TAXES VS. INVESTMENTS.
The tension between these two concepts has been at the center of public policy debates at all levels of government throughout American history. Putting aside the recurring but almost always specious claim that simply eliminating waste, fraud, and abuse will be sufficient to pay for needed public investments, the reality is that there is a clear connection between the level of taxation and the ability of government to invest in widely accepted public services.
A relatively minor but important example comes before the residents of Boston on November 8 when they will vote on a 1 percent property tax surcharge under the state Community Preservation Act (CPA). The surcharge would generate up to $20 million annually to support affordable housing, parks and recreation, and historic preservation.
The average single family homeowner would pay an additional $24 per year, with exceptions for low-income homeowners, low-and-moderate-income senior homeowners, and the first $100,000 of residential and business property value. Businesses would bear the lion’s share of the increase.
The arguments in favor of a yes vote clearly outweigh the case against it.
It is widely acknowledged that the lack of affordable housing is a major social and economic problem for Boston and the region, and the problem is getting worse. It is also widely recognized that Boston¹s quality of life – including its parks and history – are an important element of the city¹s charm and attraction.
To be sure, the money raised under the CPA surcharge won’t completely address the scale of the affordable housing problem nor change the face of Boston. But given the budget squeeze facing the state and city, this is the only real opportunity to make meaningful additional investments in these critical areas.
And that has been the experience in the 160 communities across the Commonwealth that have adopted the CPA since it became law in 2000 and who currently receive matching funds from the state equal to 25 percent to 30 percent of what the municipality raises.
What about the additional tax burden on businesses? That is not an idle question, but with Boston’s strong economy, this is a time when most businesses can handle a small increase in taxes. The past several years have been very good for downtown real estate values, and a significant share of the CPA funds will be raised from the largest property owners that have benefitted the most.
Furthermore, the business community also has a stake in a positive vote. Affordable housing is critical if Boston businesses are to attract and retain employees.
In my long tenure as head of the Massachusetts Taxpayers Foundation, the foundation and I tried to strike a balance between two competing imperatives – on the one hand, the need to have a competitive cost and tax structure for businesses, but on the other hand, the requirement to raise sufficient revenues to invest in education, health care, transportation, housing, human services, and other important areas. These investments are important in their own right but also are the underpinnings of a thriving local economy.
In some instances, that balance calls for a tax increase, in others a tax cut. In this case, Boston voters should support a modest increase in property taxes to pay for important investments in the city’s future.
Michael Widmer is the former president of the Massachusetts Taxpayers Foundation, a business-backed group that monitors the state’s finances.