Showing posts with label MASSACHUSETTS FORUM. Show all posts
Showing posts with label MASSACHUSETTS FORUM. Show all posts
Wednesday, December 15, 2010

The Business and Economic Case for Letting Tax Cuts for the Wealthy Expire

Posted by American Forum at 10:52 AM

Randy Albelda

MASSACHUSETTS FORUM

By Paul Egerman and Randy Albelda

With unemployment close to 10 percent, Congress needs to focus on creating jobs and strengthening our economy. More than ever, our country cannot afford policies that would waste resources needed for job-creating initiatives in the short run and that would increase deficits in the long run.

That’s exactly what extending hundreds of billions of dollars in tax cuts for our highest-income residents would do.

One of us has built prosperous businesses and the other is a public finance economist. From our different perspectives we have learned the same thing: businesses create jobs when people want, and are able, to buy their products.

Paul Egerman
Tax cuts for the wealthy tend primarily to increase their wealth – not their spending in the economy. To increase spending and create demand in the private sector, government needs to put money into the hands of lower- and middle-income families who are struggling to get by and will spend any new income to keep their families afloat.

That’s why economists have consistently found that tax cuts for high-income people are a far less effective means of creating jobs than are tax cuts for lower- and middle-income families, extended unemployment benefits, and direct investment in services like education, health care, and public safety, which lead to direct hiring and put money into the hands of working people who will spend it in the local economy.

With Congress likely to act in the next weeks on the expiring Bush-era tax cuts, there is widespread support for extending the middle-class tax cuts. The debate will focus on whether to extend tax cuts for the highest-earning two percent of Americans – those with adjusted gross income above $200,000 for single filers and $250,000 for married couples.
There is a strong business and economic case for letting these higher-income tax cuts expire.

The bulk of these poorly targeted tax cuts will go to households with incomes above $1 million – resulting in average annual tax cuts for these households of over $100,000, about twice what the typical American household earns in a year.

Most small businesses aren't owned by people in the top-income brackets -- they don’t make enough taxable income ($250,000 a year) to pay the higher tax rates. Only the top 3 percent of people with business income of any kind, let alone income from what most Americans think of as “small businesses,” would be affected. Moreover, high-income households will benefit from extension of the middle-income rate reductions, because a portion of high-income filers’ total income falls within the tax brackets affected by the middle-class tax cuts.

The $40 billion in revenue next year (and some $90 billion over two years) generated by letting the high-end tax cuts expire could be used for a temporary tax credit to spur small-business job creation, or to provide additional aid to the states, and would do much more to generate economic growth and create jobs. Targeted provisions for working families through the Child Tax Credit and the Earned Income Tax Credit also have helped prop up consumer spending and should be extended.

In the long run, terminating the top-end tax cuts will produce substantial deficit reduction once the economy has recovered. If Congress allows the tax cuts targeted at America’s highest-income households to expire, it would reduce both the deficit and debt over the next decade by $1 trillion, improving the nation’s long-term fiscal outlook.

The US currently is experiencing the effects of the worst economic downturn since the Great Depression; reviving the economy and putting people back to work as soon as possible will place the US in a better position to address our deficits and debt in the years ahead. Cutting taxes for the very wealthy will not help the nation as much as keeping teachers and police officers employed, investing in our schools, transportation systems and other infrastructure, and using our resources to help those who need it most.
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Egerman is a businessman and software entrepreneur, co-founder of eScription, Inc., based in Needham, Massachusetts, and is now a member of U.S. DHHS Health Information Technology (HIT) Policy Committee. Albelda is a Professor of Economics and Senior Research Fellow at the Center for Social Policy at Univ. of Massachusetts Boston.
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Copyright (C) 2010 by Massachusetts Forum. 12/10

 

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Friday, April 23, 2010

Understanding the Budget and What’s at Stake

Posted by American Forum at 12:42 PM

MASSACHUSETTS FORUM

By Tom Benner

Democracy works best when people participate in their government; and people participate best when they can get the information they need to weigh in with opinions and evaluate the decisions made by those elected to represent us.

