By Al Norman
Our state budget is the financial expression of what our Constitution refers to as a “social compact” to ensure all individuals with “the power of enjoying, in safety and tranquility, their natural rights and the blessings of life.”
The needs of our people to be safely housed, fed and cared for are not diminished in a recession. In fact, it gets worse, as more people become eligible for public programs. The fortunes of the low-income do not rise and fall with the stock market. Government looks after these people because the marketplace does not. Greed in the marketplace — not the needs of our people — caused a precipitous drop in revenues to sustain our social compact. Despite these hard fiscal times, there are still people and corporations in this state who are doing very well financially. We need to turn to those who have, to help those who have not.
Over the past decade, our state economy has been growing faster than net spending. That means the economy has been growing faster than our budget. But during this same timeframe, state taxes and fees have been growing much slower than the economy, because state income tax cuts were slashed, and the sales tax did not keep up with changes in the economy. According to the Mass Budget & Policy Center, “If the tax revenue had grown as a steady share of the economy during these past 10 years, Massachusetts would have shown a substantial surplus and would have been in a far better position to weather the current national recession.”
Lower and middle class people in Massachusetts pay a larger share of their income in taxes than do the wealthy. We are one of only seven states that do not allow a higher income tax rate for higher income people. We could make our tax code more progressive by increasing the income tax rate, while raising the personal exemptions. Only higher income taxpayers would pay more.
We could also turn to the so-called “tax expenditure” budget to seek more revenue from the corporations that currently pay little or no taxes to support our people. For one or two years we should suspend the tax breaks and exemptions we give to prosperous corporations. If we suspended the $24 million tax break we give the film industry, we could restore all the cuts to elderly home care and the Personal Care Attendant program for the disabled. It might seem counter-intuitive to raise taxes in a recession — but every penny raised gets spent on poor people, who immediately spend their disposable income. In the real economy, a state dollar spent is worth as much as a private dollar spent.
Lawmakers and the Governor need to protect our social compact — especially in tough times, and to be honest about the fact that there is still great personal and corporate wealth in this state. A tax code that closes loopholes, suspends corporate welfare and shares the burden of state programs, is as important as direct appropriations for services.
Al Norman is the Executive Director of Mass Home Care. He can be reached at email@example.com or at 413-773-5555 x 2295.