Monday, April 27, 2009

DeLeo's Bad Idea

DeLeo's sharpening his sales-tax plan, but that doesn't make it a good one. Let's look at this from several different angles.

Needed revenue.

The MBTA alone has an over-$200 million dollar hole to climb out of. It can't cut its way out of that, or force it on T users. It can't be blamed for that debt, either: the very-large bulk of it occurred because the state forced the T to pay for aspects surrounding the Big Dig, instead of paying up using the general fund or an increase to the gas tax. Governor Patrick's gas tax plan solved this problem & added money desperately needed for our transportation system, one of the oldest and most worn out in the entire country. DeLeo's plan doesn't even seek to solve the problems, it only seeks to throw just enough money at the problems so DeLeo can throw the towel in and wash his hands of it. It's neither honest nor good policy.

Not a good tax.

Simply put, the sales tax is one of the least progressive taxes out there. It is far more painful to the middle and working classes than the wealthy. Why? Middle and working class people still need to buy many of the same sort of things. This means they're paying the same taxes for those things as anyone else, even those who make magnitudes more.

On top of that, in this poor economy why add a tax that hits those who are unemployed just as heavily as it does the employed? If you're unemployed, at least you're not getting hit off the head with income taxes. Why force the unemployed to pay more? And how does this help people want to go out and buy things -- ultimately necessary to end the recession?

Other, better options.

For starters, this doesn't generate the revenue we need as a state. We need more funds for public transportation and infrastructure. If DeLeo wants to go beyond increasing the gas tax and try to raise revenue to help offset the general fund's deficit, then maybe this is a good way to do it. But this shouldn't be seen as a be-all fix for our state. Moreover, why not just increase income taxes by about .1% - which would generate about the same level of funds? At least that way, it's not quite such a regressive tax. It's not going to hit those who are un or underemployed the hardest. And it allows those who earn more to pay more, as is customary throughout the developed world.

Some sales taxes can make decent policy -- roads are costly and there's few better ways to fund it than through the gas tax, which is a type of sales tax. Gas taxes also help people use public transit and nudge people to drive less, both things needed to help reduce Global Warming emissions. Furthermore, discretionary spending, at a modest rate, should be fair game for tax policy, as people don't need to spend their money on those things.

But these aren't things DeLeo's trying to do. There are better options for the state to take than DeLeo's plan -- both in terms of increasing revenue and lessening the impact on this state's most vulnerable. If DeLeo's going to be a Speaker for the people of this state who need it the most, he needs to get off his aversion to the gas and income tax and start acting like an adult. We need real solutions, not lame-o conservative tax policy.


Anonymous said...
This comment has been removed by a blog administrator.
Ryan said...

Note to readers: I deleted the previous comment because it was spam (for porn, no less).

Anonymous said...

I think that income tax revenues have decreased by more than 10% in MA from 2007 to 2008. You are arguing that a 2% increase (from 5.3 to 5.4) in the income tax will raise enough to compensate for the 10% drop. On the other hand, I think that sales tax revenues have decreased close to 5% from 2007 to 2008. A 20% increase (from 5 to 7) in the sales tax rate would actually generate new revenue. I think you're using old data to reach a false conclusion, you should double check your numbers.

Ryan said...

I'm not claiming that a small increase to the income tax would recoup all that's been lost. I'm saying that it's better tax policy than a sales tax. I don't think we can either cut or tax our way out of this mess, we need a little bit of both - and we need to do both smartly.

Anonymous said...

You claimed that a .1% increase in the income tax would raise the same level of funds. Its not clear from your posting, the same as what? As the proposed sales tax increase? As the proposed gas tax increase? How much is that amount that a .1% increase would raise? Have you updated your numbers to reflect the revenue that the income tax generated in 2008? It's way down from 2007, although I'm not sure the final numbers are even in yet. If you're going to argue abstract tax policy then that's fine, but you discredit your argument by using incorrect data.

Ryan said...

Honestly, I haven't updated my numbers in a while. Maybe I'm wrong? If .1% isn't enough, .2% is still reasonable and a better option than the sales tax. Combined with savings from much-needed reforms and perhaps some transportation-specific new revenue (ie gas tax), we could begin to fix our state's infrastructure and avoid the bad policy tax options as much as possible.

About Ryan's Take