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Hey HCFA - How Do We Pay For Your Amendments? Our Revenue Agenda

Hey HCFA - How Do We Pay For Your Amendments? Our Revenue Agenda

April 25, 2010

In our last blog post, we detailed a number of the budget amendments HCFA supports. Most of the amendments would add spending to the budget. We also support a number of proposals that would add spending that are not being actively considered for next year's budget, like re-integrating legal immigrants into Commonwealth Care, or rebuilding our tobacco control and other public health programs that have been drastically cut over the past 5 years.

Which leads to the legitimate question - how can the state afford to increase spending on these health programs?

For one, we think there are number of real, immediate savings that can be found in the state's health budget that would save costs and improve care. For example, other states are beginning to reduce payments to hospitals with high rates of preventable complications. This flips the current incentives, where hospitals can earn more revenue from poorly coordinated care. This step is an important precursor to global payments, which has the potential to reduce spending further.

But second, HCFA strongly endorses a number of revenue initiatives (that means tax increases) to rebuild our public systems that provide the quality of life we want for every Bay Stater. HCFA is a member of the One Massachusetts community campaign, "Investing in our Commonwealth." The campaign, which includes groups such as the Mass Teachers Association, Coalition for Social Justice, Mass Home Care, Mass. Senior Action Council, and Mass Public Health Association, is working for a fair tax system that protects what we value in our state and provides the resources needed to invest in the public good.

Monday morning at 11:30, HCFA will be joining with other groups outside the House Chamber as the House begins its budget debate. We will call on the House to approve a number of revenue proposals that have been filed as budget amendments:

  • Rep Hecht's amendment #287 to plug the loopholes in our tobacco tax. Although the state raised taxes on cigarettes in 2008, it's been nine years since prices on inexpensive, kid-friendly other tobacco products (OTP) such as flavored small cigars and smokeless tobacco have been addressed. While cigarette smoking has declined nationally in part because of tax increases, OTP sales have increased rapidly, especially among youth. The amendment would increase the excise tax on these products to match the cigarette rate. See this fact sheet from Tobacco Free Mass.
  • Rep. Patrick's amendment #329 to remove the exemption from the sales tax from candy and sweetened soft drinks. This proposal, also strongly supported by Governor Patrick, will discourage consumption of unhealthy snacks and soft drinks, particularly by children who are subject to aggressive marketing campaigns. The amendment earmarks the revenue for critical public health programs, including health promotion, school-based health programs, teenage pregnancy prevention, domestic violence and sexual assault prevention. Forty other states already tax sweetened beverages and/or snack food. See this fact sheet for more information.
  • Rep. Patrick's amendment #323 to restore the tax rate on interest and dividends to 12%.The amendment exempts the first $5000 of interest and dividend income for seniors. The reduction in the tax rate from 12% to 5.3% on interest and dividend income brought large rewards to the highest-earning residents. Data from the Institute on Taxation and Economic Policy shows that the top 1% of earners in 2008, those earning over $562,500, saved on average $10,057 due to this tax cut. The bottom 80% of taxpayers saved less than $100 on average (source, see fig. 3). Going back to the pre-existing rate would raise hundreds of millions of dollars and re-orient our tax system more towards assessing individuals based on their ability to pay.

HCFA urges people to contact their representatives in support of these revenue proposals (sample phone script), and join us in working with One Massachusetts for fair, adequate revenue. Use this sign up form to be kept informed on the campaign.
-Brian Rosman