Senate Dems Get High Marks for Boldness on Earned Income Tax Credit

Thursday, July 2, 2015

The more one thinks about it, the more one is struck by the strategic audacity of Mass. Senate Democrats in using the annual spring deliberations over a new state budget to push for an increase in the Earned Income Tax Credit ("tax credit"), a mechanism allowing low-income working families to significantly reduce the state income taxes they pay.  

Dems especially shook things up by committing the Senate to postponing a scheduled decrease in the state income tax rate in order to pay for the higher tax credit.

Today, two days into Fiscal Year 2016 (7/1/15-6/30/16), we are awaiting the final legislative version of the FY 16 state budget from a House-Senate conference committee.  It appears that the disagreement between the branches over how and when to move forward on the tax credit increase, and on how to pay for the increase, is a major reason why, for the first time in years, the legislature has not met a June 30 deadline for producing a new budget, and why state government is now functioning under an interim, stopgap, one-month budget.

In May, the Senate adopted an amendment to its version of the budget calling for a 50% increase in the tax credit.  By contrast, in April, the House chose not to do anything on the tax credit when crafting its version of the budget.  (Most members of the House favor hiking the tax credit; they just didn't see the budget as the vehicle for accomplishing it.) 

A tax credit represents a dollar-for-dollar reduction in one’s taxes.  For example, if a wage earner qualified for a $200 tax credit and was otherwise liable to pay $1,000, she would pay $800 instead.  So, if the state raised the tax credit limit by 50%, she’d pay $700.

Should the full legislature vote to raise the tax credit by 50%, and should the governor sign the increase into law, the state would stand to forfeit an estimated $145 million in income tax revenue the first year the higher tax credit is in effect. That amount would be in addition to revenue already foregone due to this particular tax credit.

Approximately 400,000 low-income families qualify for this benefit. If a 50% increase in the tax credit becomes law, each of those 400,000 families would, on average, get an additional $500 back on their taxes every year.
A digression on the budget-making process seems in order at this point…

Each branch of the legislature constructs a separate version of the new budget.  Once the Senate completes its version, a six member House-Senate conference committee is set up to work out the difference between the versions and to offer up a final, unified budget.  Almost always, this unified budget is quickly approved by the House and Senate.  Then the governor gets his hands on it.  With the assistance of his staff and cabinet, the governor goes through the budget, line by line and section  by section, vetoing the parts he disapproves of.  He then sends it back to the legislature, which reviews everything the governor has done and decides whether to accept the vetoes or to conduct override votes on them.  At least a two-thirds majority in both branches must vote to override any and each vetoed item for that item to remain in the budget, that is, to become law.  The override votes comprise the final step in the months-long process. 

...In the budget conference committee, the big question now lurking over the tax credit actually consists of three separate but related questions: 
First, is the House, as the originator by state constitution of all tax measures, willing to abandon its position that the budget is not the proper vehicle this year for increasing the tax credit?

Second, will the House go along with the Senate’s controversial approach to funding the increase by delaying a voter-mandated reduction in the state income tax rate from 5.15% to 5.1%, a reduction now set for implementation on Jan. 1, 2016?  (Remember, the increase would put a $145 million hole in the budget, a gap that must be filled with revenue from some other source to keep the overall $38-billion-plus state budget in balance.)  
Third, if the House accedes to the Senate on its approach to enacting and paying for the tax credit hike, will the governor, even though he strongly supports the hike, veto the budget section accomplishing that because he does not want to thwart the will of the voters?

Hard to believe the issue of lowering the income tax has been around for 15 years. 

It was in the year 2000 that voters approved a statewide ballot question requiring a gradual lowering of the income tax rate from 5.95% to 5%.  We’ve been hearing the words “voter-mandated reduction in the income tax” so long we've forgotten when we first heard them.
In 2002, the state was in a budget crunch and the legislature decided to stop, and to freeze, at 5.3%, the ongoing fall in the income tax rate.  The legislature also set up then a system of annual benchmarks concerning overall growth of state revenue.  Under that system, when benchmarks were hit -- as they have been hit in recent years -- the rate would be lowered in increments of .05%, per achieved benchmark.  That’s how we got to the current rate of 5.15%, and how we were on track to go to 5.1% in January: revenue has been growing at a good clip in recent years.

