BOSTON — Just months after the Legislature scrapped Gov. Deval Patrick’s plan to overhaul the state’s tax code, a new special commission has begun work studying ways to accomplish just that.
The Tax Fairness Commission, co-chaired by Rep. Jay Kaufman and Sen. Michael Rodrigues, held its inaugural meeting last week, gathering lawmakers, economists and others to begin a review of the complex tax code in hopes of recommending ways to make it simpler and fairer while promoting economic growth and staying competitive with other states.
It’s a tall task, especially considering the commission’s five-month window to complete its work and the likely diversity of viewpoints among the commission’s members. Final recommendations are due March 1, and the committee expects to meet once a month through January and twice in February to meet that deadline.
“If we are successful, we will be the most successful tax commission in the history of Massachusetts,” said commission member and Senate Minority Leader Bruce Tarr, the Gloucester Republican.
“I’m hoping and confident that we can advance the public conversation,” said Kaufman, who also co-chairs the Legislature’s Committee on Revenue with Rodrigues.
Patrick in January proposed a plan that would have raised $1.9 billion in new revenue for the state by increasing the income tax rate, lowering the sales tax rate and eliminating dozens of personal and corporate tax exemptions and deductions. The governor argued that his plan would not only generate the money needed to invest in transportation, but make the tax system more equitable for people across the income spectrum.
The Legislature swiftly rejected Patrick’s proposal and turned instead to the gas tax, the cigarette tax and a tax on software design services, which now appears headed for repeal, to generate new revenues for transportation.
The commission was created by Sen. Karen Spilka, who succeeded at inserting an amendment into the $500 million transportation financing package approved in July tasking the 15-member panel with a thorough review of state tax policy. The work of the commission comes on the heels of recommendations made recently by a similar Tax Expenditure Commission that took a look at the system of tax exemptions, deductions and subsidies extended to individuals and corporations to relieve tax burdens on certain populations and spur economic growth.
The impacts of special commissions and even legislative committees have been minimized in recent years as control of the legislative agenda has solidified in the hands of Democratic leadership on Beacon Hill.
Rodrigues said the reception Patrick’s plan received from the Legislature this year shouldn’t influence the work of the commission, nor should the fact that the recommendations will come in the midst of an election cycle to choose the next governor and members of the House and Senate.
Kaufman suggested the commission’s work could help drive and shape the debate on taxes in next year’s elections.
“It doesn’t shape my thinking about what we might recommend. This is a work in progress. This is a conversation that I’ve been wanting to have for years, and it’s going be a conversation that’s going to go on for years,” Rodrigues told the News Service. “We’re not going to get done in a couple of months and think that we’re going to propose or create a proposal that’s going to make our tax system more fair and equitable. It’s just not going to happen.”
“Not overnight,” Kaufman injected. The Lexington Democrat said the commission’s recommendations will hopefully be ideas that can be sold to his legislative colleagues and “not an exercise in wishfulness.”
Kaufman said he intends to share with the commission data that will show disparity in overall taxation of the poor versus the more wealthy, with those living in poverty paying a greater overall share of their income in state and local taxes. He said he believes income inequality has become “fundamentally threatening to our democracy.”
“We not only don’t have a progressive tax system, we don’t have a flat tax system,” Kaufman said, referring to the state’s blend of income, sales and property taxes, despite a flat income tax.
Harris Gruman, executive director of the SEIU Massachusetts State Council, argued that the commission must be careful when considering economic competitiveness, noting that higher corporate tax rates could be viewed in different ways as less competitive with lower-tax states or more competitive if those resources are invested in business-friendly projects such as transportation improvements.
The commission will also consider whether the taxes currently collected by the state are “adequate” to make the types of investments on public programs and services that leaders prioritize.
“People don’t mind paying their taxes as long as they feel everyone is paying their fair share, and it’s open to interpretation what a fair share is,” said Navjeet Bal, the former commissioner of the Department of Revenue who is now an attorney at Nixon Peabody.
Other commission members who attended include Secretary of Administration and Finance Glen Shor; Massachusetts Budget and Policy Center senior analyst Kurt Wise; Marita Callahan and Stephanie Gunselman, counsel to House and Senate Ways and Means Chairmen Rep. Brian Dempsey and Stephen Brewer; Massachusetts Taxpayers Foundation President Michael Widmer, Northeastern University economist Alan Clayton-Matthews; Rep. Randy Hunt (R-Sandwich) and Brandeis University professor Bob Tannenwald.