Letter to the Editor

Tax Rebate Proposal Misses the Mark

To the  Editor,

The Massachusetts Legislature’s proposal to send $250-$500 checks to a particular income range (38-150k) is economically misguided and fails to meet the moment.

Under this proposal:

-A widowed mother of two kids making $30,000 a year in the service industry gets $0… but a dual-income, no kids married couple in their late 20s making $135,000 a year gets $500.  (Why???)

-With a historic opportunity to invest in things we’ve long ignored, like our transportation system, crumbling public housing and a lack of affordable housing generally, a lack of affordable childcare, and our public higher education system that keeps increasing tuition on MA residents — $500 million will be sent out, without a penny going to the most needy, in a short-term way that will not make a lasting impact.

-During a period of inflation, money is given to the income range most likely to spend it on supply-constrained goods and services, thus making inflation worse.

I 100% get trying to help families facing the crunch of inflation right now, but a short-term cash infusion increases demand, which increases inflation… what would actually fight inflation would be increasing the supply of things that are driving cost of living up – like housing and childcare.

If the Legislature feels the best use of the state’s surplus is tax cuts rather than investing it in public goods, then let’s do actual tax cuts that are permanent and promote long-run economic growth.

The state could increase the earned-income tax credit or the child tax credit, cut the sales tax, reduce filing fees and licensing fees on small businesses, or marginally reduce business taxation in general on small businesses… all kinds of things that have a long-term impact, rather than a sugar high that is only appropriate in a time of urgent need for short-run economic growth, which is not the situation we are in right now, as any economist left, right or center would attest to.

I disagree with Governor Baker’s proposed suite of long-term tax reductions, many of which would predominantly help upper-income earners, but at least there’s a logic to them, in terms of promoting the state’s economic competitiveness in the long-term.

This proposal is deeply unserious, short-term thinking, which wildly misses the opportunity we have to make investments in the state’s future — all to try to conveniently time checks around election time, even though more than half of the Legislature doesn’t even have an opponent. For the sake of thinking long term about MA’s future, I hope it is sunk.

Joe Gravellese

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