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Patrick's ambitious tax plan offers basis for compromise
The Boston Globe, Editorial, March 24, 2013

Far too often in public life important choices get reduced to sound bites, tradeoffs between interest groups, or ideological reflexes. Only rarely do political leaders challenge the community to look at the full picture, to engage in a rigorous discussion about the connection between today’s choices and tomorrow’s results — to think bigger, but also pay closer attention to the details: How the bills will be paid, which outcomes are desired, how progress can be measured.

Governor Patrick deserves credit for producing a budget proposal that not only lays out the choices, but is flexible enough to serve as a template for reasoned compromise. The governor released his plan about four months before the budget was due to be finished, and invited all citizens, not merely the usual actors on Beacon Hill, to participate in the debate.

The governor’s plan includes four components: A sizable funding increase for transportation; a guarantee of early-childhood education for low-income toddlers; a sizable increase in Mass. grant funding for income-eligible college students; and a dramatic reordering of state income-tax deductions to make it more progressive — that is, less burdensome to low-income people and more so to those earning above $62,000.

Not all of these plans are equally necessary. Some of Patrick’s tax proposals place a heavier burden on the middle class in order to help those one rung lower on the income ladder. But there should be no question that Patrick has his priorities in order: Even those investments that might appear to be discretionary — items that can be put off for a better day — are closely tied to the state’s economic future. This isn’t a politician’s wish list.

The plan shouldn’t be viewed as an up-or-down, all-or-nothing proposition. The Legislature, sensibly, has begun a rigorous review, leaving nothing off the table. But there is still time for many more voices to be heard, and the final product will, by necessity, be born of a spirit of compromise. Over each of the next four days, we will address a key aspect of Patrick’s proposal on its own merits, to provide a frame for the debate. Hopefully, the state’s leaders can then find agreement on a spending plan that addresses at least the most urgent of Patrick’s priorities — transportation — and his most transformative — the guarantee of early education for low-income children.

While the state’s transportation agencies have been combined in a dramatic restructuring, and efforts have been made to cut costs by removing redundancies, there have been fewer like-minded reforms in public higher education. The state’s community colleges and universities have had their state aid cut severely in recent years. But their request for more taxpayer support would be more acceptable if they had already exhausted the alternatives — such as limiting aid for students who stay beyond four years, and finally centralizing the administrative functions of the nation’s most decentralized university system.

These cost-cutting measures could bring down costs for most students without the hundreds of millions of dollars in additional funding that Patrick proposes.

By contrast, there is no viable alternative for the T’s debt-laden operating budget, or to fund long-planned priorities such as the Green Line extension into Somerville. And there are no dollars available to take advantage of new technologies to enable self-propelled, diesel-powered railcars to run on commuter-rail tracks, thereby providing more convenient service at a lower cost.

There is no similar breakdown or looming threat to require an expansion of early-childhood education. That’s why some people on Beacon Hill are simply willing to put it off for another day. That would relieve a little pressure on today’s budget, but at the cost of a generation of toddlers who are already falling behind their peers. Studies show that learning gaps are apparent as early as 24 months, meaning that when disadvantaged children finally get to school, many lack the skills to succeed. Then, teachers end up spending more time on students who are unprepared than on those who are ready to learn.

Support for early-childhood education crosses the usual political boundaries. Many conservatives embrace the idea that early intervention is far cheaper and more effective than the huge amounts spent on special-ed programs in later grades; if receiving earlier enrichment enabled even a small percentage of students to bypass special ed, the state would, on balance, save money. Patrick’s proposal also would require preschools to adopt rigorous new standards, essentially transforming daycare centers into learning centers, which would benefit almost every child in the Commonwealth. The Legislature should strive to maintain the ambition of the proposal, while cutting back modestly on its price tag to limit the tax bite.

Any such bite will feel sharp, especially to families who’ve yet to feel the benefits of a rebounding economy, but are already feeling the effects of the end of the federal payroll-tax cut. Patrick’s plan attempts to shield the most vulnerable families by adding deductions that benefit those with lower incomes while removing loopholes that are valuable to those with higher incomes. He calls for a big increase in the income tax — a full 1 percent, from the current 5.25 to 6.25 — coupled with a big cut in the sales tax, from the current 6.25 to 4.5 percent.

But Massachusetts’s sales tax carries so many exemptions that it is already quite low — 42d out of the 46 states with a sales tax, in terms of sales-tax revenue as a percentage of income. With food, clothing, and other necessities exempted, the sales-tax burden falls more on those buying new cars and luxury consumer goods than on struggling parents tending to their kids. Without the sales-tax cut, the Legislature could fund the state’s priorities with a far lower hike in the income tax while preserving those deductions that are most important to the middle class. Adding to the gas tax — a favored alternative for some state representatives — would impose an immediate burden on lower-income families with long commutes; but indexing the current tax to inflation — which would mean adding a penny per gallon every three years or so — would obviate the need for future tax hikes for transportation funding.

Good government requires a mix of pragmatism and idealism, of rigid cost management and responsiveness to new opportunities. Patrick has put forward an impressive agenda; the Legislature now must turn it into a blueprint. The state government has shown itself to be capable of major initiatives. Its willingness to rise to the occasion and take on big challenges — such as education reform and health care coverage — have made it a model for other states. This is another opportunity to demonstrate Massachusetts’s capacity for leadership, to build the physical and programmatic infrastructure necessary to compete for the next generation of jobs. From the options that Patrick has spelled out, the Legislature should strive to find an equitable mix of revenue sources to enact policies that will put the state on stronger footing for the future.

Tomorrow: A look at the state’s transportation needs