It’s that time of year now when Massachusetts is working on a new state budget. No piece of state legislation has a bigger impact on our everyday life -- from schools and roads, to public health, police and fire protection, and parks and recreation. The budget is how we as a Commonwealth express not just what we want to accomplish through government, but also how to pay for it.

State budget documents are not known for being “easy reads.” But understanding the Massachusetts state budget has just gotten easier, with a new online, interactive tool you can use to explore the state budget and see how and where money is allocated. The Budget Browser, found at http://browser.massbudget.org/, is part of our work at the Massachusetts Budget and Policy Center to help citizens of the Commonwealth better determine whether the state budget meets public needs and priorities.

The Budget Browser is a valuable resource. You can look up how much was spent over the past decade in categories large and small – from the Massachusetts public school system and all of the state’s colleges, to your local community college. You can see budget amounts for a given year or – to make meaningful comparisons – spending over several years, adjusted for inflation. Plus, you can create and download charts to print out and use for reports, media stories, or other documents.

The Browser tracks line items that have moved from one department to another through various government reorganizations and consolidations, with notes alongside the data alerting the user to these accounting issues.

Other features include a Tax Revenue page that tells how Massachusetts taxes have changed over time and
how they compare to other states. There’s a Resources and Glossary page that includes definitions of budget terms, a step-by-step description of how the state budget process works, and links to additional budget resources.

For too long, information needed to make informed choices about how state dollars are allocated was out of the reach of ordinary people. It used to be that in order to get spending levels for spending items such as health care or environmental programs over the years, for example, you'd have to thumb through a stack of thick documents, each containing hundreds of line items. Now, anyone with access to the Internet can find what they need with a few clicks of a computer mouse.

As citizens, we have an interest in what programs and services we want to preserve and what kind of communities we want to live in. With a crushing national recession increasing public needs, at the same time it reduces state resources to meet those needs, it is now more important than ever to understand how budget decisions being made by our elected leaders will affect services and our quality-of-life across the state.

Early feedback on the Budget Browser has been positive. Users across the state have called it a great new tool that helps the public to understand how state resources are being used and promotes informed and active citizenship. That’s certainly the idea.

It’s your state budget too. So get all the information about it at http://browser.massbudget.org/. An open budget allows us all to understand the state we’re in.
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Benner is communications director of the Massachusetts Budget and Policy Center.
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Copyright (C) 2010 by the Massachusetts Forum. 4/10

 

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Monday, November 23, 2009

Taxes are an Investment in Our Future Prosperity

Posted by American Forum at 9:06 AM


MASSACHUSETTS FORUM
By Peter Enrich

Our local and state governments provide many of the vital public structures that build strong communities and ensure opportunity for us and our children such as schools, transportation, public safety, parks, and health and social services.

Yet, the tax structures that enable us to pay the price for a civilized society suffer from two severe flaws. First, state and local taxes are exceedingly volatile, dropping calamitously during economic downturns, when the revenues are most badly needed. State and local governments, unlike the federal government, can only spend what they take in.

Second, unlike the federal income tax, state and local taxes are regressive: households with lower incomes pay a higher share of their incomes for the support of state and local government than do their wealthier neighbors. This regressivity is largely due to heavy reliance on sales taxes; even with exemptions for groceries and other necessities, lower income households spend far more of their incomes on taxable items than do higher income families. A recent study showed that low-income Massachusetts households spent 5.4 percent of their incomes on sales taxes, compared to 1.2 percent for wealthy households.

While we depend on and demand the services of state and local governments, we resist the reforms that would provide a healthy tax system. So, we find the state cutting essential services and turning to gambling, sin taxes, and gimmicks to try to pay its bills.

Instead, there are three directions in which Massachusetts should look to improve our ability to pay fairly and adequately for the service we all need:

• Follow the federal example and rely more heavily on income taxes, especially income taxes designed to require those with greater means to contribute a greater share to the common good. Even here in Massachusetts, where the constitution forbids graduated rates, personal exemptions and differential rates on investment income can build substantial progressivity into an income tax system. And small rate increases can yield impressive new revenues.

