Tax debate clear in theory,
not in practice

Dan Devine

The focus of the gubernatorial election turned to taxes last week, leaving voters caught in the crossfire of candidate back-and-forth over income taxes, property taxes and whether or not increased fees were actually taxes in disguise.

Claims were made and countered, numbers were cited and rebutted, and nonpartisan research groups stepped in to help translate what many consider to be sheer confusion.

Take Democratic nominee Deval Patrick’s charge that the Romney administration played a “fiscal shell game” by proposing over $985 million in taxes disguised as service fees.

Those increases, Patrick argued, included increased tuitions and fees at state and community colleges, new taxes on businesses, higher sales taxes on pre-owned vehicles, and increased fees for boat registrations and birth certificates.

When counting measures actually enacted by the state Legislature, Patrick’s campaign put the real number at $800 million. Many of the increases were passed during the state’s fiscal crisis in 2003, but have yet to be repealed and are still on the books.

Naturally, Lt. Gov. Kerry Healey cried foul and characterized Patrick’s assertions as “ridiculous.” Gov. Mitt Romney joined the fray, defending his record during a State House news conference, in which he boldly asserted that Patrick’s numbers “could not have been further from the truth.”

Yes, Romney conceded, fees did go up. But not by $900 million.

Just $260 million, Romney said, providing reporters with spreadsheets and graphs as proof.

Attempting to set the record straight, Michael J. Widmer, president of the Massachusetts Taxpayers Foundation (MTF), the business-funded nonprofit nonpartisan research group, said that increased fees and corporate taxes resulting from loopholes closed by the Romney administration resulted in between $740 million and $750 million per year.

If those numbers are true, Romney was off by a staggering $500 million and Patrick was off by $50 million, if using his numbers on increases actually enacted by the Romney administration.

The confusion is just par for the course.

According to Brenda Bushouse, assistant professor of political science at UMass Amherst, tax issues are a haven for political spin.

“The problem is that what one candidate counts as a tax the other candidate may not,” Bushouse said. “The definition of a tax is clear in theory but not always clear in practice. If a candidate wants to appear anti-tax, she will take a minimalist definition of tax but her opponent may use an expanded definition to undercut her position.”

And when candidates constantly play cat and mouse with one another’s positions, it becomes all the more difficult to pin down their real stances.

“The only way to assess the candidate’s claims is to place their definitions side by side,” she said. “Nonpartisan tax organizations are the best sources for this type of information.”

In this instance, however, those groups have provided little clarification.

Jim Stergios, executive director of the conservative Pioneer Institute for Public Policy Research, acknowledged that fees increased, but explained that fees are still preferable to taxes.

“Fees were raised by the Romney administration,” Stergios said. “Some were loopholes that were closed, some were new fees and some were revisions of fee structures that had not been touched for many decades.”

Stergios went on: “If calculated to cover the cost of the government service, and if related to services that only a segment of the population (or business community) receives, then fees are a better way of raising revenue than more general taxes. Why should people and businesses not using the government service subsidize services obtained by others?”

Whether fees are better than taxes or not, the question of how the often-confusing dialogue affects voters still remains. David G. Tuerck, executive director of the Beacon Hill Institute, a conservative economic research organization, thinks the impact is negligible.

“I doubt that it much impacts the way that voters see the issue,” Tuerck said. “Voters no doubt understand that, barring a major restructuring of state spending, that there had to be some increase in taxes during the fiscal crisis in 2002, and that the Romney-Healey administration probably took the least painful route in raising taxes at the time.”

Given recent poll numbers, the debate over taxes and fees appear to have benefited Patrick. According to a recent WBZ/Boston Globe poll, Patrick has about a 20-point lead over Healey. What is surprising, however, is that a majority of those polled claimed to agree with Healey on issues such as taxes and immigration reform.

Barbara Anderson, executive director of the anti-tax group Citizens for Limited Taxation — whose motto is “Every Tax is a Pay Cut … A Tax Cut is a Pay Raise” — said the flap over taxes and fees would be a moot point if the income tax were rolled back, as voters in 2000 approved on a state ballot question.

“I heard [Patrick’s claims] during the debate, and I’m thinking, ‘My taxes haven’t gone up. Did they increase my taxes without me knowing it?’” Anderson said. “There was a corporate loophole bill a few years ago, but that was closing loopholes for corporations, and I’m no friend of big business, so I don’t mind that very much at all. … There were no taxes passed on ordinary people like me — only fee increases for driver’s licenses and things. But if I had my income tax rollback, I could pay my fee increases, and on that issue, the Romney-Healey administration has just been totally faithful to what voters told them to do in 2000.”

But according to Noah Berger, executive director of the Massachusetts Budget and Policy Center, the change in the state’s economic climate since 2000 requires a changed approach.

“I think that people need to judge their legislators based on how they act in the circumstances that present themselves,” Berger said. “They should judge their legislators based on what they are doing now, not based on what the conditions were six years ago.”

Berger said the most important thing to focus on is the most fair and effective way to raise the money needed to provide basic services.

“ … When you cut taxes,” Berger said, “particularly the income tax, you reduce the state’s ability to raise money in what is a reasonably fair way: a percentage of everybody’s income. If the result is that you have to raise money instead by increasing fees for public higher education or for trash pickup, you’re likely shifting costs from those with the greatest capacity to pay to those with less capacity to pay.”