taxes

Here's another budget article! [Itemlive.com]

We've just begun the calendar year 2012 and yet our state government is already gearing up for the fiscal year 2013 budget debate.  This still isn't a growth budget in the sense that programs and services cut over the past 4-5 years will not be restored and that more cuts should be expected.  Austerity wasn't a good economic and fiscal plan for growing the economy in Europe.  Why do our political leaders think the same failed economic and fiscal policies will succeed in MA?  That's a head-scratcher, for sure.

... Secretary of Administration and Finance Jay Gonzalez warns that more spending cuts will be needed to balance the [FY2013] budget.  “At the end of the day there are going to be lots of areas that are going to have to live with level funding or reduced funding or eliminated funding.”

“Most of the people coming in to meet with me are coming in saying, ‘Hey, the economy is coming back, the tax revenues are coming back, so can you put my money back,’” Gonzalez said. “What I tell all those people are that those expectations are out of whack with reality.”

Its time for a paradigm shift in the economic, fiscal and tax policies of our country.  We can't cut our way out of the Recession...austerity didn't work for the English the first time and it's not working for them now nor with the countries in fiscal crises in the Euro Zone.  Will the Administration and our legislators have the courage and political will to face down the corporations and the wealthy to help the low income and middle class survive and thrive, to the benefit of the entire country?  Let's hope so.  Let's continue with our advocacy efforts to make this a reality.

As stated in The New York Times editorial, The challenge for Mr. Obama is to translate the plight of the middle class into an agenda for broad prosperity. Congress’s inability to cleanly extend even emergency measures though 2012 — including the temporary payroll tax cut and federal unemployment benefits — underscores the difficulty. The alternative is continued decline.

More jobs. Fewer foreclosures. Less financial risk. Progressive taxation. Those policies will give the middle class a fighting chance. But the list is not exhaustive. The pillars of a healthy middle class also include public education, Social Security, unions, child care, affirmative action and, not least, campaign finance reform, since inequality is reinforced by the political power of the wealthy.

The economic prognosticators were out in force at a hearing on Beacon Hill, predicting how high/low fiscal year 2013 revenues might be.  Predictions ranged from $21.7 billion, an increase of 3.2 percent (Amy Pitter, commissioner of the state Department of Revenue), to $22.28 billion, an increase of 4.1 percent ( David G. Tuerck, executive director of the Beacon Hill Institute at Suffolk University in Boston), with other predictions in between.  These predictions still leave the Commonwealth with a budget shortfall. [Full Article: Mass live.com]

Sen. Stephen M. Brewer, a Barre Democrat and chairman of the Senate Ways and Means Committee, said that tax revenue growth for fiscal 2013 is unlikely to be enough to compensate for cuts in federal grants and reimbursements or growth in items such as the state's $10.4 billion Medicaid program. Brewer said it will be difficult to avoid some spending cuts in the state budget for the next fiscal year.

"It appears like it's going to be a very sobering year," Brewer said after the hearing. "There may be in excess of $1 billion (gap) between expected revenues and needs. The revenues are growing but not to the needs of the line items. We have a lot of tough choices to make."

Jay Gonzalez, state secretary for administration and finance, said he could not make any commitments to any spending levels in the budget including state aid to communities. He said nothing is sacrosanct at this point...."Everything is on the table again this year," Gonzalez said after the hearing. "It's another challenging year."

Cities and towns are now beginning their FY 2013 budget planning and estimation processes.  There's no more federal stimulus dollars, and the economy hasn't bounced back as everyone hoped it would.  The state hasn't been able to provide much financial relief...it has reduced local aid and other program funding for the past handful of years.  When will the Administration and leaders in the State House come to fully understand that we need new revenues to invest in our communities for the health, education and safety of all our people?

One concerning trend is the decreasing level of revenue from economic growth, such as permit fees, commercial tax growth and excise taxes. The amount of that revenue has gone down two years in a row.