• Broaden the scope of our sales taxes to reach, not only sales of goods, but also a wider range of sales of services, such as club memberships, entertainment, personal and property care, and professional services. Many states presently tax some services, but often only a handful. Massachusetts only taxes 18 of the 168 services identified by the Federation of Tax Administrators and is the only state taxing none of 40 household service categories identified by the Center on Budget and Policy Priorities. Extending the tax to more services reduces an irrational inconsistency in the current sales tax, dramatically increases the tax’s revenue yield at a time when a growing share of household spending is on services, and diminishes both the regressivity and the volatility of the sales tax.

• Increase the share of taxes that are collected from businesses, rather than families. By one measure, businesses paid half of all state and local taxes in the 1950s, but only a quarter by the 1990s, and probably substantially less than that at present. By ending some of the tax incentives that have been shown to be ineffective in guiding business location decisions, closing the loopholes that have encouraged increasingly sophisticated corporate tax “management,” and reversing some of the rate cuts granted to businesses during better times, the state could go a long way to providing needed revenues while restoring the historical balance between taxes on individuals and businesses.

Each of these steps will demand courage on the part of political leaders and education of citizens about the workings of the tax system. Most importantly, they will require a revived recognition by all of us that taxes are an investment in, not an obstacle to, our shared future prosperity.
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Enrich is a professor at Northeastern University School of Law, specializing in issues of state and local governance and finance, and a former general counsel to the state’s Executive Office for Administration and Finance under both Gov. Dukakis and Gov. Weld.
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Copyright (C) 2009 by the Massachusetts Forum. 11/09

 

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Friday, June 19, 2009

Banks Lose Millions Evicting Residents from Foreclosures

Posted by American Forum at 1:49 PM

MASSACHUSETTS FORUM
By Judith Liben and Tim H. Davis

In light of the current financial crisis and the public outrage over taxpayer-subsidized bailouts, it only makes sense for banks to explore every possible avenue to mitigate the damage to families and communities caused by foreclosure, while at the same time shoring up their bottom lines.

But foreclosure alone is not what ravages communities. A large share of the damage results from the post-foreclosure eviction policies of the lending industry. What do banks and servicers do with the “real estate owned” (REO) properties that they repossess after foreclosure? They quickly evict the tenants and former owner-occupants, leaving families displaced, perhaps homeless, and buildings vacant and vulnerable.

Abandoned homes are subject to vandalism and crime, quickly lose value, depress the worth of nearby properties, and force cash-strapped municipalities to expend critical resources confronting the inevitable health and safety risks that emerge.

It doesn’t have to be this way. The tragedy of abandonment and neighborhood despair could be avoided, at no cost to the public, if banks allowed eligible, rent-paying tenants and former homeowners to remain in their homes until they were sold to new owners. Lending giants Fannie Mae and Freddie Mac recently adopted REO rental policies that do just this.

Massachusetts is taking aim at the foreclosure vacancy problem and by considering temporary measures designed to meet the current foreclosure crisis. These proposals would permit rent-paying tenants and former owner-occupants who comply with basic tenancy obligations to remain in their homes until they were sold or if vacancy were required for sale to prospective owner-occupants.

A recent article on Bloomberg.com developed a cost-benefit analysis to show that in California, banks could collect more than $1 billion annually if they allowed tenants to remain and pay rent in REO properties. Even taking into account management fees and other expenses, a Freddie Mac spokesman asserts that “the costs are outweighed by the economic benefits, which include the income stream from monthly checks and the upkeep provided by renters.”

Adapting the Bloomberg methodology to Massachusetts, we estimate that banks could take in between $86 and $102 million annually. If the banks rented only to tenants in REO rental property, they would earn between $34 and $40 million each year. In addition, keeping these homes occupied will save taxpayers the cost of municipal services like police and fire protection, and the increasing cost to the state to shelter families made homeless by foreclosure evictions.

While the lending industry’s public position is that sales are facilitated when properties are vacant, internal documents from the large banks reveal their understanding that occupied properties receiving routine maintenance are often less costly than vacant properties, and may be more appealing to potential buyers. Further, foreclosed homes in Massachusetts are not selling quickly; the median time period for which they are held by the banks is seven months. In many neighborhoods properties remain vacant and unsold for much longer and often foreclosed properties do not sell at all.

