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Massachusetts residents roll back your sales tax!

Elections may be more than a year away, but Carla Howell and Michael Cloud of Center for Small Government (CSG) are preparing the foundation for an exciting ballot initiative and they need your help!  As you may be aware provided you are not spending the majority of your time under a large rock, our trusty friends on Beacon Hill have raised our sales tax from 5% to 6.25% in order to pay for budget shortfalls.  While majority of residents of Taxachusetts shrugged their shoulders while muttering "BOHICA, BOHICA", friends of liberty and individual responsibility approached this challenge like they approached previous challenges - with a powerful ballot initiative designed to shake the largess of government to it's core.  A proposal to undo the damage by Beacon Hill and reduce our sales tax from 6.25% to 3%!

Some of you may be familiar with CSG from 2008 and their Question 1 initiative designed to permanently remove our state income tax, drastically reduce the size of state government and force legislators to do more with less.  Unfortunately a powerful network of unions, special interest groups and state employees joined forces and using (mis)information, scared the wits out of Massachusetts residents and defeated Question 1 with a resounding 70% opposition.  Residents were told that by voting for Question 1 they were going to experience increases in all other taxes and deterioration of government services.  In a most cruel and ironic fate the 30% of us who supported the initiative are indeed experiencing higher taxes, higher fees and reduction in government services.

Almost a year later we find ourselves in a worsening situation.  Sales tax has been raised.  Unemployment in the state is now at 8.8% (almost 3% higher when Question 1 was proposed), foreclosures are up over 100% in the past two years, medical insurance costs are among the highest in the nation (thank you RomneyCare), many have experienced salary cuts, benefits reduction and a great deal of uncertainty.  We are paying more and making less. Clearly the current administration and the expansion of government is failing monumentally in a state overwhelmed by liberal thinking and one party rule. 

Let us examine briefly why a raise in sales tax negatively impacts our state and our economy.

  1. Regressive tax.  A sales tax increase is extremely damaging to the lower income families.  Consider what impact a 1.25% tax increase has on a family making $80,000 versus a family making $30,000!  Naturally those making less will feel the hurt more dramatically and worse yet, have less means to circumvent the taxation as lower income families may not have a means to reach New Hampshire or Internet access for on-line shopping.
  2. Job Destruction.  Sales tax hikes impact businesses adversely by impacting their everyday operations as raw goods cost more purchase.  As small businesses (chief employers) suffer, they reduce their production and lay workers off.
  3. Behavior change.  To avoid increases of taxation, people generally change their behavior in order to avoid paying more.  Common sense suggests that if taxation becomes too prohibitive then consumption of whatever is being taxed drops significantly.  For example raising taxes on tobacco too sharply dramatically reduces consumption  such that long term tax revenues actually drop!  In our particular case, shoppers will either flee to 'tax free' New Hampshire or turn more aggressively to on-line sources like Amazon.com.  To make matters worse, this behavior change will further drive consumption down in the state thus further reducing jobs and private capital within the state.
  4. Distribution of funds.  We are now taking more money out of the private industry and moving it into the public sector.  Unfortunately there is nothing the public sector can do more efficiently, better, faster than the private sector.
  5. Increased government jobs.  How many times have you heard or uttered the expression "good enough for government work"?  What does this sentiment mean to you?  Clearly most Americans have a very low opinion of government employees, yet we continue to fund their expansion.  By funneling more of our hard earned money we facilitate creation of more administrators, more waste and more corruption.
  6. Historical failures.  Consumption taxes in America during the Great Depression implemented by FDR and taxes implemented by the Japanese government during their "lost decade" have demonstrated demonstrably that raising taxes during recessions leads to further recessions.

Why would our government insist on raising taxes in the face of these obvious drawbacks?  Because government officials always have budget deficits because they constantly spend as if they are spending their own money.  Government does not reduce or shrink itself; when we prosper they grow, when we suffer they tax.  We need to fundamentally change the way we think and the people we elect to office.

How will lowering the sales tax impact you and the state we live in?  According to BHI we stand to gain financially on an individual basis and improve our faltering economy.  Further we send a loud and clear message to our politicians that we simply had enough.  Immediate benefits of lowering the sales tax to 3% according to BHI's metrics:

  1. Create tens of thousands of new jobs.
  2. Shrink government jobs, waste and corruption
  3. Keep hundreds of dollars in your pocket on average. (CSG estimates $688/year)
  4. Support local businesses by reducing trips to New Hampshire.

Are you excited?   Are you wondering why CSG is not pushing for a complete removal of the sales tax?  They would, but unfortunately 3% of the sales tax is used as collateral against government bonds.  Therefore we must be content with a fifty percent reduction, but accomplishing this task requires a monumental effort.

What can you do to help?

First, visit Center for Small Government, sign up and join their mailing list.

Second, visit RollbackTaxes, sign up and let Carla/Michael know if you are capable of donating or helping.

Third, while money makes the world go round, in order for this initiative to actually reach the ballot come 2010, over 100,000 signatures must be collected by November of 2009!  Therefore volunteers and professional petitioners are needed to hit the ground across the state.  I plan to put my proverbial money where my mouth is and volunteer for this important task.  Not because I stand to gain personally, after all - unless you are buying a car or furnishing a new home the sales tax will not affect you, but rather because the health of the economy impacts all of us daily.  Consider getting involved in the name of fundamental principles (small government, lower taxes, more free-market) and to truly improve the life of your fellow neighbor. 

How will Beacon Hill recover?  Some concerned citizens will be concerned that by depriving millions of dollars from state coffers we will once again experience shortages.  I have some idea:

  1. Average state employee makes 58k/year, while private sector makes 62k/year.  They can consider lowering their salaries.
  2. Our state now subsidizes medical insurance.  They can undo RomneyCare and stop wasting money on subsidies.
  3. State legislators should take dramatic pay cuts.  They cannot balance the budget and our state faces bankruptcy, therefore they are not doing their jobs - why should we be paying them? 

I am sure there are many more creative options available, but instead of worrying how an inefficient and wasteful government funds itself, we should for once worry about ourselves and the state we live in.

Full Disclosure:  I am not in any way affiliated with Center for Small Government.

Comments

  • Struthio Camelus 5 years ago

    "Average state employee makes 58k/year, while private sector makes 62k/year. They can consider lowering their salaries."

    um... Check your numbers please?

    How about implementing some of the same measures in state government that the private sector has in the past two years? Wage freezes, furloughs, layoffs, elimination of 401(k) match, reduction of hours.

  • Arkady 5 years ago

    Are you suggesting my numbers are wrong? I am calculating this number based on government statistics, perhaps I did the math wrong.

    Either way, it seems we agree. They need to implement salary reductions mechanisms - so what exactly do you disagree on?

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