In the fall of 2008, I outlined on Blue Mass Group a revenue neutral proposal to provide low and middle-income income tax relief.
I benefited from the comments offered on BMG and from consultation a number of colleagues and others.
Here is the summary of my conclusions about the proposal as of the end of January 2009.
- While the proposal could benefit from further study and tuning, it is basically sound domestic policy — it provides relief to people who need relief and does not burden others unreasonably.
- One concern is that it might have an anti-business effect. One cannot fully discount that concern.
- The public perception of it is likely to be unfavorable: It will be boiled down to a rate increase, even though it actually provides relief to most of the population.
- Additionally, among those who fully understood the changes, there would be skepticism as to whether the exemption increase would remain coupled wilth the rate increase. People would be afraid that the rates would stay high while the exemptions went away at a future date.
- Concerns 3 and 4 might be overcome, but only through a major public campaign and that the usual advocates would be unlikely to mount that campaign in the absence of a revenue benefit.
- The appropriate way for me to handle the proposal is as a concept to be considered if and when people are considering revenue measures — it is per se revenue neutral but could be combined with revenue measures.