Giving tenants and former owners in foreclosed homes the right to pay rent until properties are sold is a winning proposition for families, for the public and for the banks themselves.

It’s a great opportunity for the banks to do well, while doing good.
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Liben is a senior housing attorney for the Massachusetts Law Reform Institute. Davis is an independent research consultant.
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Copyright © 2009 by the Massachusetts Forum. 6/09

 

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Wednesday, May 27, 2009

Essential Services Would be Crippled by $1 Billion Cuts

Posted by American Forum at 10:36 AM


MASSACHUSETTS FORUM

By Anna-Ellen Lenart

Massachusetts is considering $1 billion in budget cuts. So, what would $1 billion in cutbacks look like for Massachusetts?

These dollars would be taken from essential services such as social programs, schools, and infrastructure. The impact on our communities would be devastating. Programs that would have an especially heavy toll include social and health services, community-based agencies, and aid to cities. This would greatly reduce preventative services that positively impact youth and our communities. This is poor accounting, since preventative care costs less than subsequent treatment services.

One area of mounting concern is teenage pregnancy. The Centers for Disease Control reports that although birth rates have increased across all age groups, the highest jump is among teenagers.

This situation is a grave concern, because young, single mothers are at high risk for raising their children in poverty. And there is plenty of evidence to show that poor children are far less likely to reach school prepared to succeed than their non-poor peers. In the long run, providing after-the-fact services instead of preventing teen pregnancy will cost taxpayers far more than $1 billion.

One way to resolve this issue is to explore new revenue sources and stop the budget cuts. No one likes raising taxes, but even a 0.5 percent state income tax increase would generate substantial revenue for the state. This is not small change being taken out of your pocket, but if it means vastly higher quality in education, prevention, and social services, and getting more out of your tax money over time, isn’t this worth it?

Raising the state income tax is just one way to increase revenue. How about adding sales tax to purchases made over the internet, or decreasing spending in another area, for example renegotiating state contracts?

Another way to resolve this issue is to support proposals that promote prevention and fund educational social programs -- policies that directly impact families and communities.

One such proposal that is currently being examined aims to make comprehensive health and sex education a core requirement in public schools across Massachusetts.

The proposal would end the disparities among school districts in regard to health and sex education. Some school districts have comprehensive health classes as a requirement to graduate, whereas districts in poor communities are likely to have “optional” classes which are typically the first items cut from the budget.

The program would allow adolescents from many different socio-economic levels to be educated on topics such as reproduction, disease prevention, violence prevention, sexuality, and interpersonal relationships. Children and teens would be educated in school and the entire burden would not be left up to parents and caretakers to cover this wide range of important topics.

Having worked with at-risk youth for the past five years in many different settings, I know the difference prevention though education makes. Many teens lack simple knowledge and skills that could have dramatically changed the course of their lives.

Cutting $1 billion in essential services that invest in our communities and our future is not the solution to the current economic state. It will only increase spending on remedial services, such as medical care for high-risk teen pregnancies, and welfare payments to support fragile, young families. Instead, Massachusetts must explore other areas of revenue and support preventative investments for the betterment of our communities.
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Lenart, age 27, is a social worker.
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Copyright © 2009 by the Massachusetts Forum. 5/09

 

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Wednesday, March 25, 2009

Seeking Permanent Solutions to End Homelessness

Posted by American Forum at 10:36 AM

MASSACHUSETTS FORUM

By Robyn Frost and Sue Heilman

The Patrick administration is seeking new and innovative ways to deal with the growing number of families experiencing homelessness in Massachusetts. Under a Housing First strategy, the governor is seeking to hold the state’s housing agency responsible for finding permanent, affordable housing for homeless families. We applaud the governor’s efforts to find permanent solutions to homelessness.

At the same time, however, Patrick is proposing changes that will limit homeless families’ access to emergency shelter and services. These restrictions should not be implemented as the recession deepens and more families than ever are in need of emergency shelter. Children, who constitute most of the people living as part of a homeless family, will suffer, resulting in long-term harm, at a high cost to society.

