State of Cape Cod

Tax Reform. That Is the Question

Question One on the Massachusetts ballot gives voters the opportunity to abolish the state income tax. My first reaction is to go for it. Anytime you get a chance to lighten the tax burden, then Carpe Diem! Seize the Day! That initial gut reaction was confirmed by the veritable bombardment of television and radio commercials exhorting us to vote against Question One. Why? Because, they claim, the state needs that money desperately and, if they can’t raise it by way of the income tax, then property taxes will have to be increased instead. Wrong!

That’s not to say that the loss of revenue that would result by eliminating the money generated by the income tax would be inconsequential. Significant, yes. Catastrophic, no. Replaceable only by raising property taxes?  Balderdash! Or, if you prefer, Codswallop! 

We have been told, ad nauseam, by opponents to abolishing the income tax, that it will force a substantial increase in real estate taxes. There are so many things wrong with this scenario that it’s hard to know where to begin. Proposition 2 1/2 nominally stands in the way of arbitrarily increasing taxes on real estate. Being a one party state, our avaricious legislature can do just about anything it wants and not worry about being voted out of office. Certainly repealing this tax limiting statute is well within the bounds of possibility but, naysayers to the contrary, raising taxes on real estate is neither the only nor the best alternative.

A more likely scenario is one which this arrogant bunch, so callously unresponsive to the will of the people, has chosen in the past. They could simply ignore it. Remember campaign finance reform? The income tax rollback? Both were passed by a majority of voters but have never been honored by our legislators. Why should anyone expect things to be different in this case? Yet someone must be worried because an awful lot of money is being spent to defeat the issue. One need only read the list of contributors to the efforts aimed at blocking passage of Question One to understand just who stands to profit from the status quo. 

This is far from a simple either-or decision. The issue isn’t solely a choice between keeping the income tax or imposing astronomical real estate taxes, as the opponents would have us believe. Many feel that it isn’t a choice at all but rather an opportunity to finally do something about changing the way government is financed. There’s been a lot of talk about simplifying the tax code. Flat taxes and sales taxes each have their supporters. Question One, should it pass, presents us with a golden opportunity to accomplish meaningful reform without a lengthy, acrimonious and expensive legislative battle.

Passing Question One can, in one quick and virtually painless instant, provide the legislature with the opportunity to increase, not property taxes, but the sales tax. We would then have, almost effortlessly, the fair broad based tax which many have been advocating. A tax collected at the point of purchase, not confiscated from our paychecks every week. A tax we could, to a large degree, control by regulating our spending habits. A tax we would pay with money we actually received before being obliged to turn some of it over to the government for what are, let’s face it, essential services.

The details would have to be ironed out, of course. Many essential items, principally food and clothing, would have to be exempted from a higher sales tax, as they are from our present 5% impost. Safeguards would have to be enacted to make sure that the income tax could never be reinstated. We certainly don’t want to one day find ourselves shouldering the burden of both. But, in a relatively short time, a smooth changeover could be made utilizing many of the same personnel presently employed by the existing revenue service.

The savings would be significant. Just imagine: an entire bureaucracy eliminated, no more forms to be printed, mailed, and processed. No more checks to be dealt with. No more tax preparers to be paid. No tax deadbeats, since the revenue would be collected at the point of sale. And fair? The wealthy have more, thus they spend more and would pay more in taxes. Perhaps luxury items, such as very expensive cars and boats, could be taxed at a higher rate. Because all the essentials would be tax free, the poor among us could be liable for little or no taxes.

Question One, should it pass, and if handled properly, is not a calamity but an opportunity that rarely comes along. Rather than a curse which will necessarily doom us to exorbitant property taxes, Question One gives us perhaps the only real chance we’ll ever see to reform and simplify our tax code. To knuckle under to the blandishments and scare tactics of those who oppose taking advantage of this singular fortuitous circumstance in order to promote their own selfish interests would be inexcusable.

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