Economists push for tax hikes
Baker has yet to warm up to idea
A group of 91 Massachusetts economists are calling on Gov. Charlie Baker and legislative leaders to raise personal income and corporate taxes amid projected massive coronavirus-induced decreases in tax revenues.
They claim it’s the only “fair” way to balance next year’s budget and avoid spending cuts — even as homeowners and businesses try to dig out of an economic hole.
“In a recession, balancing the budget by cutting spending has a more negative impact on economic growth than balancing the budget by raising taxes. Both the personal income tax and the corporate tax are fair ways to do this, since they fall only on persons with incomes and businesses with profits,” the economy and public policy experts wrote in their May 26 letter to Baker, House Speaker
Robert DeLeo and Senate President Karen Spilka.
State budget writers are bracing for a $4.4 billion decrease in anticipated tax revenues as the coronavirus crisis continues to erode the state’s economy. The projected shortfall is 14.1% below the benchmark reached in January, according to a Massachusetts Taxpayers Foundation report.
Economists are floating one percentage point increase in the income tax and corporate taxes they say would raise a combined $2.68 billion in additional tax revenues. The tax hike could be phased back as the economy returns to its pre-recession level, the letter states.
Spilka and DeLeo have both hinted at tax increases to make up the losses, but Baker has repeatedly told reporters he would not consider raising taxes in the middle of the worst economic downturn in American history.
Michael Goodman, director of the Public Policy Center and the University of Massachusetts Dartmouth, signed onto the letter and said Baker needs to “open his mind” to tax increases or suffer the inevitable consequences of spending cuts.
But Paul Craney, spokesman for MassFiscal Alliance, told the Herald Tuesday night some of the UMass professors pushing for the tax hikes have not felt the pain themselves of the downturn.
“The UMass professors who teach economics are the ones advocating for their own salaries,” Craney said. “They should try living in the shoes of the 1 million who filed for unemployment in Massachusetts.”
Baker did not respond to a request for comment on Tuesday afternoon.