Around New England

Economists’ Call for Tax Hike Draws Opposition From Massachusetts Conservatives

May 31, 2020

Conservatives are expressing dismay over a call for increasing state taxes in Massachusetts because of the coronavirus emergency.

“Crises are temporary. ‘Temporary’ tax hikes are forever,” said Chip Ford, executive director of Citizens for Limited Taxation, in a written statement.

Ford argued that raising taxes on people who are have been thrown out of work because of the shutdown of the economy by the governor would victimize the unemployed again.

Ninety-one Massachusetts economists have signed a letter calling for increases in the state’s income tax and corporate tax rate to deal with expected budget shortfalls because of the coronavirus emergency.

Almost half – 45 – work at one of the campuses of the University of Massachusetts:  22 at the flagship campus in Amherst, 19 in Boston, 2 in Lowell, and 2 in Dartmouth.

Noting that states have to produce a balanced budget and can’t run an operating deficit, the economists argue that “balancing the budget by cutting spending has a more negative impact on economic growth than balancing the budget by raising taxes.”

“Both the personal income tax and the corporate tax are fair ways to do this, since they fall only on persons with incomes and businesses with profits,” states the economist’s letter to Massachusetts Governor Charlie Baker, dated Tuesday, May 26. “A one percentage point increase in the income tax could raise $2.5 billion per year while a one percentage point increase in the corporate tax rate could raise $180 million per year, even if the income tax base falls by 25% and the corporate tax base falls by 50% during this recession. These tax rates could be phased back as the economy returns to its pre-recession level.”

Jim Lyons, chairman of the Massachusetts Republican Party, said raising taxes in the midst of an economic crisis would be exactly the wrong thing to do.

“Incredibly, these economists are calling for an income tax increase at the absolute worst possible time, when mandated business shutdowns have people struggling to make any income at all,” Lyons said in a written statement Friday, May 29.

He suggested that the economists who signed the letter wouldn’t feel the ill effects from it that others might.

“The answer from these economists, every one of them ensconced in the luxury of tenured positions in academia, who work at the beck and call of Beacon Hill Democrats, is never to trim away any wasteful government fat,” Lyons said. “Their answer is somehow always, ‘here’s a crisis that can be taken advantage of, here’s an opportunity where we can justify the Democrats’ appetite for spending more of the taxpayer’s hard-earned dollars.’ ”

It’s not clear how Beacon Hill leaders will handle expected shortfalls between revenue and pre-coronavirus revenue projections.

More than a month ago, Massachusetts Senate President Karen Spilka (D-Ashland) expressed skepticism about an $18 billion bond and tax bill designed to raise funds for transportation infrastructure, saying about it, according to State House News Service, “I’m not certain that now is the time to be talking about taxes.”