Unless supplemental funding to help families with children experiencing homelessness is quickly provided, many of these new limitations will take effect as soon as April 1.

Fortunately, the proposed restrictions are unnecessary to close the shelter program’s projected deficit. Under the new federal stimulus package for which the governor personally advocated, Massachusetts is eligible to receive more than $17 million this fiscal year and another $23 million next year in emergency TANF funds that are specifically intended to help the state meet the costs of serving more low-income families in need. The state and local communities will also receive over $44 million in stimulus funds to help prevent homelessness and to re-house families experiencing homelessness.

The challenges involved in ending homelessness are significant. The number of families in the state’s emergency shelter system has increased 40 percent in the past year alone, rising to an all time high of 2,695 families per night. Beyond the doors of shelter, tens of thousands more families and individuals are facing homelessness and are staying in “doubled up” situations with family or friends, or in unsafe conditions. These trends are reflected all around the country due to the national economic downturn.

Things were already bad before the current economic crisis hit. There has been growing income inequality in Massachusetts. Many low-income families did not benefit from the state’s economic recovery following the recession of 2001. Real hourly wages for the lowest-income workers saw an actual decline, and poverty in Massachusetts increased from 8.7 percent in 2001 to almost 10 percent in 2007.

Now, the worst economic crisis since the Great Depression is taking its toll. Unemployment is up, and foreclosures are rising. The result: more people than ever are reaching out for state-funded shelter and services at a time when the state revenue needed to pay for these services is declining.

Through the Massachusetts Interagency Council on Housing and Homelessness, the state is looking at ways to find permanent solutions to prevent and end homelessness. Helping families experiencing homelessness to secure affordable housing will allow families and their children to move out of shelters and save the state money over the long run.

This worthy goal cannot be reached, however, without an increase in permanent housing subsidies. Until those resources are developed, and effective homelessness prevention strategies are implemented statewide, shelters and other temporary supports will be necessary to help families affected by the recession. Protecting this safety net for families with children experiencing homelessness is a moral imperative in these difficult economic times. And thankfully, Congress is providing the state with the means to do so.
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Frost is executive director of The Massachusetts Coalition for the Homeless. Heilman is executive director of Horizons for Homeless Children.
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Copyright (C) 2009 by the Massachusetts Forum. 3/09

 

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Friday, December 19, 2008

Accessible Housing Still A Dream For Many

Posted by American Forum at 12:21 PM

MASSACHUSETTS FORUM

By Aviva Rothman-Shore and Sean Caron

Since the election of Barack Obama, there have been frequent discussions about the implications of this historic election on the state of inequality in the nation. Many have said that the landslide election of an African-American raised in a humble setting by a single parent demonstrates that while racism and socio-economic inequality are stains on America’s history, they are no longer a significant part of our societal fabric.

However, this pivotal moment should not cloud the truth about social and racial inequality in the Commonwealth today. Greater Boston remains one of the most segregated metropolitan areas in the nation. The bulk of the Commonwealth’s people of color, regardless of their incomes, reside in urban centers.

In fact, the Commonwealth’s seven largest cities (Boston, Springfield, Worcester, Lowell, Brockton, New Bedford, and Fall River) have only 20 percent of the total population, but are home to 41 percent of the Commonwealth’s people of color and 40 percent of residents living below the federal poverty line.

Multi-family housing that is accessible to low- and moderate-income households is nearly impossible to build under local land use regulations in a majority of the Commonwealth’s municipalities. In many areas the lack of affordable housing could be improved with a change in zoning that would increase the number of multi-family dwellings.

For those that continue to suffer from the significant affordability barrier, income is partially to blame, but it doesn’t completely explain the disparity. That is why Fair Housing Laws are also an important part of the solution. Governor Patrick has made enforcing fair housing laws a priority. His efforts to secure housing opportunities for low income families, people of color, and people with disabilities by properly enforcing the Fair Housing Act should be applauded.

