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Q1 eliminates income tax

By Denebola
Published: October 2008

By Nathan Yeo

Massachusetts’ residents will decide the future of the state’s income tax with their Election Day votes on Ballot Question 1.

If residents approve Question 1, Massachusetts will eliminate its income tax over a two-year period. This would result in a reduced tax burden for Massachusetts residents and force the state to cut its budget by about 40 percent, or $12.5 billion by 2011.

Massive budget cuts would mean reduced state aid to cities like Newton, likely forcing the cities to both raise property taxes to compensate for lost revenue and cut heavily from the city and school budgets.

Proponents of Question 1 claim the budget is filled with wasteful spending and the state could absorb the $12 million in cuts. They also say giving each Massachusetts resident an average of $3,700 per year in tax cuts would create jobs, boost the flagging state economy, and prevent home foreclosures.

“With no income tax and less government, Massachusetts will become a magnet to private productive business and more good jobs, Carla Howell, chair of the Citizens for Smaller Government, a pro-Question 1 group, said.

Those opposed to Question 1 warn of dire consequences for schools and city governments should the question pass. The Coalition for Our Communities, an anti-Question 1 group, estimates that state aid to Newton’s municipal budget will be cut 65 percent, about $6.5 million dollars, and state aid to Newton’s education budget would have to be cut by about $20 million, or 86%. Ultimately Governor Deval Patrick will decide on the total amount of cuts to schools.

A similar ballot measure received 45 percent of the vote in 2002, and supporters and opponents of Question 1 alike fear that an economy in free fall may help Question 1′s chances.

A recent poll of 400 Massachusetts residents taken by Suffolk University and 7 News indicates that 59 percent are opposed to Question 1, 26 percent favor it, and 14 percent are undecided.

A recent study by the non-partisan public policy think tank Massachusetts Taxpayers Foundation says that if the income tax is repealed, most citizens would get a tax cut substantially less than $3,700, because most of the savings would come from the rich, who pay more money in the progressive income tax system. Massachusetts residents who earn less than $50,000 would save only $850 on average.

The Massachusetts Taxpayers Association report also studied states without income taxes to find how they raised revenue. Some states like Alaska, the report found, exploit their natural resource wealth to raise funds. 80 percent of Alaska’s state funds come from oil revenues.

The report also pointed to a third model: having high property taxes like neighboring New Hampshire.

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