Opinion: Governor's budget blasts Bay State businesses
By Elizabeth Karasmeighan
Clearly Gov. Deval Patrick is having some growing pains getting used to his new gig. He has spent a lot of time apologizing for spending more taxpayer dollars on a luxury Cadillac, major redecoration efforts and making calls from the Statehouse to friends in high places to provide references for lending companies. As the first Democrat governor in 16 years, Gov. Patrick is off to a rocky start.
More than his missteps that provide fodder for fun sound bytes, the governor's budget is a serious threat to taxpayers and the state economy. The nearly $27 billion budget proposal for fiscal year 2008 is anything but the "balanced and responsible" spending plan the governor claims. By raising taxes on corporations by $800 million over the next two fiscal years and using $400 million of one-time revenue and savings to fund new programs and spending expansion, Gov. Patrick's biggest rookie mistake thus far is his spending plan.
Certainly the governor has taken some small steps toward setting spending priorities and trimming spending growth rates to fill the budget gap. However, by calling for higher taxes on the businesses that provide jobs and drive the state's economy will only serve to fuel the continued out-migration of residents. Increasing the budget for his staff and office by nine percent and creating new programs signals that the governor's budget savings and prioritizing fell short.
In fact, what the governor says is eliminating corporate "loopholes" and "unintended benefits" looks more like tightening a noose around the neck of the Bay State economy. Raising taxes because some other states may have worse business climates enters Massachusetts into a race to the bottom that cannot be won without significant economic damage.
Even beyond the threat to the economic wellbeing of the state, the taxes raised by eliminating the so-called "loopholes" will all be paid by consumers. The governor's shell game ends with Massachusetts families facing tighter budgets as they try to make ends meet. The addition of local tax increases into the mix is an irrational way to relieve the tax burden on residents. A less visible, higher tax burden is not preferable to the current visible property tax burdens.
However, the governor's budget missteps are not limited to higher taxes in the next fiscal year. With his use of one-time revenue to fund new programs, he is setting future budgets up for disaster. Perhaps in the future he will decide that taxpayers are receiving "unintended benefits" by not paying more income tax or sales tax. If taxpayers close their eyes to what the "loophole closing" really means, it will be much easier for the governor to sneak in with more tax increases next time around.
Higher taxes and higher spending are mistakes that will linger longer than Gov. Patrick's drapes. As the budget debate continues in the legislature, taxpayers should keep their eyes open and tell their lawmakers to reject the tax increases on businesses and set meaningful spending priorities.
Elizabeth Karasmeighan is state government affairs manager for Americans for Tax Reform, (www.atr.org), a nonprofit organization that advocates for tax relief.
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