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Ballot Questions 2000:Mass. voters opt
for lower taxes
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from NewsLink, Vol. 5, No. 1, Fall 2000
The November 7 election may have failed to produce a consensus on the direction of national policy (see From the Executive Director, page 2), but the voters of Massachusetts sent a clear message on the direction of state policy. They want lower tax rates, more generous tax incentives and less government involvement in health care.
Of the eight ballot questions, three directly impact the size and breadth of state government. The Beacon Hill Institute weighed in on each of these three questions. In each instance, voters affirmed BHI's analysis and recommendations. (See “Media Mentions,” p. 6.)
Approval of Question 4 means that the Massachusetts income tax rate will return to 5%.
• A widely reported BHI story showed that Boston is currently the third most expensive city in the country, having the second highest state and local taxes. The significance: the income tax cut will make the state more competitive.
• Our analysis further showed that cutting the income tax to 5% will put 93,000 workers into Massachusetts jobs by 2003, when the cut is fully implemented. These jobs will span the income spectrum, providing opportunity for average workers, not just the “wealthy.”
• As for whether Massachusetts can “afford” the tax cut, BHI showed that state government can maintain all existing services, even with the tax cut and even with a recession.
• Opponents derided the tax cut as worth no more than “a pizza a month” to the average taxpayer. BHI showed that putting the money into the Commonwealth's U-Fund college savings plan for 18 years would permit a taxpayer to save for almost four semesters at the University of Massachusetts.
Fifty-nine percent of those who voted supported this cut.
Rejection of Question 5 dealt the drive toward universal health care in Massachusetts a setback.
• An advocacy group attempted, through the ballot, to mandate universal health care in Massachusetts. BHI showed that the most onerous version of this proposal – a single payer system – would have raised the state income tax to 13.76% in 2002. This huge increase would, in turn, have cut employment in the state by 305,133 and reduced payrolls by $11.405 billion.
Fifty-two percent of those who voted rejected this proposal. Proponents are now filing bills to implement universal health care through legislation.
Approval of Question 7 means taxpayers will receive a state tax deduction for contributions to nonprofit organizations.
• BHI has shown how charitable tax incentives empower private organizations that help the poor. A charitable tax deduction will provide an incentive for increased charitable giving; far more important, it will greatly improve services to our state's most needy citizens.
Seventy-two percent of those who voted approved this proposal. Massachusetts now joins 33 other states offering this deduction.
Massachusetts Competitiveness Project
Looking ahead, BHI is preparing a series of reports on the competitiveness of the state's economy. These reports are motivated by three concerns about the direction of the economy and of national and state economy policy.
• Our national economy is slowing.
• Growth in 2001 will fall below 3%.
• A divided Congress and the potential for a weakened Presidency reduce the likelihood of meaningful change – including meaningful tax cuts – at the federal level.
• Massachusetts is more than ever dominated by a single party, with the governorship up for a vote in 2002.
All these factors pose dangers for our state's competitiveness. With the national economy slowing and political uncertainty at the federal or state levels, it is crucial that we sharpen our state's competitive edge.
How do we keep Massachusetts competitive? At BHI, we have some answers:
•Keep taxes low.
•Control state spending.
•Promote good public education through wise spending.
•Improve infrastructure.
During 2001, with our Massachusetts Competitiveness Project, BHI will examine each of these issues, offering recommendations and analysis aimed at growing our state's economy. We believe the voters indicated the proper direction in which Massachusetts government should proceed. It is an important step, but still, just the first step.
NewsLink is the quarterly newsletter of the Beacon Hill Institute for Public Policy Research at Suffolk University. © 1996-2000. All rights reserved.
