Generating & Spending New Revenue

Despite overwhelming evidence that new revenue is needed to meet existing obligations, the Governor refuses to consider any new tax proposals. The only exception to his no-new-taxes position, of course, was the Gross Receipts Tax plan, which was roundly (and rightly) defeated by the legislature this spring.

There are, however, a number of proposals that are much more progressive, efficient and fair. I support the following initiatives to meet our obligations:

  • Increase the personal income tax rate by 1 percent. A rate increase combined with targeted credits for low-income households works to affect a graduated rate within a non-graduated tax structure.
  • Tax a percentage of retirement income over $100,000.
  • Increase the corporate income tax rate by 1.5 percent.
  • Expand the sales tax base to include consumer services.

The new revenue generated by these increases will accrue to the state, to local governments and to the transit agencies. The state’s share is estimated at about $5 billion and must be mandated to:

  • Fund pension obligations, and
  • Close the per-pupil spending gap; the disparity between the benchmark established by statute in 1997 and actual funding has deteriorated since 2002.

The new revenue that accrues to local government and transit agencies, about $1 billion, must be used to fund transit and local pensions obligations (as much as $1 billion additional revenue can be generated with a small increase in the state's sales tax rate).