Gabrieli's tax cut plan

That "new policy initiative" Chris Gabrieli was going to unveil this morning? Turns out it was a detailed plan to cut the income tax rate to 5 percent, per the voters' instructions.

With Gabrieli looking to chip into Deval Patrick's big lead, this is a great issue. Patrick's opposition to income-tax cuts and focus on property-tax relief may have a solid intellectual foundation, but there's a big emotional problem there: Massachusetts voters said they wanted the 5 percent rate. They still haven't gotten it. And this, in turn, helps feed the anti-Democratic establishment sentiment that keeps sending Republicans to the Corner Office.

That's my take, anyway. Here's the meat of the press release Gabrieli put out this morning:

Gabrieli proposed a formula that locks state government into a commitment to cut taxes by tying the cuts to the state’s tax revenue growth above inflation. The more tax money the state takes in, the faster the income tax rate will fall to 5 percent.

Gabrieli’s plan would allocate 40 percent of the state’s tax revenue growth to pay for tax cuts and 40 percent for new spending and increasing local aid, while setting aside the remaining 20 percent for the government’s rainy day fund.

If revenue grows by 6.5%, which is the 25-year historical average according to the Massachusetts Taxpayers Foundation, then we could cut taxes in 2008 to 5.2% in 2009 to 5.1% and in 2010 to 5.0%, while pumping $1 billion into new programs and local aid, and reserving $800 million for the rainy day fund...

“These are real numbers, and this plan brings the kind of accountability that has been lacking on Beacon Hill for too long,” Gabrieli said.  “This Romney-Healey administration has proven they cannot be trusted to cut taxes responsibly.  And for 16 years, it’s clear our people have been unwilling to trust a Democrat at the fiscal helm.  I want to change that.”

Gabrieli also questioned how some of his opponents could promise a tax cut all at once.

“Simply put, it would be fiscally irresponsible to go to 5.0% immediately,” he said. “I’ve been looking at budgets most of my adult life and the numbers just don’t add up.”

Next year, the consensus revenue estimate includes $18.9 billion in tax receipts.  The FY 07 budget just passed by the Legislature has us running a deficit of over 500 million dollars, which would have to come from the Rainy Day Fund.  According to the Massachusetts Taxpayers Foundation, just to balance this budget, growth would have to be higher than the consensus budget estimates to the tune of over 500 million dollars, while an additional $600 million would be required to cut taxes to 5.0% immediately.

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