Winning the Sales-Tax-Cutting Race

We keep hearing about the horrible prospect that Massachusetts is going to steal Rhode Island's gambling revenue if we don't win the race to build our own full-scale casinos, but what do you suppose would be the consequence, for RI, were the voters of MA to implement this?

The initiative would reduce the sales tax rate from 6.25 to 3 percent, a move that would cost the state up to $2.4 billion in annual revenue beginning Jan. 1.

Economy-wise, I'd wager that this is a far greater threat to Rhode Island than the casino competition. Of course, proponents of gambling and opponents of tax cuts are less concerned about the health of the economy than the health of state government. Indeed, the debate over the Massachusetts cut runs right along contemporary debates about just that division:

Millions of dollars were spent during the 2008 campaign by public employee unions and other opponent groups to defeat the initiative. ...

Opponents of rolling back the state's sales tax to 3 percent argue that such a large cut would put tremendous pressure on state lawmakers to reduce spending leading to widespread layoffs and cutbacks in services on which millions of people depend.

Note well that last word, "depend." The objective of big government is to make as many residents dependent as possible so that we'll all be afraid that our own dependency will hit the chopping block when the ruling class doesn't get its way.

"It will have a drastic impact on a whole range of services that the public expects from state and local government in Massachusetts -- local schools, public safety, human services, health care," said Michael Widmer, president of the Massachusetts Taxpayers Foundation. "The problem is this will take full effect in fiscal 2010 on top of a structural deficit in fiscal 2012 that could already be more than $2 billion. You're talking about a $5 billion hole in the 2012 budget."

For fiscal year 2009, Massachusetts's budget was $28 billion. Even if we assume that the tax decrease would lead to zero increase in transactions (thus mitigating the loss to state government), that number represents about 8.5% of the budget. There is surely that much fluff. And it's absurd to think that the actual decrease in revenue would not be much less.

Carla Howell, who is leading the charge is absolutely correct that "the only way to force lawmakers on Beacon Hill to eliminate wasteful spending is to take away their revenue streams." The problem is that the waste is more important to them than the services by which they hook residents, so they'll line up residents' dependencies — addictions — for cuts first. One can see this dramatically during local budget battles, and the principle holds at the state and federal levels, as well.