October 25, 2010 | last updated March 25, 2012 4:53 am

Ballot Question 3: Tax Cut Is Short-Sighted

Question 3 is the classic ruse — cut $2.5 billion in state revenues with absolutely no consequences. In fact, the consequences would be very serious for cities and town, property taxpayers and the state's economy.

According to an analysis by my organization, Massachusetts Taxpayers Foundation, Question 3 would result in across-the-board cuts of approximately 30 percent in virtually all state programs, including local aid, higher education, human services, prisons, courts, environmental protection, and state parks and beaches.

Local Impact

If Question 3 passes, state leaders would face a $4.5 billion shortfall in the fiscal 2012 budget — an already existing structural deficit of at least $2 billion, plus $2.5 billion of reduced tax revenues by cutting the sales tax from 6.25 percent to 3 percent.

Because almost half of the state's $32 billion budget is legally required spending, the $4.5 billion in reductions must be spread over the remaining $16.9 billion of "discretionary" spending, which would require across-the-board cuts of 28.4 percent.

State programs have already been cut by more than $2 billion since the fiscal crisis began in 2009.

In addition, since the tax cut would take effect on Jan. 1, 2011, the state would have to deal with the loss of approximately $1 billion in sales tax revenues in fiscal 2011, requiring large mid-year cuts across state government, certainly including aid to cities and towns.

If Question 3 passes, the cuts in local aid would result in thousands of layoffs of municipal employees, chiefly teachers, police officers, and firefighters, decimating the core services of education and public safety and falling most severely on the cities and poorer communities that depend so heavily on state aid.

Since state aid and property taxes are far and away the two major sources of municipal revenue, the cuts in state aid would inevitably lead to higher property taxes in many communities.

This would put an added burden on many lower and middle income taxpayers.

While paying higher property taxes, those lower income taxpayers would save very little by cutting the sales tax, an estimated $200 a year. In contrast, wealthier taxpayers would be the major beneficiaries, saving as much as $2,000 a year.

Furthermore, because Massachusetts has a very narrow base on which sales taxes are collected (e.g. exempting food, clothing up to $175, and services), even with last year's increase in the sales tax from 5 percent to 6.25 percent, Massachusetts still ranks in the bottom group of states in terms of sales tax burden — 43rd in revenues collected per $1,000 of income and 35th per capita.

To add insult to injury, the massive layoffs of city and town employees would undercut the state's economic recovery. Nor would the economic price be short term.

The state's economic competitiveness depends on investments in local schools, public higher education, transportation infrastructure, and many other areas, all of which would be seriously impacted if voters approve Question 3.

Voters may be tempted to support Question 3 to "send a message" to Beacon Hill, but in the end it will be the citizens and the state who will suffer.

Michael J. Widmer is president of the Massachusetts Taxpayers Foundation. For more information, visit masstaxpayers.org.

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