Massachusetts set to Raise Taxes – New Hampshire Rejoices!

While Massachusetts Governor, Deval Patrick is set to draw up a new budget that will include a substantial hike in the state income tax(Mass Live), New Hampshire is anticipating an increase in new businesses moving to the Granite State.

From New England Cable News:

Granite State watchdog groups said that goes for businesses, too. Deval Patrick's proposal to raise his state's income tax by a full percentage point will likely revive New Hampshire's efforts to get companies to move north, in spite of oft-criticized business taxes.

Arlinghaus said companies will turn to tax attorneys and ask, “What are things really like north of the border?”

“It doesn’t guarantee people come here,” he said, “but it guarantees they take a look at coming here.”

Especially as New Hampshire's legislature considers a bill that would double the limit on the research and development tax credit from $1 million to $2 million.

“They understand that as businesses need to increase their profitability and spend more money in research and development, [it] will allow them to hire more people,” Lewandowski said.

Even Democratic New Hampshire Governor Maggie Hassan coyly told the New Hampshire Union Leader that if Patrick's "approach leads to an economic boost for us, then I welcome it."

For decades the State of New Hampshire has been the number one destination for those Massachusetts residents and businesses that are seeking fewer taxes and less government interference in their daily lives (although many of those that immigrated north, brought along their Massachusetts values, much to the chagrin of certain residents). However, the fact that the new Democrat Governor is pleased that Patrick is pushing Massachusetts towards yet another loss of income to the Commonwealth, speaks volumes. The fact that the Bay State has already lost population resulting in a loss in one Congressional District, and at least four consecutive revenue losses, one might think the idea of attracting new taxpayers would be foremost in Deval Patrick’s mind. No so, he is intent on “Government helping people help themselves, by taking more from those working in order to try and support those who are in need. One novel approach would be to cut taxes, which would allow those who have extra income to spend, and keep businesses in the state, along with attracting new business. Building a train is fine, as long as one can guarantee that the train will run more than once a day at a cost equal to that of a bus, and have enough of a population to use the system in the first place. “Investing in education” is fine as well, as long as one has the tax base to support the “investment”. Adding an additional burden to those already maxed out with taxes is akin to pushing them onto a train – north to New Hampshire or west or south to more tax friendly states. A tax-cut from Patrick is highly unlikely in any scenario – more tax increases in the two remaining years, to continue to try to “increase state revenue”, are more likely.

Interesting Links from the Tax Foundation: Tax Foundation study on migration out of Massachusetts

Tax Foundation 2013 Business Tax Climate – See New Hampshire in top 10 friendly states – Massachusetts at 22nd out of 50 in business climate, study concluded in 2013 - prior to Govenor Patrick’s decision to increase taxes.

Note: Loss of Business results in fewer jobs, and possible lost jobs, which is a double whammy to the Bay State’s revenue – (The only income Massachusetts has are the taxpayers) – this may result in loss of services (police, fire, teachers) as well as a cut in state entitlement programs.

Senate – Reid Fails to Move State Aid Bill – Fed Budget Bust As States Must Be Prepared to Rein In Spending – Analysis

Beleaguered Harry Reid Falls Short on Federal Aid to States

The long and the short of it – the federal government’s deficit, without the tax base to sustain the status quo, let alone increases in spending (unemployment equals loss of income for the federal government), combined with the end of the “Stimulus”, will leave states relying on federal funds with no choice but to cut budgets and services.

Politico reported yesterday that Democrats in the Senate now understand that current spending levels are unsustainable and will make cuts from the President’s budget for 2011 after “summer recess” The title of the Politico article says it all “Budget Woes Snare State Aid”. States such as Pennsylvania were waiting to hear when the federal aid would arrive, as they cannot balance their budgets without help from the federal government.
Massachusetts has cut a “third of their local aid”, according to South Coast Today. First on the chopping block, higher education, with more cuts to follow:

“Looking ahead, experts warn of more painful cuts next year as one-time federal stimulus money disappears and the state grapples with a $2 billion shortfall.”