My guess is the conference committee will not include the tax credit increase in the final legislative budget because House leaders are not happy the Senate dealt with the issue this way. 

Don't forget that the House attempted, unsuccessfully, to get the state Supreme Judicial Court to rule that the Senate had overstepped its bounds when it tinkered with the income tax rate during the budget process.  That defeat has likely inspired the House to dig its heels in deeper on the subject now.
If it turns out I'm wrong, that the House conferees do accede to their Senate counterparts, I suspect the governor would veto the increase in the final legislative budget, despite having come out early in support of an increase.  He’ll veto it because:

One, he prefers to eliminate the state’s film tax credit as a way of covering the gap created by augmenting the Earned Income Tax Credit.
Two, he has always supported reducing the income tax rate to 5% and will not countenance a detour on the way to 5%.  (One has to wonder if the Senate Democrats didn't undertake this maneuver in part to put the governor into an uncomfortable spot -- to force him into a high-profile choice between a higher Earned Income Tax Credit and a reduction in the income tax?)

Three, he opposes all tax increases.

Four, he will not want to contravene the 2000 verdict of the voters on lowering the income tax, even though a plausible argument can be made that putting off an income tax cut is not the same as increasing the income tax.
That argument is, almost certainly, a non-starter with Charlie Baker.

NEXT : A look at the Senate floor debate in May on the Earned Income Tax Credit.

State Flag Pierces Dignity of Original Americans; Baker Open to a Do-Over

Friday, June 26, 2015

Governor Charlie Baker gave a jolt of energy this afternoon to an idea that’s been languishing at the State House for years and that came to the fore this week because of the racially motivated slaughter of nine African-Americans at a church in Charleston, South Carolina, last week.

That idea is to change the Massachusetts state flag because it is offensive to Native Americans.
For at least the last three legislative sessions, Assistant House Majority Leader Byron Rushing, D-Boston, has tried to move a bill that would set up a commission to look at redesigning the flag; so far, he’s made little headway.

There is not a large bloc of legislators actively defending the flag and vowing to preserve it as is.  It’s more a case of legislators being reluctant to initiate a change process on the ground, I presume, that, once you start tinkering with the official portrayal of historical events, where do you stop?
Yvonne Abraham heaved the idea into the spotlight yesterday in a Boston Globe column headlined “It’s no Confederate flag, but our banner is still pretty awful.”

Wrote Abraham, “Though the Massachusetts state flag is not as overtly abhorrent as the one that flies on South Carolina’s state capitol grounds, it is still pretty awful,” adding, “…It is hard to read it (the Massachusetts flag) as anything but a flag designed by and for the colonial conquerors who made the Bay State, the ones who won the land – with a short time out for Thanksgiving dinner – by all but eradicating the people who got here first.” 

The Massachusetts flag depicts a member of the Algonquin tribe on a shield beneath a disembodied right arm that wields a big sword.  Swirling round that shield is a ribbon on which is written, in Latin, words that mean, “By the sword we seek peace, but peace under liberty.” 
The images and words can too easily be perceived as evocative of King Philip’s War (1675-78) between the English colonists and the Wampanoag tribe that had befriended the English upon their arrival 55 years earlier at Plymouth.  In that war, the Wampanoag were allied with another tribe, the Narragansett.  The war ended, genocide-like, with but a small remnant of Wampanoag and Narragansett alive.

As for changing the flag, Governor Baker told the State House News Service, “I would say if there is an interest among the players, and there are many, to have a conversation on the flag, I would certainly be happy to participate in that.  It has been around for I think about 150 years and there is nothing wrong with taking another look.”
More than encouraging the governor to take another look, I’d ask him please to replace the flag with something that does not make one think we are reconciled to the notion of  annihilating the human beings who owned the splendid lands and waters that became the Commonwealth of Massachusetts.

