What would happen if the Massachusetts income tax were abolished?
A proposal on the state ballot in the upcoming Nov. 4 election suggests doing just that. Its proponents say that such a measure would drastically diminish government waste and give money back to taxpayers.
Those opposed to Question 1, a binding proposal that would eliminate the commonwealth's existing 5.3-percent income tax, claim that the change would cripple state and local government.
If passed, Question 1 would lower the income tax to 2.65 percent in January 2009 and completely do away with it in January 2010.
This tax accounts for roughly 40 percent of the state budget, or about $12.7 billion per year. The average taxpayer would save around $3,600 annually if it is repealed.
Members of the Committee for Small Government, the group that collected the 11,000 signatures needed to put the question on the ballot, say the proposal would create thousands of jobs by moving millions of dollars to the private sector each year and would force the state legislature to become more accountable to voters.
"Ending the income tax takes [billions of dollars] out of the hands of the politicians on Beacon Hill … and puts [them] back into the hands of the men and women who earned that money," Carla Howell, the coalition's chair and a former Libertarian candidate for governor, told the Daily. "It will force the legislature to streamline and cut the waste of big government."
But the loss of revenue would strike a "devastating blow" to state and local governments, said Stephen Crawford, spokesperson for the Coalition for Our Communities, a group opposed to Question 1.
State aid accounts for a great deal of local governments' budgets. Somerville received 33 percent of its budget in fiscal year 2008 from state funds, according to city spokesperson Tom Champion.
"There's no doubt that cutting that big a hole in state revenues would have an enormous adverse impact on cities and towns because so much of the state budget is a pass-through in state aid to local communities," Champion said.
"We're already seeing a significant decline in state revenues because of the national economic situation," he added.
The proposal has drawn heat from various public officials ranging from Gov. Deval Patrick to Somerville Mayor Joseph Curtatone, who currently serves as president of the Massachusetts Mayors' Association.
Patrick dubbed abolishing the tax "just a dumb idea" during an interview with the Associated Press last December.
But a similar proposal nearly passed in 2002, when 45 percent of voters supported repealing the state income tax. That measure had received less media attention before the election than Question 1 has.
Seven states have no income tax, but those states often have high property and sales taxes and other fees like tolls on roads to provide revenue, according to Crawford.
"There's little doubt that [doing away with the income tax] would create severe pressure on local property taxes as cities and towns across the commonwealth scramble to deal with state-aid shortfalls," Champion said.
In addition to higher property taxes, opponents cite cuts to basic services such as public schools, sanitation services and public safety programs as possible effects of a large drop in state revenue.
But Howell explained that the government severely lacks transparency in what she described as a convoluted and confusing budget process that the average taxpayer is hard-pressed to understand.
Advocates of the ballot measure also maintain that scrapping the income tax would enable a smaller number of government programs to meet citizens' needs more effectively, cutting down on unnecessary spending.
Champion disagreed, saying that wasteful expenditures do not constitute 40 percent of the budget.
"Even if you accept the specific citations of particular programs that constitute wasteful spending, they simply do not add up to anything like the massive cuts that would be required under the terms of Question 1," he said.
Howell also believes that the change would benefit small business owners. Most support for her group has come from working-class neighborhoods across the state, she explained.
"It will produce more jobs. It'll provide better, more effective charity," she said. "It will direct investments to more productive businesses that will create more jobs."
Opponents counter that Question 1's passage would retard local business growth.
"The message that this would send to the business community is that the people of Massachusetts do not want to invest in themselves," Crawford said. "And they would therefore conclude that they do not want to invest in [business] either."
The Coalition for Our Communities has significantly more money than the Coalition for Small Government, as well as the backing of major unions.
The proposal, one of three initiative petitions on this November's ballot, is meant to be binding on the legislature after its passage. But lawmakers often find ways to limit such initiatives' mandates.
