Clare Higgins: An angry taxpayer’s reflections
NORTHAMPTON — It’s March madness time – that is, the madness that descends on otherwise rational people when they sit down to do their tax return. I know that April 15 is the deadline, and I know that many of you have already filed, but many of us are just focusing on this now. I certainly find the whole thing exasperating, not just because of the irritating forms but because of my concerns about how my taxes are assessed and spent.
This tax return is the last one that will reflect the Bush tax cuts for the wealthiest people. The first cut was the one that Bush pushed through in 2001 when the country had a budget surplus, a legacy of the Clinton presidency. The additional cut passed in 2003 when we were fighting two wars and the economy was faltering. These tax cuts were sold as a way to stimulate the economy and to create jobs without jeopardizing the fiscal health of the federal government.
Well, the cuts certainly stimulated the economy of the richest 1 percent of Americans; 65 percent of the income gains between 2002 to 2007 went to them, while the typical household had income below what it had the year Bush took office. Economic growth was the worst since the end of World War II. And the national debt nearly doubled during the Bush presidency. We have had to spend $400 billion just on the increased interest to finance the debt created by the Bush tax cuts.
The result has been less money spent on roads, bridges, or education and more money spent on interest to pay for tax cuts and two wars.
Then we spent months at the edge of the fiscal cliff as the parties debated the fate of these cuts, due to expire after 10 years. As we all know, the wealthiest 2 percent will pay more on their incomes as of Jan. 1 and the tax cuts are permanent for the rest of us.
But the work is not done on the federal level; Democrats and Republicans continue to be at a stalemate on taxes and spending, so they allowed automatic cuts to happen to critical budgets through the so-called sequester. The sky won’t fall in (except maybe where air traffic controllers have been cut), but real people will lose Women, Infants, Children (WIC), Head Start, childcare and other programs that are critical to helping their families succeed. And the lives of people on unemployment or seniors receiving Meals on Wheels have been made much harder by the actions (or inactions) of this Congress.
The commonwealth, like the federal government, has enacted a series of tax cuts over the last 15 years. These include the income tax cut from 5.95 to 5.3 percent and the cut in taxes on dividends and interest. These also included specific business tax breaks benefitting the film, mutual funds and manufacturing sectors of our economy. All told, these cuts have resulted in over $3 billion less to spend on state and local services. As a result, local aid has gone down by 46 percent, public education aid by 7 percent, higher education by 31 percent, early education and care by 28 percent and spending on the environment by 38 percent. Meanwhile, local communities have been forced to turn to the regressive property tax to fund education, public safety, and public works.
We may be seeing changes to the way the state assesses taxes this year. The governor has put forward a bold plan to increase revenues including an increase in the income tax, a reduction in the sales tax, doubling the personal exemption and eliminating a number of popular deductions. There is another plan called the Act to Invest in Our Communities that would raise the income tax back to the previous 5.95 percent rate, increase the personal exemption to hold down increases for low- and middle-income families and raise the tax rate on investment income to 8.95 percent, with an exemption for low- and middle-income seniors. Both of these plans could raise close to $2 billion. Those dollars are needed to fill the potholes that get worse each year, not only in our roads, but also in our city and town budgets, our schools, our colleges, our early education programs and our human services system.
I remember a bumper sticker from the 1990 campaign to defeat the tax and fee rollback known as Question 3. It said, “I’m mad, but I’m not crazy.” And there is a lot that I’m mad about! I am mad that a gerrymandered U.S. House of Representatives and a filibustering Senate have been unable to agree on a balanced approach to solving the fiscal mess that we are in. I’m mad that the educators of young children in our state make on average $23,500 per year. I’m mad that over 16,000 people were homeless in Massachusetts in 2011, and the numbers aren’t getting better.
But I’m not crazy! I don’t think cutting taxes will actually raise government revenues, as some of my Republican friends think. I don’t think tax cuts for the wealthiest will trickle down. And I don’t think that we can succeed as a country unless we invest in our infrastructure — roads, bridges and education.
So, I will fill out my forms, pay my taxes and continue the fight for a fair tax system, and for state and federal policies and spending priorities that address the critical challenges facing our state and country.
Clare Higgins of Northampton, the city’s former mayor, is executive director of the nonprofit Community Action! of the Franklin, Hampshire and North Quabbin Regions. She writes a monthly column and can be reached at email@example.com.