Implications of Dean Cavaretta’s State Senate Race – Taxes

The Senate race in the Middlesex and Worcester district features a contest between two candidates with very distinct platforms. I would argue, though, that given the choice between these two unique policies, that of Dean Cavaretta, the challenger, offers a vision for a far more stable economy in the state of Massachusetts than does the vision offered by incumbent James B. Eldridge.

To make my case, I seek to offer some of the more clear distinctions between the two candidates, ones which really highlight their divergent economic policies.

Senator Eldridge’s economic record isn’t terribly robust in terms of legislation that has been enacted, but instead is revealed in several bills that he’s either written or supported. During his career, Senator Eldridge has been a proponent of increasing the sales tax, the income tax, the gas tax, and the capital gains tax. Senator Eldridge describes himself as a progressive Democrat, so his support of increasing the income tax and the capital gains tax comes as no surprise. However, the sales tax and gas tax are both inherently regressive, meaning that they place a greater burden on lower-income families than on higher-income families. Why such is the case for the sales tax is fairly simple – when your income is lower, you have to spend a greater proportion of your income to live than someone who makes more. The higher someone’s income is, the greater the proportion of said income he or she will have left over to invest or save. If a consumer must spend a greater proportion of their income, then the sales tax is affecting a greater proportion of their income than someone who saves a greater proportion of his or her income, so that the sales tax, from a proportional standpoint, is affecting the lower-income consumer more.

To say that the gas tax is regressive, however, requires a slightly more complex case. Senator Eldridge, during a televised debate for the 5th District Congressional Seat, explained his justification for a gas tax, as well as the sort of system he would favor. His call for a gas tax has two key goals – the primary goal of shifting consumer behavior to benefit the environment, and the minor goal of raising revenue for the state. However, both goals pose problems for consumers. Senator Eldridge seems to assume that everyone, if they so choose, can switch to a more fuel-efficient vehicle at any given time, but there are large swaths of people who, even with an increase in the gas tax, would not be able to change their habits. Newer models of vehicles are more fuel efficient than older models, but are also more expensive than their older, used counterparts. And as we all know, vehicles, used or new, are expensive investments. It’s true that Senator Eldridge made these comments before the recession hit, but even then, most consumers couldn’t afford a hybrid, or even the newest, most fuel efficient version of whatever type of vehicle they need. So, while the idea of trying to change consumer behavior sounds good in theory, it has some serious problems in practice.

To avoid this issue, Senator Eldridge says that, in his system, the tax would only be realized when consumers spend over a certain amount of money on fuel. That way, only consumers driving larger, less fuel efficient vehicles would be taxed. Presumably, there would be some sort of system where gas consumption was tracked per consumer on a yearly basis, because any other system would offer huge loopholes (only buying small quantities at a time, going to different gas stations, etc.). This system would still disproportionately affect lower income consumers. Some people have no option but to have a van, truck, or SUV, whether it be for their work or their family. Once more, lower income consumers may have to settle for purchasing an older, less fuel efficient model, meaning that they will have to spend more on gasoline than someone who can purchase a newer model. Senator Eldridge likely didn’t thoroughly consider these implications when devising his policy, but these are, nonetheless, the potential ramifications of such a tax.

Granted, there are many facets to this race that voters have to consider on a personal level, but from an economic perspective, Senator Eldridge’s record raises some serious concerns.…

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