Prototype 12/03/04

Sunday Telegram (Massachusetts) October 20, 2002 Sunday,

October 20, 2002 Sunday, ALL EDITIONS

SECTION: NEW ENGLAND; Pg. A2

LENGTH: 1179 words

HEADLINE: Question 1 would cancel state income tax entirely

BYLINE: Martin Luttrell; TELEGRAM & GAZETTE STAFF

DATELINE: WORCESTER

BODY:

-Voters have an opportunity to give themselves the largest tax break in state history by voting for ballot Question 1, which would rescind the state's personal income tax.

The initiative petition, titled The Small Government Act to End the Income Tax, was placed on the ballot by the Libertarian Party, which claims the measure would return an average of $3,000 to 3 million taxpayers, create hundreds of thousands of jobs and reduce the state budget by $9 billion.

Opponents call the petition drastic and argue passage would create fiscal chaos and eventually result in higher property and sales taxes. They also contend the creation of the number of jobs predicted by its sponsors is baseless.

Carla Howell, Libertarian Party candidate for governor, said the purpose of the petition is to make government small. ''Big government programs don't work,'' she said.

''Big government programs often hurt the very people they're intended to help, such as people receiving welfare. Our intent is to identify and remove all big government programs that don't work, to scrutinize the state budget, to scrutinize how they're spending our money.

''Question 1 would create jobs for 175,000 people looking for jobs, jobs for college and high school graduates from last June who are looking for jobs. It would be jobs for those graduating in June and jobs for people who can come off welfare and can become self-reliant.''

The elimination of the 5.3 percent state income tax would reduce the state budget from $23 billion to $14 billion, which she said is enough for state government to run efficiently.

Ms. Howell pointed out that the state budget has more than doubled in a little more than a decade. ''We were running just fine on a $14 billion budget just over six years ago,'' she said. ''We had big government then. Republicans in the 1980s were saying Gov. Dukakis was a big government, high tax, big spending governor, and yet it's more than doubled since then.''

She disagrees with those who contend state government relies on the income tax. ''There would be more than enough,'' she said. ''We would still be swimming in taxes,'' she said. ''There would be dozens of taxes to fund state government.''

Michael J. Widmer, president of the Massachusetts Taxpayers Foundation, disagreed, calling the ballot question the ''most drastic initiative to reach the voters of Massachusetts.''

Two years ago voters approved Question 4, a rollback of the income tax to gradually reduce it to 5 percent, which removed $1.2 billion from the state coffers, he said. ''This just dwarfs Question 4,'' he said. ''No one in the Legislature, none of the other candidates for statewide office supports this.

''There is unanimity between Democrats and Republicans on this. That kind of unanimity describes how far-reaching and misguided this initiative is.''

Rescinding the income tax would severely affect health care, education and social services. Ms. Howell has said the state should end its involvement in public education, leaving that up to local districts. Many current social services would be better handled by private businesses, private charities, churches, community organizations and informal networks of family and friends, she said.

Mr. Widmer contends the Supreme Judicial Court has ruled the state has a constitutional responsibility to provide public education, and the state has relied on the income tax since the early years of the 20th century to fund education and health care.

He said that there are nine states with no income tax, but those states have higher sales taxes or property taxes, or other sources of revenues not available to Massachusetts. New Hampshire has the highest property taxes in the nation per capita, and Washington has the highest sales tax, roughly triple that of Massachusetts, he said.

Nevada depends heavily on revenues from casino gambling, and Alaska and Wyoming rank one and two in the nation, respectively, in revenues gained from mineral taxes, he said.

The two broad-based taxes that would likely be targeted to make up the lost revenues would be property and sales taxes, he said, which would transfer the majority of the burden from the wealthy to low- and moderate-wage taxpayers.

Higher-income earners pay more than $3,000 a year in income tax, and would benefit the most if the income tax were rescinded. Property taxes would be passed on in rent costs, and food and clothing could lose their exemptions from sales taxes, as is the case in Washington, he said.

''It's just the opposite from what she's saying,'' he said of Ms. Howell's assertion. ''It would hurt the lower-income families and help the higher-income families.''

Ms. Howell said the measure would not create chaos. Every other candidate for governor is an opponent of Question 1, she pointed out. She also contends businesses that support the Massachusetts Taxpayers Foundation enjoy tax breaks and have an interest in keeping the budget where it is, ''while jamming it to the individual taxpayer by keeping our income tax high.''

Most of the companies that support MTF would benefit from such a tax break, Mr. Widmer said. ''The employers who support us don't live off the state,'' he said. ''When the message doesn't carry, attack your opponent.''

He also took issue with the claim that eliminating the income tax would create 300,000 to 500,000 new jobs, pointing out that there are far fewer people than that unemployed in the state.

She pointed to studies by the Beacon Hill Institute at Suffolk University, which she said indicate 100,000 new jobs would be created for every percentage point taken off the income tax.

But David G. Tuerck, executive director of the Beacon Hill Institute and professor and chairman of economics at Suffolk University, said the institute hasn't done any study looking at the impact of Question 1.

''These numbers she extrapolated from other studies we've done,'' he said. ''We have put out studies on tax changes, but do not have a model that would allow us to predict the impact of this question.

''She's on her own to use us to justify her numbers.''

Barbara Anderson of Citizens for Limited Taxation said she supports Question 1 and encourages the public to do so. But her support is less for the details of the measure than the more general message it sends to the Legislature, she said.

''If the voters vote no, the Legislature reads that as a sign to raise taxes,'' she said. ''That's how the political brain works. Once there is a petition on the ballot to cut taxes, we have to support it.''

She said if the measure passes, there is not likely to be a serious effort to cut the entire $9 billion from the state budget. ''They're trying to redefine the budget so that essential services can be funded,'' she said.

''If we vote yes, we're telling them they had better think twice about raising taxes. ... Somehow we got along (on $14 billion) 10 years ago. Raising taxes each year puts us in a big hole. A yes vote will help improve the situation.''

GRAPHIC: PHOTO; T&G Staff/PAULA FERAZZI SWIFT ; Libertarian Carla Howell thinks the state could get by just fine without the $9 billion it collects in income taxes.

LOAD-DATE: October 23, 2002