Campaign for Our Communities

ARCHIVE: CAMPAIGN FOR OUR COMMUNITIES (Progressive Revenue Reform, 2012-2013)

- Campaign updates
- Goals
- Gov. Patrick's Revenue Proposal
- An Act to Invest in Our Communities
- Changes in Tax Share under Governor's Proposal
- Changes in Tax Share under Act to Invest in Our Communities
- Legislation
- Compare Governor's Plan and Act to Invest
- Background: Why do we need more revenue?
- Take Action
- Toolkit
 


UPDATE 4/9/2013: On Apr 8, the House passed Leadership’s flawed and inadequate Joint Ways and Means (JWM) Transportation Funding bill. However, it did not pass with a veto-proof majority, meaning, what the final revenue package looks like is very much still in play. Gov Patrick has promised to veto if the bill, in its current form, reaches his desk.

On Thursday 4/11/2013, the SENATE votes, and we believe that the progressive position –vote no–  has a decent chance of prevailing… if we continue to contact the Senate, pressuring those on the fence to vote “NO”, and thanking and encouraging those Senators who have shown their commitment to a “no” vote already (the politics are rough! let’s give them our thanks and support for sticking it out!).  Your calls and emails and other conversations* with your State Senator are just as important as ever. Keep it up. And thank you.



Our Goals:

investinma.jpgThe Campaign for Our Communities is committed to improving the quality of life for Massachusetts families and strengthening our economy. We need to make smart investments in our people and communities.   To fund those investments we support tax reforms that will raise substantial new revenue while holding down increases for low and middle income families.

  • Our families and our communities need investments in the services, schools, and infrastructure that make Massachusetts a great place to live and work.
  • In order to make the necessary investments, we will need to raise significant* new revenue
  • That revenue should come primarily from the highest income earners.

*Significant means around $2 billion, the amount necessary to address MBTA, education, restore budget cuts to services, spurred by tax cuts in the 1990s and the Great Recession. A smaller amount will only be a temporary stop-gap, and we’ll continue going from crisis to crisis and continue to need to cut programs, raise fees, and raise taxes again. Let’s do it right the first time.

An Act to Invest in Our Communities

We need to invest in our communities and keep middle-class families working and earning!  “An Act to Invest in Our Communities,” legislation filed in January 2013 by Rep. Jim O’Day [HD 1359] and Sen. Sonia Chang-Diaz [SD 555] does just that.

By allowing us to invest in education, innovation and infrastructure, this proposal builds on our state’s strengths, making life better for our families today and into the future.  By asking more from high income households and investors who received large windfalls from the Bush tax cuts, while raising the personal exemption as a way to hold down the tax increase for middle-class families, the bill raises needed revenue primarily from those who can best afford to pay.

With that revenue, we can keep the quality schools and services that make our state a good place to live and do business. [more information below]

Governor Patrick’s Revenue Proposal

In his State of the Commonwealth address in January 2013, Governor Patrick outlined a bold and exciting new proposal to raise revenue through raising the income tax while cutting the sales tax. The Governor’s plan is ambitious and follows the same core principles as the “Act to Invest In Our Community:” that investment in our infrastructure and education is imperative to our economic vitality now and in the future, and revenue should be raised progressively, with vulnerable citizens protected.

Legislators Can Demonstrate Commitment to Our Values

Over the course of the next few months, both the House and the Senate will consider the Governor’s proposal and other revenue bills and proposals.  The climate seems ripe for new revenue but a strong grassroots case must continue to be made and pressure exerted on reluctant legislators.   We continue to urge legislators to co-sponsor ACT TO INVEST, or make their support for new revenue public.  Doing so will demonstrate a strong public commitment to the Governor’s aims and needs and values of all Massachusetts voters.

Details/Background on An Act to Invest in Our Communities

[ATI Fact sheet - PDF] [PDM Fact Sheet - PDF]

Massachusetts State and Local Taxes are Regressive

That means that the wealthiest Massachusetts earners have been paying far less in taxes than their poorer counterparts.

taxes-unfair-in-ma.png

 Provisions in 'Act to Invest'

  1. Restore the income tax rate from 5.25% to 5.95%, but also raise the personal exemption enough to hold down increases for middle-class families.
  2. Raise the tax rate on investors, but also provide a targeted exemption for middle-class seniors.
  3. Raise $2 Billion in net additional revenue to maintain funding for our communities, schools, and health care.

