Campus Community Conversation

Click here for the Powerpoint Prestentaion                                                                       by Jim Plaza

On Friday, February 5^th, 2010, Representative Jay Kaufman (representing the 15^th Middlesex District) presented a short overview of the current tax policy in the commonwealth to a mixed group of University union employees. His PowerPoint based presentation provided a snapshot of the mix of state & local taxes and the services those revenues provide and support. The presentation, interspersed with several comments from the audience was followed by an active and engaging Q&A, lasting almost an hour.

Representative Kaufman, preferring to be called “Jay”, said that he held similar community conversations across the state last fall, in his capacity as House Chair on the Joint Committee for Revenue (Senator Ben Downing is the Senate Chair). He characterized these gatherings as an attempt to have “kitchen table” style discussions, generating ideas on revenue enhancement, as opposed to only positional statements that taxes are too high or low.

(See video below)

The first slide (State & Local Revenue Sources FY 09), showed that taxes fall into six categories: personal income, property, general sales, excise, corporate, and other (such as fees), of which personal income (34%) and property (35%) comprise more than two-thirds of total taxation. 

The second slide (What Does Your State Tax Dollar Buy?) revealed that more than seventy-five cents of each dollar provides for education, local aid, health care, and human services, with health care comprising the largest percentage at 31%. There was no comment on health care cost by Representative Kaufman, nor from the audience, but from a Legislative study in the early 2000’s it was found that 39% of health care premium dollars do not purchase health care services. We all are aware of the ongoing national debate in addressing health care costs.

A third slide (Elements of Good Tax Policy) depicted fundamental criteria used in developing a tax system. Those considerations most often cited are: adequacy, fairness/equity, stability, congruency with policy goals, responsibilities and authority aligned, along with efficiency, transparency, and simplicity. Jay stressed, that though achieving adequacy, equity and stability are key considerations in tax policy development, they are also the most difficult to accomplish. And, overtime, emphasis or over reliance on specific criterion may change. For example from FY 2004 to FY 2008 capital gains revenue increased each year, contributing significant revenues to the budget. But capital gains are highly variable taxes producing offsetting decreases in more stable taxes. This has the effect of reducing previous levels of support for state services. Revenue collections have seen a 75% reduction in capital gains over the last two years leaving a large reduction in a relied upon source of revenue. 

Perhaps the most revealing data presented was from slides (State & Local Taxes as % of Personal Income) comparing all fifty states to a national average. For the year 1977 – 1978, Massachusetts collected 13.7%, whereas the national average was 11.2%. By FY 2007, Massachusetts collected 10.6% with the national average remaining solidly at 11.2%. Massachusetts ranked 3^rd highest in collections in 1977 – 1978, but dropped to 26^th in 2007. Even though the total per capita tax obligation significantly decreased there has not been a corresponding increase in business activity within the state. Thus the label of the Commonwealth as “Taxaschusetts” is disingenuous to say the least.

Representative Kaufman noted that had the state collected taxes at the national average level, the state’s revenue would have been $2.5 billion more than it currently is. Certainly obviating the need for such drastic cuts in public programs and services.

Massachusetts has struggled with a structural deficit over the last several years, which will only continue without a change in our current taxation approach.