Thursday, December 14, 2006

Thank goodness New Hampshire has 'the pledge'

By ANTHONY SCHINELLA
Commentary [From the New Hampshire Union Leader]

AS A NATIVE of the Granite State who has lived in states that have income and sales taxes, I've learned to appreciate what some call the New Hampshire Advantage.

Despite a political perspective that would be considered left-of-center by most, I'm glad that many elected officials took "the pledge" in 2006. The long-term health of our state and its quality of life will only be preserved by trying to solve our problems without broadbased taxes.

After spending many years living and working in Massachusetts, I can tell you firsthand that broadbased taxes rarely solve society's ills. At the same time, they can lead to corruption and dishonesty by governments.

For those of you who don't know, here's a bit of Massachusetts history. In 1989, after the state experienced a real estate slide and recession, then-Gov. Michael Dukakis and the Democratically controlled Legislature raised the state income tax from 5 to 6.25 percent and promised that after the economy improved, the tax would return to 5 percent.

In just a few years, the economy did improve, as expected. But instead of rolling back the income tax, Republican governors, with the assistance of Democrats in the Legislature, lowered taxes and fees on just about everyone but the individual.

Democrats in the Legislature were the worst, awarding anyone and their lobbyist targeted tax cuts while the rest of us got nailed with the higher income tax rate year after year. It was so bad that the voters had to pass a lobbying reform and disclosure bill via initiative petition.

Fidelity Investments, for example, screamed poverty while reaping millions in profits and landed a huge tax break. Then, the company moved thousands of jobs to Rhode Island. Raytheon was able to create a break for itself and then proceeded to layoff thousands of workers, despite record profits. Another loophole, which still exists, allowed banks like Citizens and Fleet to pay as little as $456 annually in state income tax while residents barely surviving on $20,000 a year paid more.

At the same time all this was going on, the state budget doubled. In 1998, a citizens group attempted to roll back the income tax rate via initiative petition. The campaign slogan was "Keep the Promise" and every interest group under the sun did all they could to thwart the effort. After two tries and a slew of lawsuits, the question was finally put on the ballot in 2000 and it passed overwhelming by more than 19 percent.

But legislators scoffed at the will of the people. The Massachusetts state income tax was lowered over the years, but it was never returned to 5 percent, as promised.

You would think that after doubling the budget all of Massachusetts' problems would be solved. Well, anyone who watches Boston-based television news these days knows the problems weren't solved: The schools still aren't good enough, there are still people who are hungry and homeless, many remain unemployed or underemployed, and residents continue to flee the state in droves. In the last decade, according to MassINC, a non-partisan think tank, more than 110,000 people have moved out of Massachusetts. Many of them moved here or to Florida where taxes are lower.

While New Hampshire is not Massachusetts, we can learn a lot from the mistakes our neighbor to the south has made. We can also preserve the reason many people move here (or move back here).

One thing I would like to see attempted is zero-sum budgeting. Essentially, every budget cycle, the state should start at zero and work its way up to what was collected the budget before. We might be surprised that we can actually live within our means without these taxes. It is worth a try.

While we are trying to be thoughtful about solving our state's problems, we need to be wary about assumptions made from election results or "discussions" about tax reform that are fronted by activists who have repeatedly thrust broadbased taxes into the political arena. Seldom do these types of discussions lead to anything but the conclusion at which the group wants to arrive.

No matter what anyone says, November's election results had nothing to do with ending "the pledge" and implementing a sales or income tax. The results, however, had everything to do with getting government to use the resources it already has more efficiently and wisely.

Anthony Schinella is the station manager of WKXL 1450 in Concord. He also writes for Politizine, a blog about politics, music, and modern times, at www.politizine.blogspot.com.

1 comment:

Paul said...

Nicely said.