economic interests than the poor. If this were not the case, the voting results would look like the income distribution - i.e., Republicans would be getting only the vote of the 2% of the population that controls the plurality of the national wealth.
If you are interested in this, you should read Frank's "What's the Matter with Kansas", which nicely lays out the point.
No, I want them
To stop trying to hire Marian Walsh for a $175K non-job....
To stop hiring people like James Aloisi, and to fire his sister...
To stop allowing select state employees to bank vacation and sick time, so they can cash out with a six-figure payout, in addition to their pensions....
To stop allowing MBTA employees to retire on a full pension after 23 years, then move on to another state job and another pension (see Whitey Bulger's nephew)...
Anybody following that Department of Probation being run like a banana republic thing?
When that kind of stuff starts happening, then we can talk about keeping the sales tax at it's current rate.
Thank you!
This is the type of stuff that will get me to vote for it!
I don't understand how anyone can be fine paying for this incompetence?!
Ha!
Ah, waste, of course! See, I want them to keep the taxes AND end waste. In fact, I'd be willing to bet that EVERYONE wants the waste cut! Anyone like waste? No? However, cutting taxes won't cut the waste unless you think that everything the government does is waste. If you are rich enough to build your own roads, ports, police forces, etc., then fine, maybe government isn't for you. However for those of us who aren't Russian Oligarchs, government is mostly pretty useful. Aside from the acts of outright corruption, which will simply never go away, the spending changes you are talking about are just a question of getting politicians to make tough choices. But they won't. They will just cut spending on everything to make it fair, or they will cut spending on programs that don't have a loud voice because it won't hurt the vote. Cutting taxes isn't the answer, voting out cronies is.
Rewind... reverse that
When government outlays start going down, then we can talk about lowering taxes. Otherwise, it's just a big flim-flam game. Look at the Bush tax cuts - government expenditures went higher than ever as the Republican Party grew the government larger than it's ever been, but they just financed it with debt. That made the so-called tax cuts really a tax increase just waiting to happen, like a suspended sentence.
It's like deciding you're going to fix your budget by putting everything on your credit cards instead of paying with cash anymore. It might seem like you've made some efficiencies, but it's illusory - soon the bill comes due.
Instead of grandstanding about taxes, our politicians should fix the actual problems. If we stop wasting so much money, then taxes can come down without trickery and shell games.
state can't do that
They have to submit a balanced budget - the feds do not (and usually don't - I just read that the US has only had a balanced budget about 18 of the last 70 years or so). If you cut the state's revenue, they are required to cut expenses - and some they can't - like medicaid and debt repayments - which are about half the budget - which is why a lot of it is so hard to do. Part of the problem is that when times are flush, we hire thousands of new workers. When times get tough, instead of freezing/cuttin pay and bennies - we cut heads and give everyone raises so that people complain about losing services, so when times get better, we hire more people again and start the whole process over again.
But I agree with the last comment - too many shell games.
I didn't know that
A balanced budget requirement is a good thing - otherwise we'd be likely in worse trouble. I wish we had that at the federal level.
But the idea that some sort of hydraulic pressure created by revenue cuts will directly result in reduced pay or benefits to overpaid police and firefighters is a canard. Their pay and benefits are set by collective bargaining, and can't unilaterally be changed. It's simply not legal to do so.
If revenue cuts create budget pressure, it will express itself in different ways. The police and firefighters and other unionized state workers will still make the same amount, if not more. The half of the budget that goes to medicaid and debt repayments won't change. The cutting will come in different places, principally through the reduction of services, like libraries, state parks, colleges, boys & girls clubs, DMV offices, road work - or the revenue will be replaced by increased fees for things like drivers licenses or state colleges.
If your fundamental issue is overpayment of unionized state workers, you'll have to find another way to address that. Reducing the sales tax may have benefits, but that's not one of them.
I think it's the other way
I think it's the other way around.
We need to fix thoes problems first, because cutting funding for everything is just going to lead to more corruption and more handshake politics as thoes people, who are still there, look for other means to do what they always do.
Repeate please, Starve the beast does and has never worked.
Reveneue is instead shifted away from long term structural needs to immediate needs, entrenched needs, and corruption.
What we need to do is first fix the budget and the system. Problem is too many people believe in fairies and unicorns at the same time politicians on both sides fear interest groups.
You want to fix it, lets get everybody togther for 100% public funding. Cut out the special interests of both parties and you'll see people running on sane fiscal platforms, since they don't have to answer to thoes constituents.
YES
The MA sales tax was originally a 3% temporary tax that went into effect on April Fools Day 1966 and was supposed to disappear on January 1st 1968, but I guess people were too hung over to notice that it didn't.
Once government has citizens'
Once government has citizens' money it isn't ever going to give it back. Any tax 'cut' is really going to paid for with deficit spending rather than actual decrease in spending.
I also have to laugh at the posters above whom seem to think the source of all government financial problems are Republicans. In case you didn't notice this state has been a fiefdom of the Democratic party for decades! The commentators seem to believe one party rule, by the 'correct' party, would fix everything, yet we have had nearly one party rule for decades which has resulted in all the problems the commentators want fixed.
All politicians and political parties are equally caddish once given power. That's why the founding fathers wanted to limit the size, scope, and reach of government. The nature of government is always to become corrupt when given power, thus I have a really hard time understanding why people seem to think giving government almost absolute power is going to fix most of the problems with government being given power in the first place.
I'd love to see the sales tax repealed. However, I know full well that the state wouldn't cut spending on frivolous things first. Public safety and essential services would be held hostage in lieu of actually cutting grossly overgenerous pay, pensions, benefits, and no show jobs. If that extortion failed, there would all kinds of other taxes or fees levied on citizens to recoup the revenue. The politicians are addicted to spending and would send their grannies out to sea in flames to keep spending.
Earth to Haviland
With all our problems, this state is still one of the strongest in the union. People want to move here, but can't because too many people want to move here, and housing prices are through the roof. We're really not doing that bad nationally, and yes, we have problems, but nothing compared to CA, AZ, or FL.
NH is nice too, but I think too many people don't stop and think what NH would be like without it's big economic brother next door. NH nor MA would really be the same if one ceased to exist.
Then again, isn't that what governemnt is, realizing that we all have a collective interest in working some things out together to our mutual benefit.
Cutting the sales tax
You all just do not get it. I own a retail business that sells furniture and I am always losing sales to NH because 100s of thousands of people shop in NH. It's a 6.25% discount off everyday, and how about everyone that shops online. There is no taxes there. People can avoid this tax and they do! So I am in favor of cutting it to 0!