Those taxpayers left standing can anticipate hefty increases come next year, as Congress is prepared to implement a round of tax increases during a “Lame Duck Session”. Depending upon which news source one is reading on this subject, either the Lame Duck Session and impending tax increases are nothing more than a tool of the Republican’s attempting to keep the Democrats from “allegedly” spending the U.S. into bankruptcy (”The Lame Duck Looms”), or the more assertive Human Events article Tax Hike Planned for Lame Duck Session”, which outlines the “plan” by Democrats to fund the Presidents massive entitlement programs. Both articles are suggested reading. This due to the simple fact that it appears ideology trumps sanity with the 111th Congress. The backlash over public debt and spending which Democrats are admitting will cost them power in 2010, are the same Democrats prepared to sink 2012 in order to further progressive interests.

If, while waiting for new Congressional members to take their seats, outgoing members push through tax hikes, only one Political Party will take the blame – and this sets the stage for yet another backlash of the American public who is demanding the Government back off their paychecks, and find a way to increase private sector jobs, be it through tax cuts, or tax cuts.

Either way, both the States and Federal Government must realize that the nation can no longer sustain the unprecedented levels of spending. As U.S. taxpayers go further into debt, increases in local taxes (example: water bills raise for home owners, to fund sewer projects – which is a tax, either way one slices it). Inflation is reported to have stayed the same for food, however, in reporting the overall rate of inflation, the Department of Labor leaves food and fuel out of the equation – due to the volatile nature (i.e. ability to increase at a much higher rate). One thing is certain, the paycheck has remained the same, yet there is less “discretionary income".

It is estimated that only 50% of U.S. citizens actually pay taxes, and as employment opportunities remain the same (unemployment), or decrease, those left paying taxes (or currently paying taxes) are not large enough in scope and or income to sustain either state or federal current spending levels. Something has to give. The road back to prosperity is never an easy one – during the years immediately preceding the Carter administration, Ronald Reagan had to get a house in order, make painful cuts, and raise taxes for a short period, in order to bring the house in order enough to cut taxes across the board and get the nation moving forward.

Somehow, we survived and prospered, and yet, a mere thirty years later, a new administration has done nothing but mirror the Progressive Carter administration, and even ramped it up a notch, in order to push the nation, once again to the brink – the culprit – spending until there is a fiscal crisis at which point, one has to tax, everyone.

Unfortunately, the message got through to the Democrats in the Senate at the 11th hour (the majority Party always controls the purse strings, so any additional spending bills passed or not passed by the House or the Senate or the House are owned by the Democrats at this point. ) As not one of them, from the President to the most junior congressional representative can take personal responsibility (It is George Bush’s fault), for any of this mess, the nation is reacting now in kind.

In order to alleviate a lot of heartache, it would be suggested that governors look to some true inspiration, regardless of political leaning, in order to save their states, and ask New Jersey’s, Chris Christie, for help in the way of lessons on how to deal with out of control labor groups, (see Teachers Union), and get more power into the hands of individual cities and towns.


It is simple, as services and cuts are made, there are going to have to be some extremely painful choices, for example, Harry Reid’s plans for a monorail, and millions spent on stimulus signs (signs announcing the stimulus is about to work), would have been better placed in courses for lawmakers from the Federal, State and Local levels on fiscal responsibility.

It is time to take the needs of the people to heart, the taxpayer and the non taxpayer in total – Stimulus under Franklin D. Roosevelt involved an entitlement program that put the unemployed to work for the government – it did not in any way shape or form, include welfare – rather workfare – it’s a concept whose time has come again. In concert, taxes must be cut to stimulate corporate spending (on jobs and research) as well as individual spending on all levels (to pay for the salaries of those on workfare). Additionally, the offices and positions created by every single bill passed by this Congress and President have added to the government work force, and those salaries must be paid by the taxpayer – why not outsource and take the burden off the taxpayer, give the jobs to American companies, and let the private sector handle every aspect of the Federal budget. (With the exception of the military, this is one area that is the Federal Governments responsibility.)