Our state's name was adopted from the name of the peoples who lived here first, the Massadchuset.  That name, in turn, was derived from the word they had for the Great Blue Hill in Milton and Canton, a place spiritually significant to the ancient peoples. 

Commonwealth comes from common weal, which meant the common well-being, or the common good.
If I had a say, this is what I'd say: 

Mr. Governor and distinguished members of the Great and General Court, it's time for a new and better Massachusetts state flag.  The new flag, I believe, should solely bear an image of Massasoit, Chief of the Wampanoag, who helped to ensure the survival of the Pilgrims at Plymouth.  One of Massasoit's sons, Metacom, later became Chief of the Wampanoag. He was called by the English "King Philip." Chief Metacom was slain near the end of the terrible war that bears his name.  I ask you please to decree that, on our new Massachusetts state flag, beneath an image of a robust, dignified and proud Chief Massasoit, these words shall be inscribed:

Remembering Him, and Regretting the Fate of His People, We Strive Harder for the Common Good  

 

Suffolk University's New Prez More than Ready for Prime Time on Beacon Hill

Friday, June 19, 2015

Boston’s Suffolk University has a new president, Margaret McKenna, who served as president of Lesley University, in nearby Cambridge, for 22 years and was most recently the president of the Wal-Mart Foundation.   

McKenna is the first woman to lead Suffolk, which sits in the shadow of the State House and has traditionally enjoyed a close relationship with the powers that be on Beacon Hill.  It’s a neighbor-to-neighbor thing, but also an alumni-loyalty thing:  last time I counted (in December, 2012), 18% of the 200 members of the Massachusetts legislature were Suffolk grads.  In any given year, a significant number of legislative staffers will be pursuing law or graduate degrees in Suffolk’s evening division.  It’s just so easy for staffers to dash across the street at the end of the day to catch a class.  Lawmakers are famously lenient for letting staff go early, especially during exams. 
Among the many current legislators who’ve graduated from Suffolk are House Speaker Robert DeLeo and Rep. Angelo Scaccia, the longest-serving member of the House.  Secretary of State Bill Galvin is also a Suffolk alumnus, as is former U.S. Rep. Marty Meehan, outgoing president of UMass Lowell and  incoming president of the entire UMass system.   

Meehan is rumored to have turned down the Suffolk presidency when it was offered to him.  If that was the case, McKenna was the second choice of the Suffolk board of trustees, a 30-member group filled with Boston super-achievers and power brokers.  Come on down, Dan Conley, Bill Hogan and Jen Nassour!  And you, too, Jim Morris, Damian Wilmot, Roger Berkowitz, Julie Kahn, Marshall Sloan, John Fernandez and Bob Sheridan!
To her credit, McKenna took head-on the question of whether the board loved Marty more, and turned it with fun to her advantage.  In an interview with the Boston Business Journal’s Mary Moore in early May, McKenna said, “Was I first, second, third or whatever?  Marty Meehan is an alumni and he’s definitely going to be one of my fundraising calls.”  (Meehan is savvy enough to write McKenna a big check, and to call Bill Brett in for a photo when he presents it to McKenna on the Boston Common, State House gleaming in the background.)

Speaking of the Suffolk trustees, they obviously felt they made the wrong choice last time they chose a new, permanent president of the university.  President James McCarthy was let go last August with a year remaining on his first contract.  McCarthy is a brilliant man, a Ph.D. from Princeton with an impressive list of professional accomplishments, but he never moved up to the exalted role of Boston big shot created and left for him by David Sargent, who ruled the Suffolk roost for 21 years.
Suffolk board chair Andrew Meyer told the Boston Globe that McCarthy’s departure was amicable, saying McCarthy had “accomplished what he felt he could.”  I think that translates as: McCarthy was tired of butting heads with us, and vice versa.

