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From the Executive Director
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from NewsLink, Vol. 4, No. 3, Spring 2000
The Community Preservation Act, now in conference committee in the Massachusetts legislature, would fund the provision of open space, afforable housing and historic preservation. The CPA raises an age-old question: How should government collect revenues to defray the costs of public services? Through taxes targeted at certain individuals or businesses, or through broad-based taxes imposed on the general population?
The CPA would take open space off the market so that it remains available for aesthetic or recreational purposes. Like public education, open space presumably benefits everyone, not just those who use or live next to it. Some communities value open space so much that they willingly forgo tax revenues they could have realized through residential or commercial development.
Both the House and the Senate want to preserve open space and have offered state matching grant programs as an incentive.
But both branches disagree strongly on how exactly to allow communities to defray their portion of the cost of funding the programs. The Senate maintains that communities should have more flexibility including levying transfer taxes on buyers of new homes in their communities or applying a tax surcharge of 3% with certain exemptions.
The House maintains that any new taxes should be broad-based and not targeted. The cost of preserving open space would thus be paid through increases in property taxes.
A transfer tax could add $1,500 to the sale of a home and would, to that extent, be targeted at parties to real estate transactions (buyers, sellers and realtors). An increase in the property tax would spread this burden over all homeowners, including those who never sell their homes.
If the preservation of open space does, in fact, benefit the community as a whole, then the cost of preserving it should be borne by all taxpayers (home owners) not just a few (parties to real estate transactions). The transfer tax has the earmarking of a scheme –-abhorrent to the principles of constitutional democracy –- to push the cost of something that benefits the many onto the backs of the few.
Unmet Legal Needs? Less than 10%
This May, we published our 78-page study, Just Services: Balancing the Scales of Legal Services Funding in Massachusetts in which we demonstrated that not even one of ten low-income persons in Massachusetts has “unmet legal needs.” Legal services advocates in Massachusetts claim six of ten is the correct number. We recommend that before the state approves increased funding requests for legal services, it commission its own new study to assess the number of unmet legal needs.
Ray Shamie Prize for Civic Innovation
We're pleased to announce the first recipient of the Ray Shamie Prize for Civic Innovation. Andrea Plante, a student in the Master of Science in Economic Policy program here at Suffolk University, captured the prize with her research paper, Fostering Philanthropy: A Tax Deduction for Charitable Contributions in Massachusetts.
Ms. Plante argued successfully for a state-based charitable tax deduction noting that the revenues generated for nonprofit organizations far exceed the “cost” to the state's treasury. For example, over five years the treasury would lose approximately $1.3 billion, but the state's nonprofit sector would gain $5.5 billion in revenue.
A question that would establish a charitable tax deduction is headed for the November ballot. Meanwhile, the state Senate passed a similar measure. Both efforts seek to improve Massachusetts' low ranking on the much-touted “Generosity Index.”
NewsLink is the quarterly newsletter of the Beacon Hill Institute for Public Policy Research at Suffolk University. © 1996-2003. All rights reserved.
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