Changes in tax share under Governor's Proposal - GRAPH

 Changes_via_Gov_Plan.png

 

screenshot from the “Choose Growth” Revenue Modeling Tool

Presentation (download here)

Changes in tax share under 'Act to Invest' - GRAPH

Bill As Filed in the House

Chapter 62 of the General Laws is hereby amended as follows:

SECTION 1.

Section 3 of chapter 62 of the General Laws, as appearing in the 2010 Official Edition, is hereby amended by striking out subsection B(b)(1)(A) and inserting in place thereof the following:–
A personal exemption of $7,900 for tax years beginning on or after January 1, 2014.

Section 3 of chapter 62 of the General Laws, as appearing in the 2010 Official Edition, is hereby further amended by striking out subsection B(b)(1A)(A) and inserting in place thereof the following:–
A personal exemption of $10,300 for tax years beginning on or after January 1, 2014.

Section 3 of chapter 62 of the General Laws, as appearing in the 2010 Official Edition, is hereby further amended by striking out subsection B(b)(2)(A) and inserting in place thereof the following:–
A personal exemption of $15,800 for tax years beginning on or after January 1, 2014.

Section 3 of chapter 62 of the General Laws, as appearing in the 2010 Official Edition, is hereby further amended by adding a subsection D to read in its entirety as follows—

In determining the Part A and Part C taxable income of persons who are 65 or older, or who are disabled, an exemption shall be allowed upon the sum of the Part A and Part C adjusted gross income of such persons in an amount equal to the lesser of $2500 and one third of the sum of such Part A and Part C income for a single person, or a married person filing a separate return, whose total federal adjusted gross income is less than $40,000, and in an amount equal to the lesser of $5000 and one third of the sum of the Part A and Part C income for a married couple filing a joint return whose total federal adjusted gross income is less than $80,000, provided, however, that if only one spouse is 65 or older or is disabled, the exemption shall not exceed $2,500.

SECTION 2.

Section 4 of chapter 62 of the General Laws, as appearing in the 2010 Official Edition, is hereby amended by striking out subsection (a)(1) and inserting in place thereof the following:–

Part A taxable income consisting of capital gains shall be taxed at the rate of 8.95 per cent for tax years beginning on or after January 1, 2014.

Section 4 of chapter 62 of the General Laws, as appearing in the 2010 Official Edition, is hereby further amended by striking out subsection (a)(2) and inserting in place thereof the following:–

Part A taxable income consisting of interest and dividends shall be taxed at the rate of 8.95 per cent for tax years beginning on or after January 1, 2014.

Section 4 of chapter 62 of the General Laws, as appearing in the 2010 Official Edition, is hereby further amended by striking out subsection (b) and inserting in place thereof the following:–

Part B taxable income shall be taxed at the rate of 5.95 per cent for tax years beginning on or after January 1, 2014.

Section 4 of chapter 62 of the General Laws, as appearing in the 2010 Official Edition as amended by 2010, 240, Sec. 111, is hereby further amended by striking out subsection (c) and inserting in place thereof the following:–

Part C taxable income shall be taxed at the rate of 8.95 percent for tax years beginning on or after January 1, 2014, excepting Part C taxable income derived from the sale of investments which:

(1) are in a corporation which is domiciled in the commonwealth with a date of incorporation on or after January 1, 2011 which has less than $50 million in assets at the time of investment and complies with subsections (e)(1), (e)(2), (e)(5), and (e)(6) of Section 1202 of the Internal Revenue Service Code; and

(2) are held for 3 years or more, which shall be taxed at a rate of 3 per cent; provided, however, that in order to qualify for the 3 per cent rate, such investments shall be made within 5 years of the date of incorporation and, to the extent consistent with the provisions of this subsection, shall be in stock in a corporation that satisfies the requirements for treatment as “qualified small business stock” under section 1202 ( c) of the federal Internal Revenue Code, without regard to the requirement that the corporation be a C corporation.

On the Governor's Plan and 'Act to Invest'

NEW: The Governor’s office has posted a tool for citizens to see how the Governor’s proposal will affect different constituents. Download the file with Excel to plug in different scenarios: mass.gov/governor/agenda/ma-revenue-modeling-tool-.html

NEW: See how investment revenue, proposed in the Governor’s budget, impacts your community: mass.gov/governor/agenda/choose-growth.html

Over the course of the next few months, both the House and the Senate will consider the Governor’s proposal and other revenue bills and proposals. The climate seems ripe for new revenue but a strong grassroots case must continue to be made and pressure exerted on reluctant legislators. We continue to urge legislators to co-sponsor ACT TO INVEST, or make public their support for new revenue. Doing so will demonstrate a strong public commitment to the Governor’s aims and needs and values of all Massachusetts voters. While in the legislative process, the details of the various revenue packages will change, here are points of comparison between the Governor’s proposal and ‘Act to Invest,’ in their present form (2/2013).

