Tax Talk on Beacon Hill

With the State of Massachusetts looking at some pretty bad revenue numbers some members of the House have begun talking about increases in the personal income tax or the sales tax. But such talk on the income tax brought quick and negative response from some key players, including the Speaker. From the State House News Service:

“In talking to members, I have found little or no support for an increase in the income tax. I myself have serious reservations about doing something that would put such a burden on the families of Massachusetts. Given the strain the state’s families are under, I am committed to serious reform and profound cuts before considering any new revenue items.”

And Senator Steve Panagiotakos also threw cold water on the income tax idea.

Senate Ways and Means chair Steven Panagiotakos (D-Lowell) rejected an income tax boost, telling the News Service, “As far as the income tax, I think the voters have preempted that issue. I personally would not be in favor of increasing it.”

Panagiotakos did however open the door a crack on the potential for a one cent increase in the sales tax, but added that it would be considered as a substitute for a gas or meals tax increase.

The House yesterday heard from Michael Widmer and other economists, and the news was sobering. Widmer has been saying for weeks that the Governor’s FY2010 revenue estimate is off by about $1.2 billion, and House Ways and Means Chair Charlie Murphy is admitting that the FY2009 shortfall, even after the last round of cuts, could be between $200 and $500 million. And Murphy also threw some real cold water on the idea of tax increases, telling the State House News Service that you cannot “tax your way” out of this problem.

“We’re in a different place. We’re in fiscal times that are uncharted, I would suggest, since the Great Depression. And we have a job to do. We’ve got to balance the budget,” said House Ways and Means Chairman Charley Murphy (D-Burlington). “We’re not going to tax our way out of it. We can’t. The tax revenue just is not going to come back anytime soon to where it is today. So we have an issue of tamping down expectations, both internally and externally on many, many levels.”

The choices are between bad and worse, and with the politics involved in revenue enhancements I believe another round of massive cuts will come out of Beacon Hill. The Commonwealth has driven its rainy day fund down to about $900 million, from $2.2 billion. Without federal money the next round of cuts out of Beacon Hill will be awfully painful for many.

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3 Responses to Tax Talk on Beacon Hill

  1. Jules Gordon says:

    Your Honor,

    I voted YES on Prop 1. Looks almost prophetic.

    Actually, considering whose in charge in this state, it was a sure thing.

    Not much budget cutting,though. I think that would be an unnatural act by the General Court.

    Are the $12,000 dollars in savings from the Governor’s brave act of cutting police details going to be divided among the municipalities?



  2. Gerard Donahue says:

    Mayor Manzi:

    I know this state is known for being Taxachusetts, but I did not realize how strong this adjective for the state is becoming. If they start eliminating some pork spending projects and come down to earth then none of the tax ideas would come up.

    BTW wasn’t the State Income Tax Supposed to be 5% instead of 5.3% or was that a mirage vote when that happened.



  3. Fred Mertz says:

    I’m guessing this means no new train service to the south shore. Call it a hunch.



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