I’m watching the third and final Presidential Debate between Barack Obama and John McCain. I’ve heard for the umpteenth time from Senator Obama that he will cut taxes for 95% of the American population. This cannot be true. Almost 40% of Americans have zero tax liability. I repeat, 40% of Americans do not end up paying any taxes and in many cases receive tax refunds. Senator Obama does plan to raise taxes on people making more than $250,000 a year, and balance that with refundable tax credits (not deductions, credits) for people on the low end of the pay scale. What’s important about a refundable tax credit is that once that money is used to offset taxes, the remainder ends up in the person’s pocket. Senator Obama is not simply going to increase taxes on the rich and decrease taxes on the poor – he’s going to increase taxes on the rich, and give that money to the poor. That’s income redistribution, and I vigorously oppose it.

Massachusetts currently imposes an income tax on its workers as well as capital gains taxes. The income tax rate is a flat 5.3% which is also the long-term capital gains rate. The short term capital gains tax rate is a whopping 12%. Of course, these are in addition to any federal taxes you will pay.

Today, there is an op-ed piece in the Wall Street Journal that describes an upcoming November ballot initiative to eliminate the income tax and capital gains taxes in Massachusetts altogether. The motive is to force legislators on Beacon Hill to reduce spending and exercise fiscal restraint. If this sounds like it might be a long shot to happen in “Taxachusetts”, the article reminds you that the same question appeared on the ballot in 2002 and garnered 45% of the vote.

For more information, visit:

http://www.smallgovernmentact.org/

If this measure actually passes, then it has to force the state government to reduce spending. I imagine it will also cause local governments to raise property taxes to compensate for the loss in state money. Although I’m certainly all for a reduction in taxes and more fiscal restraint in government, I’m not sure I can completely support this movement in theory because it doesn’t seem all that unusual across the United States to have a small state income tax. But maybe the idea is to fight for an outright elimination and end up with a compromise.