Thursday, November 08, 2012
Massachusetts – Commonwealth May Cut Services as Tax Revenues Fall Short for the 4th Straight Month - Harry Reid promises the nation higher taxes - to compensate for National Debt
Tax Increeases Likelyy? - John Boehner, all partisanship aside with President Obama, in like mind - Boehner announces will work with President on tax increases and budget cuts. - Image CBS News
One may have missed the monthly report from the State of Massachusetts Budget office with the hoopla surrounding the general election the day before the monthly report was released, however, The Boston Globe, has reported that the that tax collections for October, were off by $48 Million dollars.
Apparently the glowing reports that Massachusetts was in full recovery, were a bit inflated, considering that the State Budget has lost, this year, $250 million in tax revenue according to Governor Deval Patrick’s administration. Secretary of Finance and Administration, Jay Gonzales, noted that there would have to be cuts made in order to meet budget expectations. Currently there is a hiring freeze at the State Level, and Gonzales suggested that due to the economy , “ businesses are “in a holding pattern right now and not making the types of investment in their businesses they might otherwise make” due to the uncertainly over how and where Congress might make budget cuts. (Wicked Local – Wareham)
Those businesses were not hiring because of the weight of regulations and the cost to comply with regulations that were pending, the tax increases that are pending as a result of the expiring Bush Tax Cuts, and that was prior to the re-election of President Obama. What is most disconcerting is that for the past 8 years, everything that is Massachusetts politics has been exported nationwide – and if Massachusetts is in trouble, then one can imagine what is happening elsewhere. That said, it remains to be seen how many more businesses will either pack up and head for states that are more “tax-friendly” now that government taxes are a certainty (See Speaker of the House John Boehnerwho has promised to work with the President to make the cuts and raise the taxes necessary to bring the spending under control. Boehner has suggested these cuts will be across the board, so that every single household will be impacted Should the President and Congress not extend the Bush Tax Cuts, but rather load taxpayers, both corporate and individual with additional taxes, those who are working will be tightening belts that are already stretched to the breaking point. In addition, the Senate Majority Leader, Harry Reid (NV) has stated that the President’s reelection is a mandate to raise taxes. With the Senate in full control of the Democrats, and the House Republican's ready to play ball with the administration – the promise of higher taxes, and according to Reuter’s news, the President will be able to expand the reach of government, one can expect to be living in a rather larger version of the Bay State.
What happens with higher taxes and regulations that are stifling businesses is an example of Massachusetts' year long, month after month, increasing revenue shortages. Therefore, businesses in general will be less likely to hire, there will be higher unemployment and as a result of less tax revenue as businesses close and individuals are out of work or underemployed, then those that depend on everyone from food, to transportation and communications (cell phones) will be in for a rude awakening. Those whose jobs are dependent upon the government will also be subject to cuts, eventually.
Of course, this scenario could be avoided should the President take a sharp turn to the center right and extend the Bush Tax Cuts, go further and cut the corporate tax rate, and give incentives to those companies coming back to the U.S. in cutting their regulatory dilemma. For example he might exempt certain business from the mandated health care reform law, as he did for several unions and states.
One has to sift through the partisan rhetoric, to get to the simple math, when one has no income of their own (any Government) and spends like crazy (the Government) then one is going to run out of money and be unable to continue to be as generous to those who depend on the them (the government).