Local economists back Patrick’s tax hike plan
A group of more than 50 economists will voice their support Monday for Governor Deval Patrick’s plan to increase Massachusetts’s income tax, saying that chronic underfunding of the state’s education and transportation systems has threatened future prosperity.
“We believe there needs to be a significant increase in investment to make sure we remain economically competitive,” said Barry Bluestone, director of the Dukakis Center for Urban and Regional Policy at Northeastern University, one of the 57 economists who signed the statement backing the governor’s plan.
The governor’s proposal, which would generate an additional $1.9 billion annually, raises the income tax from 5.25 to 6.25 percent, while cutting the sales tax from 6.25 to 4.5 percent.
His plan also would eliminate 44 tax exemptions and deductions and change the corporate tax code to raise $149 million a year.
The additional revenue would be used to finance a broad overhaul of the state’s aging transportation system and launch major education initiatives.
The governor’s plan needs the approval of the Legislature. Last week, House Speaker Robert A. DeLeo said he will offer his own, scaled-down revenue package next month.
DeLeo’s more narrowly focused bill would provide additional funding for transportation but would also look for budget cuts in the state Department of Transportation.
Patrick unveiled his proposal in his State of the Commonwealth speech in January.
“There is no good time to raise taxes,’’ said Patrick in the speech. “I would not ask if I did not believe in my heart that investing meaningfully today in education and transportation will significantly improve our economic tomorrows.”
Bluestone said many of the economists were inclined to sign the letter because the governor pledged to use some of the increased revenue to fund early-education programs.
“The evidence we’ve seen from other economists suggest that early education has a very high return,” he said, explaining that a better educated work force will earn more and generate more tax for the state.
Last week, a group of educators and union leaders including Paul Toner, president of the Massachusetts Teachers Association, and Jackie Jenkins-Scott, president of Wheelock College, also urged lawmakers to back the governor’s plan.
In a letter to all legislators, this group argued that “raising revenues will help us fulfill our responsibility to future generations, as well as our commitment to the students currently attending our schools, colleges and universities.”
But some who agree that major investments in transportation and education are critical to the state’s future do not think the governor’s tax plan is the best approach.
“We believe the most appropriate way to raise funds for transportation is from transportation taxes and fees,” said Michael J. Widmer, president of the Massachusetts Taxpayers Foundation.
Widmer said the state could generate enough revenue to meet the governor’s target by imposing a “modest” hike in the gas tax, with future increases that would be tied to increases in the cost of living. He also supports “modest” increases in Registry of Motor Vehicle fees.
Widmer expressed concerns that parts of the governor’s tax plan may hurt those it seeks to help.
“Many of these 44 personal income tax exemptions . . . are beneficial to lower-income and middle-income people,” he said. “You’re investing in higher education appropriately, but on the other hand the state would now tax scholarships. It gives with one hand and takes away with the other.”
Testifying at a public hearing last week, Patrick said simply raising the gas tax would not bring in enough money to create “21st-century transportation and education systems.”
“If we want more, we need to pay more,” Patrick said. “All of the evidence points to the fact that making these investments means more jobs and opportunity. If we want growth, we need investment.”
The House minority leader, Bradley H. Jones, Republican of North Reading, said in a phone interview Sunday that although the governor pledged no tax increases during his reelection campaign, he is now proposing “the most massive tax increase in the history of the Commonwealth.”
“This is just crazy,” he said. “He wants to bill this as a legacy to his governorship, and I quite frankly don’t think the voters want it or can afford it. Before he asks the Legislature to be politically courageous, I would ask him and his administration to be politically honest.’’
Patrick’s communications director, Jesse Mermell, said in a statement that the governor’s plan is “consistent with the goals he articulated from the first day of his administration” and “enjoys popular support.”
“Throughout Governor Patrick’s political career he has championed growth and opportunity in Massachusetts,” he said in the statement. “In his first inaugural address the governor called for ‘more and better jobs’ in the Commonwealth and ‘the best prepared work force on the planet,’ and lamented our ‘broken roads and bridges.’ ’’