Massachusetts Governor Calls for State Income Tax Cut

Published June 1, 2004

Massachusetts Governor Mitt Romney (R) on May 3 advocated a $225 million tax cut for the 2005 fiscal year, pointing to a resurgent economy that is sparking “extraordinary growth in revenues” after four years of fiscal crisis in his state.

Romney called on state lawmakers to take action on a tax cut that was approved by voters in 2000 but “forestalled by the Legislature in the midst of the state’s economic downturn.”

At a press conference, Romney announced the state has as much as $1 billion more in revenues for fiscal year 2004 and 2005 than he realized when he filed his budget in January of this year. State records show the state is running a $517 million tax revenue surplus heading into the last quarter of fiscal 2004, which ends June 30. April tax collections, reported in early May, were up $410 million over April 2003. Ten months into the fiscal year, collections are up $867 million over 2003, or 7.2 percent.

“The recovery is under way in Massachusetts,” Romney said. “It is time to carry out the will of the voters. Let’s get this under way. It helps the taxpayers, it follows their voice at the ballot box, and it further stimulates our economy.”

Voters in 2000 approved a gradual reduction in the state’s income tax rate from 5.85 percent to 5 percent. In 2002, however, the state legislature froze the rate at 5.3 percent.

According to, Romney was especially pleased to see withholding taxes, a measure of employment, up $84 million, or 16 percent, during April.

“Something’s happening out there. I can’t tell you how many jobs that represents, but we’re clearly going in the right direction and the trend seems to be consistent,” said Revenue Commissioner Alan LeBovidge. “This is a big jump.”

Mixed Reaction
Lead House budget writer, Rep. John Rogers (D-Norwood), said the House will take a “wait and see” attitude before acting on any proposed tax cut. “You can’t look at one month and call it a recovery,” Rogers said. “As much as I’d like to and love to do it, I’d love to say it. But you have to be very cautious before you say such a word.”

“This is no time to change your policies of restraint and reform and limited taxation,” Romney countered. “In fact, those policies helped get us where we are with regards to recovery.”

Lowering taxes stimulates the economy, Romney told News. “Tax cuts put Massachusetts in a better position to compete with other states for businesses and workers, and a thriving economy could fill the state’s coffers.”

Barbara Anderson of Citizens for Limited Taxation praised Romney for keeping his campaign promise to push for the lower tax rate.

“The typical Beacon Hill response is, ‘Oh, we can’t afford it, the voters didn’t know what they were doing, and we want the money.’ The unusual Beacon Hill response is a politician keeping his word and respecting the voters,” Anderson said. “Now that the revenues are building again, if we don’t do it, then they’ll spend us into another fiscal crisis.”

John Skorburg is managing editor of Budget & Tax News. His email address is [email protected].