Massachusetts has a ballot question this election on whether or not to eliminate the state income tax. Opponents of the bill forecast death and destruction. Absent from the debate is the fact that our neighbors in New Hampshire seem to get adequate government services despite not having an income tax on wages (New Hampshire does tax interest and dividends) nor a sales tax.
Why do we need an income tax here when New Hampshire apparently doesn’t?
Let’s look at some recent news items…
- Massachusetts taxpayers are paying the salary of Dianne Wilkerson (wikipedia), whose track record during 15 years as a state senator includes (1) failing to file or pay federal income taxes, (2) being fined for ethics violations, (3) being fined for campaign finance violations, (4) being prosecuted for perjury, and (5) being videotaped taking bribes from the FBI.
- Massachusetts taxpayers are paying the salary of Salvatore F. DiMasi, speaker of the House, who is currently spending most of his time and effort stonewalling a conflict-of-interest investigation.
- Massachusetts taxpayers have been paying since 2003 to house Barack Obama’s Aunt Zeituni, an illegal immigrant from Kenya (Boston Herald story).
Vote No on Question 1, stay in Massachusetts, and ask your boss for a raise; our state government will be needing those income tax dollars…
[Facts and figures: The average American pays $4,283 per year in state and local taxes. The average Massachusetts resident pays $5,377. The average New Hampshire resident pays $3,642. Source: http://www.taxfoundation.org. The U.S. Census Bureau presents some data showing state taxes only for 2005. Interestingly, Massachusetts collects more per resident than New York, though perhaps that is only because New York funds more things at a local level.]
[Idea: Any tax that grows automatically with property values or incomes probably sets up a bad dynamic between taxpayer and government. The cost of delivering a product or service should normally be set by standard microeconomic supply and demand curves. The government runs schools, prisons, police and fire departments. If a Google or Microsoft is founded in the state and starts paying a lot of computer programmers higher salaries, should that drive up the cost of running the prisons? If there is a real estate bubble and all of the houses, at least on paper, are now worth 3X their former value, does that drive up the cost of running the local school? We have to assume that any revenue that gets into the hands of state bureaucrats will get spent (Alaska being the only current example of a state that returns some of its revenues to citizens). Why set up a system where there is no way for citizens to do better without fattening the state bureaucracy as well?]
“…the houses, at least on paper, are now worth 3X their former value, does that drive up the cost of running the local school?”
I think that would be “yes”, if the teachers are going to be able to afford homes (or pay for gas to commute from miles away).
J.P.: Houses went up 3X, but rents did not. For a young teacher moving to an area, the cost of renting stayed about the same. For an established teacher who had purchased a house 5-10 years ago, the cost of continuing to pay the old mortgage stayed the same. Private sector workers don’t get a 3X pay raise when the cost of a house goes up 3X…
“Alaska being the only current example of a state that returns some of its revenues to citizens”
Not sure if this falls under the definition you’re thinking of, but Oregon sends a refund check to taxpayers when the state’s actual revenue is more than 2% greater than the forecast revenue which budgets were based on. (http://www.oregon.gov/DOR/PERTAX/faq-kicker.shtml). Of course the following period the state’s revenue forecast would be raised to take into account the new high-paying jobs, etc.