"Those are reflections of economic activity," Walters Young said. "When economic activity slows, the amount of money the government collects goes down. [Full Article: Wicked Local Natick]

Paul Krugman writes - class warfare, says who?  We benefit from participating in this society in which the government is at its center; the wealthy could not have garnered its wealth without being part of this society.  They clearly have benefited greater than the lower and middle class folks.

... big cuts in top income tax rates,...there has been a major shift of taxation away from wealth and toward work: tax rates on corporate profits, capital gains and dividends have all fallen, while the payroll tax — the main tax paid by most workers — has gone up.   According to new estimates by the nonpartisan Tax Policy Center, one-fourth of those with incomes of more than $1 million a year pay income and payroll tax of 12.6 percent of their income or less, putting their tax burden below that of many in the middle class.  [Full OpEd: The New York Times]

It seems Massachusetts is at the middle of the pack, nationally, when it comes to taxes on casinos.  And, we're on the low end for the Northern states.  Why is the tax revenue aspect of the casino gambling bill not being debated in the House this week?  Is MA leaving money on the table?  What are the true reasons for allowing casino gambling in MA?

[Economic development secretary, Gregory P.]  ]Bialecki said the state must look at casinos primarily for their ability to create jobs and long-term economic development...Tax money has to be a secondary concern, he said, emphasizing the importance of debating the bill outside the pressures of budget season, when the need to plug short-term holes in spending could cloud discussion about economic development.  [Full Article: The Boston Globe]

California recently passed a law that Massachusetts retailers want here ... to collect sales tax on Internet sales.  It wasn't popular with the Internet retailers, as you can imagine, and Amazon spent millions leading a ballot referendum effort to overturn the law.  So California made a one year deal with Amazon.  Now it's up to Congress.

If Congress acts by next summer to settle the contentious issue of how online retailers should be taxed, that decision would override Amazon's deal with California... "If they can't get Congress to act by next July, then they will start to collect the tax in September 2012. If by chance they get Congress to act, then that would trump the state law."  [Full Article:  Los Angeles Times]

Casinos in Massachusetts - may be a foregone conclusion if leadership in the State House has its way.  But is this the way to achieve fiscal stability for the Commonwealth as some would have us believe?  Is this strategy working to achieve budget surpluses (or balanced  budgets vs. budget deficits ) in New Jersey or Nevada?  Even Connecticut isn't showing great financial rewards from gambling.  What will happen to total revenue when there's more competition in New England?  Then there's the additional cost of the health and safety issues of gambling...

Gambling revenue  ...erodes a fundamental idea of democracy: that we’re all in this together. Instead of all people contributing equitably to the common good, a casino economy fractures the social compact. And it asks the most from those who can afford it least.   [Full Op-Ed:  The Boston Globe]

Here's a twist on the tax discussion...raise the taxes on those least able to pay (more) and who are currently paying the highest percentage of income in taxes.  This political platform may get a candidate more corporate contributions, but as we know, corporations aren't people and they don't vote.  Think about it...who earns the money that's not being contributed/taxed at the similar percentage of income basis to pay for the programs and services that we all depend and rely upon on a daily basis?

The moral argument would have been obvious before this polarized year. Nearly 90 percent of the families that paid no income tax make less than $40,000, most much less...At a time when high-income households are paying their lowest share of federal taxes in decades, when corporations frequently avoid paying any tax, it is clear who should bear a larger burden and who should not . [Full Editorial: The New York Times]

Warren Buffet raised the profile of the discussion of taxing higher incomes ($1 million and above) at higher rates.  He also focused the discussion on the type of income and the tax rates - wages versus investment income where investment income (including hedge fund managers income) currently carries a lower tax rate. 

So, what do some of  the wealthy in Mass. think about Mr. Buffet's revenue/tax/budget proposals?

“It serves to set an example that some people who can well afford to pay more are paying more,’’ said Cummings, a local developer and founder of the Cummings Foundation, one of the largest philanthropic organizations in Massachusetts...Jack Manning, chief executive of the real estate finance company Boston Capital Corp.,  "If more tax revenue is needed to tame the deficit, he said, it should come only from those with deep resources."...Others are less enthusiastic or put caveats on their comments.  [Full Article:  The Boston Globe]