INTRO TEXT she’s back. The coming throw-down over the personal income tax finds libertarian dynamo Carla Howell back in the ring. Howell’s first attempt to end the income tax by ballot question struck a chord with Bay State voters and shocked some observers by coming within 10 points of carrying the day in 2002. So the head of the Committee For Small Government—who has unsuccessfully run for state auditor, US Senate, and governor—is trying again this year. Howell is spearheading the campaign on behalf of a ballot initiative that would cut the state income tax, currently at 5.3 percent, to 2.65 percent in 2009 and then do away with it entirely the next year.
Howell claims that eliminating the income tax would put an average of $3,600 in the pocket of every taxpayer, every year. What about those cities and towns already on the ropes with cutbacks in school budgets and municipal services? Howell dismisses those concerns, saying simply that municipal budgets have still been “increasing.”
If the income tax is eliminated, the overall state budget, totaling $26.8 billion this fiscal year, would be cut by about 40 percent—reducing it to $17 billion, or what the state government ran on in 1995, according to Howell. “When we shrink big government, it’s not only going to make the tax structure more favorable to businesses, it’s also going to remove some of the big government programs that drive them away with permits and licensing and delays and other obstacles that they face,” she says.
Given the anti-tax sentiment across the state, perhaps no one should have been surprised that 45 percent of voters said “yes” to this idea six years ago. But the state’s political and media establishment, who pretty much treated Howell as a pariah and the ballot question as nonsense, were thrown for a loop by its strong showing.
They might want to listen to Methuen resident Kasia Sokalla, one of the 10 original signers of the 2008 initiative. “This will be the first serious tax cut for working-class and middle-class Massachusetts voters that I can remember,” she says. The proposal got 53 percent of the vote in Methuen the last time it appeared on the ballot, and Sokalla says, “We voted to end the income tax in 2002 because working families deserved and needed the money.”
In Fitchburg, where voters have turned up on the winning side of state elections and referenda to the tune of 83-1 since 1994, the “no” vote won last time, with 53 percent. But Jason Lefferts, editor of Fitchburg Pride, the city’s year-old weekly newspaper, still thinks officials should keep an eye on this year’s campaign. “I think people’s first reaction is, ‘Well, yeah, of course, if I can get rid of the income tax, I’m going to vote for it,’” he says.
The chattering classes can ignore this sentiment at their peril, but this time around Michael Widmer isn’t taking any chances. The president of the Massachusetts Taxpayers Foundation, who single-handedly led the charge against the first repeal effort and debated Howell several times, plans on building a coalition of groups to oppose the question this year. Howell’s committee already has a running start, aiming to raise $500,000 for advertising, mostly from small, in-state contributions. (Asked about donations from outside Massachusetts, Howell says, “All campaigns get money from outside the state.”)
Since the question did so well the last time, Widmer isn’t surprised to see that it’s bounced back. But Widmer argues that Massachusetts can ill afford to see $12 billion in fiscal 2009 revenues disappear into thin air. If the measure passes, he says, the state would sink into a period of political and fiscal chaos rivaling the late 1980s, the most turbulent period he can remember. Education and health care budgets would see massive cuts, he adds, and Massachusetts would not be able to meet its debt service or pension obligations. It would be “hugely messy,” Widmer says.
Trimming K-12 education funding alone would probably prompt legal challenges in light of Supreme Judicial Court decisions outlining the state’s responsibility to provide education for all children. “Could we meet our constitutional obligations? The rough answer is ‘no,’ unless you are just closing prisons and college campuses and so forth,” Widmer says. As for Howell’s claim that doing away with the income tax would cut red tape, Widmer says that a repeal wouldn’t undo permitting and other regulations, but instead gut the staffing of state agencies. If people are having trouble getting an answer out of MassHighway or the Department of Environmental Protection now, staff layoffs would “guarantee that that you won’t get a response,” he warns.
But when asked how she would handle the fiscal fallout, Howell insists that the question is not relevant: “The right question would be, ‘Is ending the income tax good for the 3 million Massachusetts workers and taxpayers?’” She says that repeal of the tax would create a “vibrant, free-market economy” in which people can use their tax savings for retirement, education, health care, home improvement projects, and vacations—all of which would stimulate the economy and create jobs.
The anti-tax campaign has collected the required 66,593 signatures to advance the question to the next hurdle, the Legislature. Lawmakers have until the first Wednesday in May to give the petition the go-ahead or reject it. A third, rarely used, option gives lawmakers the opportunity to draft a countermeasure that would also go on the ballot. If lawmakers give the petition a thumbs-down, a likely course of action given the fiscal consequences, repeal supporters will have to persuade 11,099 more registered voters to put their John Hancocks on a second petition to get the question on the November ballot.
Thanks to the presidential contest, voter turnout is expected to be high this fall, which means that the 2002 result may not be a predictor of what happens this time. There is at least one bit of evidence that anti-tax sentiment is strong: Last year, voters in about 70 communities weighed in on Proposition 21/2 overrides, and according to the Massachusetts Municipal Association, less than half of the overrides succeeded.
The Massachusetts Republican Party has not taken a position on the income tax repeal, but Peter Torkildsen, the state party chairman, weighs in with his take.
“I personally understand why someone would vote for it out of frustration that Beacon Hill has not been doing its job for quite a few years now,” says Torkildsen, a former congressman. “A lot of people on Beacon Hill start the argument with how much money would they like to spend,” he says. “A better starting point is, ‘What’s an appropriate level for people to pay?’ and then ‘What’s the most economical way for the public officials to use that money?’”
Few believe that legislators would simply watch the income tax disappear. If the question passes, the Legislature could dramatically increase the sales tax, impose a statewide property tax, or simply vote to restore some version of the income tax itself, according to Widmer. Asked if House Speaker Sal DiMasi has considered any responses if the question passes, spokesman David Guarino says, “it’s such a far-fetched idea” that the top lawmaker doesn’t anticipate it passing. “He doesn’t think it would be sound fiscal policy,” Guarino says.
But what do you do with people who want to use the ballot question to send a message to Beacon Hill? “I guess the answer would be, “Be careful what you wish for,’” Widmer says.
While ballot questions are often not debated until late in the campaign season, Lefferts says it will be interesting to see if repeal opponents are able to make a strong case: “Somebody is going to have to stand up and make the argument—and overwhelm you with logic—that this is a bad idea.”
