Citizens for Limited Taxation & Government
"The Commonwealth Activist Network"
18 Tremont Street #608 * Boston, MA 02108
Phone:(617) 248-0022 * E-Mail: cltg@cltg.org
Visit our web-page at: http://cltg.org
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*** CLT&G Update ***
Wednesday, March 18, 1998

Greeting activists and supporters;

Taxpayers of Massachusetts, what would you do without us?

On last Thursday, March 12, you received a CLT&G Alert! that contained Barbara’s Report on "the biggest tax cut in state history!" On Friday you got a copy of our News Release:

"Finneran ‘Taxpayer Relief’ Plan: Really a Tax Increase— ‘Biggest Tax Cut in State History’ *Raises* Taxes by $148 Million *More* that it Cuts."

We’ve not only caught House Speaker Thomas "Imperious Maximus" Finneran with his pants down (The emperor has no clothes) and again rolling his flock of House sheep, but we’ve also exposed him to the world and at last the media has finally taken notice.

According to the lead story on the front page of today’s Boston Globe, Finneran says "he believes state leaders ought to debate and evaluate tax rates for cuts or changes in tax policy from time to time, taking into account economic and fiscal matters" . . . but nobody in the House even knew he’d slipped a huge tax increase into his "largest tax cut in state history"—and most still don’t and won’t until they read today’s headline!

Some "debate" Imperious Maximus, but just as good as all the others your condescend to allow from time to time in a feint to democratic legitimacy.

Did anyone else you know catch Finneran’s latest sleight of hand? Did even one of the 152 House legislators who voted unanimously to pass his tax hike, anyone in the media, anyone at all, stop and look at his proposal?

Have you heard it anywhere else? Would anyone know it happened if CLT&G hadn’t pointed it out? Would anyone care— until they filed their income tax returns next year and discovered—again! -- that they were getting an even smaller personal exemption than this year?

Would they just wake up to the treachery and again wring their hands is futile despair?

"Imperious Maximus" responds to our charge by calling it "ludicrous," just like Bill Clinton responds to all charges. Next thing he’ll be telling us is that he doesn’t recall, exactly, sort of. (Wait, he already told us that about the "temporary" tax increase of 1989!)

If decreasing the personal exemption is *not* a tax hike, then why not lower it all the way to ZERO and then try to tell us that it’s not a tax increase, Mr. Maximus Speaker?

I don’t hate to say ‘I told you so’ any more -- *I LOVE IT!*

Chip Ford—

PS—Again, our special thanks to CLT&G activist and near full-time office volunteer for lo these many weeks, Allen M. Karon of Canton, who initially caught this and brought it to our attention.
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The Boston Globe
Wednesday, March 18, 1998
Page One, Lead Story

Finneran’s move could offset tax cut
Bill that would reduce rates also raises the bar for a refund
By Frank Phillips and Geeta Anand
Globe Staff

House Speaker Thomas M. Finneran boasts that his tax-cut plan would be the largest in state history, but a little-noticed change in fiscal law that he proposes in the same bill could erase any gain taxpayers may have had.

Finneran’s plan calls for raising the level at which the state’s stabilization - or rainy day - fund kicks back tax refunds to citizens, making it highly unlikely that taxpayers would benefit from the state’s expected $800 million budget surplus this year.

The plan has drawn criticism from fiscal conservatives, who say Finneran and the House are deceiving taxpayers by promising to cut taxes while at the same time blocking an almost guaranteed tax refund. Acting Governor Paul Cellucci yesterday vowed to veto the plan.

"Finneran rolled everybody again," said Barbara Anderson, executive director of Citizens for Limited Taxation. "He announced the biggest tax cut in Massachusetts history, which is in fact a tax increase."

Finneran yesterday conceded that the change to the stabilization-fund trigger would eliminate a near-certain tax refund this year, but he strongly defended his proposal on the grounds that it is sound fiscal policy. He said raising the bar for a tax refund will ensure a healthier stabilization fund to guard against economic downturns.

Finneran also said he is philosophically opposed to fiscal mechanisms that trigger tax cuts. Besides, he said, he believes state leaders ought to debate and evaluate tax rates for cuts or changes in tax policy from time to time, taking into account economic and fiscal matters.

"To the extent that the automatic trip wire keeps going off like a defective smoke alarm, you keep responding to that rather than looking at the overall picture," Finneran said.

Finneran’s change to the rainy day fund, which was not discussed in the legislative debate, is contained in the bill the House approved last week that would cut the state’s income and other taxes by $302 million for 1998.

Finneran’s plan calls for cutting taxes by $500 million over several years by lowering the current income tax rate from 5.95 percent to 5.7 percent, and lowering the tax rate on dividends from 12 percent to 5.7 percent.

But critics say Finneran’s bill could deprive taxpayers of at least that amount, and perhaps as much as $200 million more, by raising the trigger for a refund from the stabilization fund.

Finneran dismissed the accusation that he was deceptively raising taxes. "That on its face is ludicrous," Finneran said, arguing that Anderson’s logic is skewed when she calls his proposal a tax hike.

Finneran said the stabilization fund, which is now about $800 million, should get another injection of funds from the Legislature so it is large enough in case of economic downturns or loss of federal funds or other revenues, such as turnpike tolls, that are now paying for the Big Dig.

Under current law, a tax refund would kick in when the stabilization fund reaches 5 percent of state revenues. Finneran’s tax plan would raise the trigger level to 7.5 percent.

In fact, Finneran said he actually advocates raising the level to 10 percent in order to soften any future blow created by a stock market crash, a ripple effect from the Asian economic crises, or voter approval of a ballot question to remove turnpike tolls.

"There are four or five questions that I don’t have the answers to and Barbara doesn’t either," Finneran said.

But Anderson argues that the legislative intent in 1986 when the stabilization fund was created was to set a level at which point the money put into the fund would be returned to tax-payers. She said Finneran’s fiscal philosophy is "irrelevant" to the discussion.

"If they don’t believe in promising rollbacks, they shouldn’t make the promises," Anderson said. "If they don’t believe in trigger mechanisms, they shouldn’t have passed the law."

Of the $800 million surplus expected when the ‘98 fiscal year ends June 30, some will be used to pay for capital projects and other expenses. The debate will center on how much should go into the rainy day fund.

Administration sources estimated that amount could be anywhere from $250 million to $500 million. But Finneran yesterday estimated the appropriation to the rainy day fund could be $100 million to $200 million.

Under current law, a tax refund would kick in when the stabilization fund reaches about $950 million. Under Finneran’s plan, the tax refund wouldn’t be given until $1.45 billion was in the fund.
The refund is given to taxpayers by allowing for higher personal exemptions on the state income tax paid by couples and individuals.

A raised cap, administration sources say, would allow the fund to absorb as much as $500 million that could have gone to taxpayers.

Thus, in Anderson’s view, Finneran’s plan to raise the cap actually amounts to a $300 million tax hike. That increase wipes out the $300 million savings the Finneran plan purports to save taxpayers, she says.

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