April 9, 2017

On Beacon Hill: Taxing routines trump legislative progress

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Sam Doran / State House News Service

The Great Hall was packed April 5 with hundreds of immigrants and advocates who pushed for passage of the Safe Communities Act (S 1305 / H 3269), which would prevent use of state resources to enforce federal immigration law. The bills have 75 House co-sponsors and 17 co-sponsors in the Senate.

Recap and analysis of the week in state, and federal, government
from State House News Service

BOSTON — President Donald J. Trump and Senate President Stanley C. Rosenberg may finally have a common interest: tax reform.

While that may be the point where their shared agendas start to diverge, the topic that Beacon Hill leaders largely like to avoid may soon become something they can’t escape.

The federal debate over tax reform appears headed toward a package of tax cuts, while Massachusetts voters will almost certainly be asked to decide in 2018 whether households should pay a surtax on incomes over $1 million to generate additional revenue for state government.

Enter Rosenberg, who in a speech to the Greater Boston business leaders last week pleaded with the community not to embrace the Retailers Association of Massachusetts’s pitch for a sales tax cut as he took a stab at explaining a conundrum that has vexed budget writers for years now.

State House News Service file

Senate President Stan Rosenberg

The strength of the state economy, including low unemployment, has done little to stabilize state finances or generate the tax revenue growth necessary for Democratic leaders to comfortably invest in education, rail expansions and other projects on their wish lists.

March brought another round of collections that missed benchmarks, and the state now trails revenue projections for the year by $220 million with just three months left in the fiscal year.

Rosenberg suggested that a tax system reliant on income gains and taxes on the sales of goods has failed to capture the nature of the new service-based economy.

“The bill is finally coming due,” he warned, calling the state’s tax structure “regressive.”

The Amherst Democrat suggested it was “certainly worth looking at” a revival of the sales tax on business and professional services passed under Gov. Michael Dukakis and repealed by Gov. William Weld.

But even if that’s just one suggestion, Rosenberg raised an interesting question and one that might not soon go away. True tax reform has not been attempted since Gov. Deval Patrick, late in his second term, put a package on the table that would have raised the income tax, lowered the sales tax and eliminated a variety of exemptions, but it barely got a look by skeptical legislators.

House Speaker Robert DeLeo recognized the need for revenue in 2013, but opted for increases in gas and cigarette taxes that haven’t produced the revenue jolt that DeLeo’s 2009 sales tax hike did.

Gov. Charlie Baker may not be champing at the bit to entertain straight tax hikes, but the possibility of a more comprehensive tax revamp is exactly the reason he refused to take a no-new-taxes pledge in 2014 when he was running for governor, and may be the opening Democrats need to start the debate, if not for now then perhaps the years to come.

— Matt Murphy


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