It's sometimes easy to forget that the Presidential race isn't the only battle over policy proposals going on right now. But Massachusetts and Oregon provide two examples of states where voters are about to make some very important decisions affecting the future of their tax systems.
There may be a silver-lining in the regressive and irresponsible nature of the proposals facing these two states. In both states, the anti-tax groups pushing these ridiculous proposals appear to have gone too far, causing groups traditionally supportive of tax cuts to fight these initiatives.
An Expensive and Unfair Tax Cut, Part 1: Massachusetts
The Massachusetts proposal is perhaps the worst tax-related question on any ballot in the nation. It would repeal the state's income tax. Aside from being the only major progressive tax levied by the state, the income tax is also a source of 40% of Massachusetts' revenue. The results of depriving the state of 40% of its funding are nearly unfathomable. So unfathomable, in fact, that the Massachusetts Taxpayers Foundation (MTF), a group that just last year opposed reforms to make Massachusetts' tax system more fair, recently released a report in opposition titled The Massive Consequences of Question 1.
The MTF report does not focus solely on the budgetary consequences of income tax repeal. Those consequences have already received tremendous publicity in recent months, especially given the state's already strained budgetary situation as documented in this brief from the Massachusetts Budget and Policy Center. Instead, what stands out about the MTF report is its examination of the distributional consequences of the tax cut. In contrast to the claims of those supporting the repeal, the vast majority of Massachusetts residents will not be receiving a $3,700 tax cut if the measure is approved. Instead, as the report indicates, that cut will be much smaller for those low-income residents most in need, and much, much larger for the most well-off taxpayers in the state.
An Expensive and Unfair Tax Cut, Part 2: Oregon
Oregon's proposal also seeks to reduce state revenues in a way that disproportionately benefits the wealthy, though on a much smaller scale than that proposed in Massachusetts. The proposal: allowing Oregonians to write off their federal income tax payments when determining their state income taxes. Since residents can already write off up to $5,600, this measure will only benefit the wealthiest 22% of households in the state who pay more than $5,600 in federal income taxes. As this report from the Oregon Center for Public Policy notes, 78% of Oregonians will see no benefit from this proposal. In fact, as another release explains, some 120,000 Oregonians -- most of them retirees -- would see their taxes rise if Measure 59 were made law, as the measure would prohibit Oregonians from deducting taxes paid on Social Security benefits or certain pensions, as they are allowed to do under current law.
Recent actions by a collection of Oregonian business groups demonstrate the degree of irresponsibility contained in the plan. The Associated Oregon Industries, Oregon Business Association, Oregon Business Council, and Portland Business Alliance recently came together to issue a joint statement against the proposal. These businesses worried the measure would "deeply hurt basic services, including those critical to our economy". And these groups are absolutely right: why throw money at those taxpayers already doing quite well, if it's going to result in a reduction in the education, healthcare, and safety protections that Oregon families and workers depend on?