Increase in undecided voters found in poll on grad tax ballot question

Chris Reidy, Globe staff
735 words
7 October 1994
The Boston Globe
City Edition
81
English
(Copyright 1994)

Voters appear to be confused about a graduated state income tax as support erodes for two November ballot questions that would implement a grad tax, according to a Boston Globe/WBZ-TV opinion poll taken Tuesday and Wednesday.

Meanwhile, grad tax advocates yesterday released a study that asserts that 82 percent of small business owners would pay less taxes or nothing if the grad tax is approved in November.

The claims that a grad tax will hurt small businesses is "a simple, unvarnished lie," said the author of the study commissioned by the Campaign for Guaranteed Tax Relief.

Grad tax opponents said the study was "deceptive;" as many as 25 percent of small business owners could pay more.

The claims, counterclaims and charges of lying seemed to add to the confusion uncovered by the latest Globe poll, which showed the number of undecided voters growing by 10 percent.

Question 6, a constitutional amendment that would require the state to replace its flat tax rate with a graduated income tax system, continued to draw more support than opposition.

According to the poll, 43 percent supported Question 6, 28 percent opposed it, and 27 percent were undecided. The poll of 404 voters has a margin of error of plus or minus 5 percent.

A poll taken last month showed that 54 percent supported Question 6; 28 percent opposed it, and 17 percent undecided.

On Question 7, which spells out the details of the new income tax brackets, the voter uneasiness seemed more pronounced.

Support for Question 7 in this week's poll was 28 percent, down from 36 percent in the previous poll.

The new poll said that 28 percent supported Question 7, 31 percent opposed it, and 39 percent were undecided.

The earlier poll found that 36 percent supported Question 7; 34 percent opposed it, and 29 percent were undecided.

"The state really doesn't know what to do, but the trend is away from supporting the grad tax," said pollster Gerry Chervinsky of KRC Communications Research, who added that the numbers mirror historical patterns from past years when other grad tax proposals were defeated.

According to the Massachusetts Department of Revenue, the 1994 grad tax proposal is revenue neutral; it would shift $600 million from the tax burden on middle-class and poor taxpayers to the state's wealthiest 8 percent by setting income brackets.

If the grad tax will be more fair to 92 percent of the state's taxpayers, it will help 82 percent of the small business owners who pay taxes on their business income at their personal income tax rate, said Peter Enrich, the Northeastern University law professor who did the study for the grad tax advocates.

Michael J. Widmer, the president of the Massachusetts Taxpayers Foundation, disputed Enrich's findings.

That 82 percent number is "high," said Widmer, a grad tax opponent; roughly 80,000 of the most successful small business owners will pay more, and they are the ones creating jobs.

In claiming that a grad tax will hurt the local economy, Widmer and his allies at the "No on 6 & 7 Committee" are in the position of pushing an argument that is hard to prove.

According to grad tax opponents, common sense suggests that a proposal that raises taxes on the state's most successful small entrepreneurs would reduce the amount of capital they would have to reinvest in their businesses and hire new workers.

While that claim may be true, it may also be true that the many small business owners who would get tax breaks under a grad tax would use some of that money to hire new workers.

Without making "heroic assumptions," such claims are hard to verify, said members of the DOR's grad tax advisory group.

"The DOR asked us to figure out whether jobs would be lost, and the unanimous conclusion of the group was that it was just impossible to pin down empirically," said Karl E. Case, an economist at Wellesley College.

The DOR didn't find "any migratory effects" on jobs that would result from adopting a grad tax, said Northeastern University economist George A. Plesko. "And they were looking."

CAPTION:Northeastern professor Peter Enrich talks to reporters about a study he did for grad tax advocates. GLOBE STAFF PHOTO/WENDY MAEDA

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