A 2004 Harvard Civil Rights Project study found mere financial affordability fails to explain the segregation that currently exists. The study compared the actual number of owners/buyers in each municipality by race and found that in 80 percent of cities and towns, the number of black and Latino buyers is less than half what researchers anticipated if affordability was the sole barrier. African-American and Latinos face greater affordability constraints on average, but affordability alone does a poor job in explaining segregation.

Residents of both cities and suburbs must have housing choice for our Commonwealth to truly overcome inequalities of the past. We must also allow residents of all cities and towns the opportunity to choose from a variety of communities through expanded housing options for people of color and for a multitude of incomes.

However, there is a significant amount of state and local work left to be done to break down practices that perpetrate racial and social inequality.

The governor and the legislature should reform exclusionary land use laws that lead to unattainable housing for people of color and people of modest means in the coming legislative session. Municipal officials can also help solve this problem by welcoming families with children to their communities and supporting additional local initiatives to promote multi-family housing.

It will take a focused effort at the federal, state, and local level to bring about the equality that President-Elect Obama has called for so convincingly. Even a president that changed history can’t do it alone.
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Caron is director of public policy at Citizens’ Housing and Planning Association. Rothman-Shore is director of outreach and policy at the Fair Housing Center of Greater Boston.
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Copyright © 2008 by the Massachusetts Forum.

 

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Friday, October 24, 2008

One Consequence of Question One

Posted by American Forum at 10:34 AM

MASSACHUSETTS FORUM

By Leo V. Sarkissian

Meet Caitlin Hadley. She is proof of how well individuals with Down syndrome and other special needs succeed when given the chance. She's also just one example of why we should not eliminate income taxes through Question One as doing so would severely hurt services to children and adults with disabilities and others.

Caitlin was hired as an assembler at Milton Roy in Acton. She performed well there with an outstanding record. When a quality control position became available, Caitlin was a natural fit. After a short time on the job, she was promoted to quality control specialist. In this role, she checks pump subassemblies for accuracy. But Caitlin doesn't stop at her job description. She is extremely helpful and occasionally mentors substitute assemblers who are learning the job.

The Minuteman Arc assisted Caitlin in making the transition to her new role. This was made possible through our tax dollars. A staff person helped her succeed by reviewing the job with her and coaching her initially so she would develop the skills and confidence. The coach also assisted her in establishing a daily routine including breaks, lunch and transportation.

Now Caitlin is a taxpayer. This is no accident. It's something that her parents wanted for her and that she has worked for. She got her diploma from Arlington High. She was able to get a good education through a regional school collaborative which receives public dollars through cities and towns. If she was born a decade earlier, she would have experienced a different world and perhaps she would not be working at Milton Roy.

Funding for special education did not begin until the middle 1970s, and there were few employment programs until the 1980s. Past investment through tax dollars has made a difference for Caitlin and if we increase that investment, it will make a difference for future generations. Like the rest of us, Caitlin is more than just an employee. She has a pretty full life and schedule. She enjoys performing in a chorus, bowling, going out to eat and stays active with friends.

Caitlin is now making a transition from her parents' home to a group home. At her new home she will receive support services. Someone will help her learn how to live on her own and teach her things like money management, cooking and maintaining a routine. It is a step that will take hard work on Caitlin's part and support from her parents. They are up to the task.

Recently, Massachusetts has struggled to find opportunities for individuals such as Caitlin. In the past six years, we have seen a 200-student increase in the number of graduates with disabilities who need some type of adult services. But we haven't been able to increase the funding to meet that rise in need. As a result there are fewer employment opportunities, and fewer taxpayers. And now Question One threatens to slash that funding further.

If Question One passes, Caitlin and thousands like her may not get the supports they need. Individuals with disabilities want to work and want to participate in their communities. Individuals and their families make the effort on a daily basis. But to ensure individuals have the opportunities to succeed, we need the investment in services. It's an investment that has paid off in taxpayers and full lives in our communities. That is why we must say no to Question One.
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Sarkissian is executive director of The Arc of Massachusetts, whose mission is to enhance the lives of individuals with intellectual and developmental disabilities and their families.
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Copyright © 2008 by the Massachusetts Forum. 10/08 Letters should be sent to the Forum, P.O. Box 121066, Lafayette Station, Boston, MA 02112

 

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