Feb. 23, 2003
A few months ago, the left-wing lobby long known as TEAM changed its name to the Massachusetts Budget and Policy Center, perhaps because the TEAMsters were tired of the quip that their acronym stood for Tax Everything And More.
It really stood for Tax Equity Alliance for Massachusetts, but as a summary of TEAM's philosophy, "tax everything and more" would be hard to improve on. Over the years, the only thing in Massachusetts more dependable than TEAM coming out for higher spending has been TEAM coming out against lower taxes. TEAM opposed almost every significant tax cut and proposed tax cut of the last 15 years, invariably arguing that the money was more urgently needed by the state than by the taxpayers who had earned it.
The liberal leopard hasn't changed its spots. Last week, the renamed organization released a report on "The Role of Taxes and Spending in the Fiscal Crisis." Sure enough, it was preaching the same old sermon: The Bay State's problems were caused not by spending too much but by taxing too little.
"It is clear," write James St. George and Sarah Nolan, the report's authors, that during the 1990s "the state's top priority was cutting taxes." This will come as news to those who remember the exertions Beacon Hill went to not to cut taxes -- the budgets that grew by as much as a billion dollars a year, the enlargement of the "rainy-day" fund to forestall an automatic tax cut, the repeated refusal to undo "temporary" income tax hikes dating back to the Dukakis administration. Tax revenues flooded the Treasury in record-smashing waves, but as far as the lobby-formerly-known-as-TEAM is concerned, taxes weren't nearly high enough.
So naturally it recommends making them higher.
"Tax increases to compensate for the overly ambitious tax cuts of the 1990s must be part of any solution to the state's fiscal crisis," the authors write. (Indeed, they write it twice.) They make it clear that they are calling for tax increases over and above the huge ones enacted last year.
It wasn't enough, in other words, to repeal the income tax rollback passed by overwhelmingly by the voters, to abolish the charity deduction, to shrink the personal exemption by $1,100, to double the tax on cigarettes to $1.51 a pack, to jack up the fee for renewing a driver's license or registering a car, to sharply hike the tax on capital gains, to charge nursing home residents who pay their own bills an additional $3,300 a year, to add $5 to every speeding ticket, to increase filing fees for all legal documents, and to impose a $1.50 tax on drug prescriptions. It all added up to the largest tax hike in Massachusetts history, but Nolan and St. George say it wasn't enough.
They also say the commonwealth's budgets have been too stingy. "Massachusetts spends a smaller share of its total personal income on state and local services than most states," they claim. "Only five states in the nation commit a smaller share of available resources to public services than does Massachusetts." State budget growth, they lament, has been lagging behind the growth in personal income.
The planted axiom in this argument is that in good times, when companies are hiring and incomes are rising, government spending should rise too. Does that mean that in not-so-good times, when workers are being laid off and belts are getting tightened, government spending should be reduced? No, the authors certainly aren't saying that. TEAM may have altered its name, but its goals remain fixed: Rain or shine, boom or bust, it wants spending to go up -- and taxes to stay up.
Fortunately, the Cato Institute, a noted Washington, DC, think tank, has just issued a monograph that highlights some of the numbers that TEAM -- sorry, the Massachusetts Budget and Policy Center -- elides. The center's report never gets around to mentioning just how much money the state ran through during those supposedly stingy 1990s, but the Cato study, which crunches the numbers for all 50 states, does.
In 1990, Massachusetts took in $9.37 billion in tax revenue. By 2001, it was collecting $17.23 billion -- an increase of 84 percent. Only 44 of that 84 percent was needed to keep pace with inflation (plus population growth). The remainder -- $3.76 billion, or $1,509 a year for every household in Massachusetts -- was a windfall to the state. Only five other states helped themselves to a larger bonus from taxpayers' pockets. Needless to say, Beacon Hill spent every penny it took.
The Cato study also looks at each state's budget history. Between 1990 and 2001, inflation-adjusted per-capita spending by the Commonwealth of Massachusetts rose 31.8 percent. It was the 8th-highest increase in the nation.
The notion that the state would be facing fewer fiscal problems today if only it had levied steeper taxes and spent even more money is, to put it politely, eccentric. "Tax everything and more" was lousy advice in the 1990s. It's an even worse prescription today.