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Revenue, Revenue, but not a Dime to Spend…

This political season taxes, in addition to mudslinging, have been a hot-button issue. Like all people, Bay Staters, who may oppose Bush’s tax cuts for poor rich people, are feeling pinched.

This has spawned ideas to reduce the tax burden from reducing the income tax to reducing property tax. However, both ideas carry a great deal of misdirection. You remove taxes from one area; they need to be made it up elsewhere. This is particularly true for Massachusetts’ municipalities with very tight budgets. Just look at Springfield, which is only the first of many.

So what is the answer to pay for lowering taxes elsewhere and also to weather bad times? Unfortunately, one of them has been to dole out extra taxing powers to Massachusetts’ 351 communities. Why is this bad? Well first of all, only the cities, I mean the poorer ones, will use it. I’m talking Springfield, Boston, Worcester, Lowell, Lawrence and the like. This will weaken municipal economies. For example, let’s say Boston, imposed an additional meals tax. Boston has many fine eateries which will still draw loyal customers. However, some establishments, particularly chains and restaurants along the border would suffer as car owners could easily go where the tax isn’t. Certainly, suburbanites won’t be dining in Boston as much. This effect will be amplified in the large cities without a respected culinary tradition.

I know it seems stupid for someone to do that as they’d likely spend more on gas, but they do. I would point to Springfield as evidence. Three miles from the Connecticut border many Mass residents who might go to Connecticut don’t. Some Conn residents even hop on 91 and come here to eat, shop, and save on tax. If Springfield imposes an extra meals tax, its culinary tradition, unlike Boston’s, isn’t potent enough to overcome that urge to “screw the government” and avoid extra tax. The chains will fold, too, as they have locations all over the area. How the hell many 99’s are there?

Varying these taxes creates another problem. Massachusetts is still having trouble economically. Increasing municipal tax privileges to every Taunton, Dedham, and Hadley will only lead to an intramural taxing contest distracting from the state’s qualities. Intrastate competition should highlight communities’ qualities, not their taxes. Even if a developer chooses Massachusetts, they’d likely pick less taxed, but often wealthier suburbs. Detroit is a cautionary tale. Motown imposes its own income and corporate taxes that, on top of other problems, impedes economic development. Many developers choose its cheaper suburbs. But Detroit does what it has to do. Mass communities don’t…yet. Impose lower property taxes and they will…fast. People won’t save anything; they’ll just feel like they did, along with poor economic conditions.

If a city or town implemented their own tax, with the legislature’s approval, for only six months to get over the hump, that would be okay. But I doubt the people would stand for it. Look at the uproar over the trash fee in Springfield. Either way, be careful what you wish for tax-wise. You’ll still be stuck with the check. ;

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