One moment during yesterday’s gubernatorial debate struck me as odd. Jon Keller asked the question: if you absolutely had to raise a significant amount of revenue quickly, what tax would you use? Reilly offered a nonanswer (I wouldn’t do it), but Gabrielli made the point that he wasn’t sure, but he would look for a tax that was progressive, and pointed out that by law the income tax had to be a flat rate. He didn’t know which one he’d offer, however. Patrick echoed his support of progressive taxation, but didn’t offer anything beyond a sin tax on cigarettes, which he acknowledged wasn’t progressive.
Well, what about the capital gains tax? The legislature has reversed a previous rollback to 5.0% and reinstated a 5.3% rate for the time being - but if we’re looking for a temporary, generally progressive tax, why not this one? Or maybe a dividends tax on qualified dividends to offset Bush’s dividend tax cut. These taxes aren’t perfect or without side effects, but if you’re looking to tax the better off in the state without adversely impacting the less well off, it seems a logical starting point. Yet the candidates didn’t seem to even think to mention it.
There may be a number of reasons behind this omission. It could be there are strong reasons - logistical or macroeconomic - against either a capital gains or dividend tax in comparison to other tax hikes. It could be that as corportate, venture capital types, Gabrielli and Patrick are disinclined to raise taxes on capital. It could be that it’s bad politics to seem anti-business, which would run against both’s pro-growth Democrat message. It could be they just forgot when questioned on the spot.
Or maybe we’re still inhabiting Bill Wed’s world, more than we realize or acknowledge.
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