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The Taxachusetts Referendum

Dean Pagani

October 06, 2008

As Connecticut takes its first steps toward allowing for initiative and referendum on state issues, Massachusetts is conducting a live experiment this Election Day.

For the second time in six years, voters are being asked at the ballot box whether the state should abolish its income tax. In 2002, a similar measure got about 45 percent of the vote. So this time, both sides are taking the matter very seriously.

Massachusetts taxpayer groups are raising funds to wage an anti-tax campaign, while others — led by top state officials, including Gov. Deval Patrick — are campaigning against the proposal.

Regardless of where you stand on taxes, you can see where the governor is coming from. Eliminating the Massachusetts income tax would peel away about $12 billion of revenue. That’s close to half of the state budget of about $28 billion. Even the most frugal fiscal conservative can’t believe the state budget could be balanced — minus an income tax — through spending cuts alone. Other taxes would have to be raised.

Messy Democracy

The income tax elimination plan on the ballot this year would give Massachusetts two years to phase out. It would also put the state on a path to two years, or more, of fiscal chaos as politicians and the public debate the best way to replace the lost revenue and dramatically cut spending. There is no telling what kind of signal such a move would send in economic development circles or to bond rating agencies.

It’s been said that democracy is the worst form of government, except for all others. A recognition that open debate on the issues of the day can be messy. Initiative and referendum just makes it messier and more difficult for incumbents to get the job done.

The Massachusetts anti-income tax campaign is a clear example of how initiative and referendum tends to be used in a way that fosters simplistic debate over complex issues. It doesn’t take much work to raise a mob to oppose an income tax without discussing the alternatives — just as it doesn’t take much to raise a mob to favor the death penalty.

Emotion v. Reason

Governing is complicated. The choices are very rarely as clear as night and day as they are often cast in referendums. The campaigns built around these issues often appeal to emotion rather than reason.

In California, in 2003, Arnold Schwarzenegger defeated Gov. Gray Davis in a special recall election. Once a governor’s approval rating dips below 40 percent, it’s not too difficult to put together a campaign calling for his ouster. But that doesn’t mean ousting him is the right thing to do. Without arguing the particulars of the Davis recall, it is possible to imagine a scenario leading a governor to make a series of grossly unpopular decisions that were at the same time — in the best interest of his state. While the public can be persuaded to “throw the bum out,” there is no guarantee the next bum will be any better.

Anyone who has been to a local town meeting can’t help but be impressed by the realization that in this country you can be as involved as you want to be in decisions that other countries trust only to a governing class. You can speak out, challenge those elected to serve you and vote.

Cherishing this, it’s hard to take a stand against greater involvement through the use of initiative and referendum. It’s also important to understand however, that in this media-driven age, a well-developed issue campaign can have chaotic consequences. Supporters of the Massachusetts tax initiative should be careful what they wish for.