1/25/2013

Taxes are funny, innit? II

Deval Patrick put out his budget proposals, and the people are taking out their frustrations over the details of said proposals on their politicians.

Namely: the increase of the income tax from 5.25% to 6.25%; the reduction of state sales tax to 4.5%, to which sodas, snacks, and water bottles will be included; the increase of cigarette taxes to $3.51, and other things.  On the positive side, the personal exemption may go up to $8,800 - but only if you earn less than $37,000.

A few back-of-the-envelope calculations: If you're buying a pack of $6 generic cigarettes and the new excise tax is $3.51, that sports an effective tax rate of 58.5%, even before the sales tax is applied.  If you're buying $50 of snacks and a case of 24 cans of soda at $8, the new tax will rake in $2.25 for the snacks and $0.36 for the soda, plus another $0.60 for deposit.  That means an additional $3.21 tacked onto the bill.  If you earn $40,000 a year, you pay an extra $400 per year, or $8 per paycheck.

Deval Patrick knows that he's a lame duck and is very smart to use ignorance to his advantage. He knows the real money to be taken is where no one will take a second to question why and calculate how much.  He also knows the taxes he's raising are on the poor and lower middle classes who have little, if any, influence on how these taxes will be distributed - it might sound great that the monies are going to transit and education, but often they go to the general fund so they can be spent on pork and perks.  They're the same people who will hang on every promise but in the end get whacked in the face, time and again, because they aren't savvy enough to differentiate between good taxes (that are put out front and benefit everyone) and bad taxes (that can be hidden and manipulated to the whim of the politician).

Furthermore, these extra taxes beyond the income tax are designed to be regressive, and will come from the disposable income of the poor and lower middle class.  The snack and soda taxes alone will be a harsh regressive tax, and coupled with yearly fare hikes, the urban areas (and not the suburbs, who sustain most of the commuter rail fare hikes) will financing a huge chunk of shiny new buses and trains, while also having bus and train services reduced or cut.  On top of it, no one, not even the poorest, will avoid the 6.25% income tax (and no one knows if they'll offer an alternate, higher income tax for those who want to pay more - the 5.85% tax has generated so little revenue anyway).

Voters re-elected Patrick with passion.  Now they're seeing their passion repaid with a massive shakedown on their wallets.  Now the voters are certainly rekindling that same passion - by giving politicians a huge earful about how they'll vote for the other guy if this budget passes.

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