Compare Changes under ‘Act to Invest’ and the Governor’s Proposal
(Information on the Governor’s proposal from Mass Budget and Policy)

 

ATI

Gov

income tax rate

5.95

6.25

sales tax

6.25  (no change)

4.5

revenue raised

2 billion

1.9 billion

personal exemption: single

7,900

8,800

personal exemption: married

15,800

17,600

     

Other elements of ATI tax proposal (with no direct comparison to the Gov’s plan):

  • Lower short term capital gains from 12% to 8.95%
  • Increase Dividends and Interest income from 5.95% to 8.95%
  • Exemptions that protect low income disabled and senior persons and Massachusetts small business investment income

Other elements of the Governor’s tax package (with no direct comparison to ATI) (From Mass Budget):

  • Applying the sales tax to the purchase and installation of custom-modified computer software (raises $265 million/year)
  • Eliminating dozens of special tax breaks that reduce personal income taxes for eligible filers (raises $1.1 billion/year)
  • Eliminating a number of special tax breaks for businesses and clarifying the corporate tax code to prevent certain kinds of tax avoidance (raises $194 million/year)
  • Indexing the Motor Fuels Tax to inflation, which would prevent the further erosion of collections from this source.
  • Eliminating the sales tax exemption for soda and candy (raises $53 million/year)
  • Increasing the cigarette tax by $1 per pack, thus raising the tax to $3.51 per pack (raises $150 million/year).
  • Updating of tobacco tax laws in order to equalize tax rates on cigars and “smokeless” tobacco products with the tax rate applied to tobacco sold in the form of cigarettes (raises $16 million/year). (Smokeless tobacco products include items such as chewing tobacco, snuff, and nicotine-containing breath mints and lozenges.)
  • Capping the revenue lost through the Film Tax Credit at $40 million (raises $40 million/year)

Additional $57 million in tax revenue will come from the following sources:

  • $27 million from enhanced tax enforcement by the Department of Revenue, using special software and processes to identify promising collection and audit opportunities.
  • $26.2 million from the agreement the Administration reached with Amazon.com for the online retailer to collect sales taxes from its sales to Massachusetts customers
  • $2.6 million from the eliminating the exemption from the room occupancy excise tax for certain types of short term room rentals (such as B&Bs, rental vacation homes, and corporate executive temporary apartments).

Background: Why Do We Need More Revenue?

THE PROBLEM: CUTTING OUR FUTURE

Due to a series of tax cuts in the 90s/early 00s and the economic downturn of the Great Recession, Massachusetts has had to face a run of budget cuts, drastically affecting the quality of services in our cities and towns. {information adapted from Mass Budget and Policy}

  • Massachusetts income tax cuts between 1998 and 2002, cost us $2.5 billion/year in lost revenue.1
  • The result: even during the strongest years of economic growth our state was barely able to fund essential services, and in recessions we have had to cut deeply.
  • When adjusted for inflation, since 2001:
    • Funding for local aid is down 45%
    • Funding for higher education is down 31%
    • Funding for public health is down 25%
  • Significant cuts have occurred across the entire state and local government
  • Our MA budget gap for 2014 is expected, conservatively, to be $1.2 Billion
  • Over the last 3 decades  (adjusting for economic growth):
    • Total state aid to cities and towns in Massachusetts—including aid for education and general local aid—has declined by about $1.7 billion.
    • Education funding is essentially flat.
    • Non-education aid is currently at its lowest point in 30 years, with a $1.3 billion decline.
    • Causes of reductions in local aid: State-level tax cuts, effects of the Great Recession
From Mass Budget and Policy. [http://s.shr.lc/XwH3Am]
Watch the MassBudget presentation on Taxes and Our Communities (YouTube)

 

Mass. Taxes Are Below National Average 

Massachusetts total state and local taxes are lower than national average. [see MassBudget]

Take Action Now  

Organizers' Kit 

More on 'Act to Invest' and Revenue on Our Blog 

Check our “What’s New” tab for our all our blog posts.

 

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