Massachusetts Governor, Deval Patrick’s New Campaign Slogan - Yes! We Need More Taxes!

Deval Patrick, Campaigns on More Taxes! - Photo Boston Herald

Anyone living in the Commonwealth of Massachusetts has noticed that they have been paying a lot more for simple things, including necessities, since the June round of taxes proposed by Governor Deval Patrick and passed by the Massachusetts Legislature went into effect. From cell phone bills, cable and satellite TV bills, to the increase in the bottom line of any given grocery receipt, a few dollars here, a few dollars there, adds up - especially in an economy where many find themselves choosing between eating and paying the rent. There are taxes and fees aplenty in the Commonwealth – all designed to boost a budget deficit that continues to outpace the income the Commonwealth derives from those individual working taxpayers and businesses that remain in the state.

In an election year, one finds U.S. representatives, and the Govenor, filling our mailboxes with brochures and flyer's touting constituent services (more on this subject at a later date). However, what one does not expect to see is the Incumbent Governor of the State known as “Taxachusetts” proposing yet another round of Taxes! From candy and soda (those are bad to you excuse) to Tobacco products that did not fall under a cigarette tax, such as cigars and pipe tobacco, (same excuse) to an increase in prescription drug fees for Medicaid recipients, a bottle tax on water and juice, and a surcharge on auto insurance – the later intended to drive those already struggling under the yoke of taxes, those underemployed, unemployed, and the elderly, to the very brink of destitution. Is he nuts?

Of course, the Governor, who is aware that his approval rating has tanked in recent months, (A recent Boston Globe/University of New Hampshire poll (Known to be generous to a certain political party – see Coakley plus 15 in the Brown/Coakley race while other pollsters had Brown up anywhere from 5 to 12 points) gave Patrick a 44% approval rating.) but believing in the power of the catchy and recycled slogan: “Yes, we can” - he decided that now is the time to raise taxes, again.

Why?

Enter the Trojan Horse.

The Governor faces a three way contest in November: Tim Cahill, Life-long Democrat conveniently turned Independent, and either the team of Republican Charlie Baker and Richard Tisie, or Republican/Independent Christy Mihos. With recent events in the Commonwealth clearly indicating that those who tax and spend – fail and retire - one has to ask why Deval Patrick continues on his path of potential taxing political suicide. Maybe he’s not as obtuse as one would believe.

The Cahill Factor: Tim Cahill, a life-long Democrat, began his career as a City Councilor, moving to the position of Country Treasurer and lastly elected State Treasurer in 2002. Cahill, who oversees the State Lottery, has had his share of notoriety. The Boston Globe report from December of 2009, talks about Cahill’s legal fees and use of “high profile, elite lawyers at the taxpayers’ expense. Apparently, when Deval Patrick began to tank in the polls, Cahill got “religion”. As of now Should Cahill receive more than 6%of the vote usually donated by the good citizens of the Commonwealth to the “Independent” running, he will insure that Deval Patrick is reelected. Sounds like a plan.

In reality, Tim Cahill may be sincere, but timing, as they say, is everything. With a disenchanted and depressed electorate, the candidates running for the governor’s office will be put under a proverbial microscope by the people of the Commonwealth – In real election terms, it is far too early to count anyone in or out, however, as the race shapes up during the summer, the handwriting should be on the walls (or in the polls).

Prediction: Deval Patrick takes the die hard progressives (26% of the 35% Democrats enrolled): Tim Cahill takes the balance of the Democrats who truly want a moderate, and 10% of the independents who believe he's truly found religion (that 19% and that is generous.) Looking more Baker/Tisie by the minute, take the balance. (12% Republican vote and the remaining 41% of the independent vote).