Back to McKenna: this lady is a force of nature!  She’s an attorney with a law degree from Southern Methodist University, and has served as a vice president of Radcliffe College, a civil rights lawyer in the U.S. Department of Justice, a deputy counsel in the White House, and as an undersecretary of the U.S. Department of Education.  She was hugely successful at Lesley, which had 2,000 students when she started in 1985 and 10,000 students upon her departure in 2007. 
Another big reason to feel optimistic about the Suffolk presidency of Margaret McKenna: she’s a graduate of the frequently underestimated Emmanuel College, in Boston's Fenway district.  She has that in common with Mary Beth Cahill, once Ted Kennedy’s chief of staff and John Kerry’s presidential campaign manager, and with Middlesex District Attorney Marian Ryan.

At 70, McKenna projects the energy and drive of a person 30 years younger.  To the Boston Business Journal, she hinted strongly that she’s going to be an aggressive fund raiser.  “You ask for money,” she said.  “You can’t get money unless you ask for it.  We’ve got a great, large alumni base.  We need to engage them and get them excited about what Suffolk is today and go after them.”
A lot of that engagement, the “going after them,” I predict, will take place on Beacon Hill.  Most every legislator has an enviable list of donors.

 

 

 

  

Pipeline Foes Prone to Exaggerate the Ease and Likelihood of Exporting LNG

Wednesday, June 17, 2015

If fuel from the Marcellus Shale, perhaps the largest known source of natural gas in the world, is one day shipped through pipelines in Massachusetts and exported as liquefied natural gas (LNG) to Europe or elsewhere, should you care?

Opponents of new and expanded gas pipelines certainly want you to care. More precisely, they want you to be suspicious. 
Pipeline foes never seem to miss an opportunity to claim that the export of LNG is the ultimate objective of the companies proposing new gas pipelines. The web site of one opposition group, for example, claims there is “new potential for export (of gas) from facilities in Maine and Everett, MA.”

Pipeline foes imply that Massachusetts is a pawn in a bigger game, never mind that consumers here could save, collectively, hundreds of millions of dollars annually through lower bills for electricity if we had a larger, more dependable supply of gas, the fuel of choice now for generating electricity in Massachusetts.
By playing the export card, opponents obviously believe they improve their chances of blocking one or both of the pipelines now on the drawing board in Massachusetts.  If they have to exaggerate the possibility of America actually exporting natural gas one day, no problem.

Here’s what I think has been exaggerated, maybe wildly so:  
The potential to take gas from Pennsylvania, transport it by pipe to industrial complexes on the coasts of Massachusetts or Maine, convert it there to LNG by freezing it to 258 degrees (Fahrenheit) below zero, ship it and sell it overseas for a profit, and do that for the substantial span of years needed to ensure the financial viability of the entire multi-billion-dollar enterprise.

Before saying more, I must disclose that I perform work for pay on behalf of the Coalition to Lower Energy Costs: http://www.energycostcrisis.com/   
I also serve as a director of the Coalition, which advocates for the construction of two new gas pipelines in Massachusetts.  If built, those pipelines could deliver up to an additional 2 billion cubic feet (bcf) of gas per day to the region. 

Persons more knowledgeable (and objective) than I are convinced that 2 bcf more of gas would be enormously beneficial to the economy and to every working person in New England. 
Everyone should be concerned about the high cost of electricity in Massachusetts and how that cost inhibits economic growth, weakens the position of the Commonwealth in national and international marketplaces, undermines our standard of living, and casts a shadow over the futures of our children and grandchildren.  

Now, back to the exaggerations…
When pipeline opponents say there’s new potential for exporting shale-gas-converted-to-LNG from a facility in Everett, they’re apparently referring to the Distrigas terminal on the Mystic River, in the inner part of Boston Harbor, several hundred yards west of the Tobin Bridge. 

Physically, the terminal probably could be adapted to enable LNG exports.  But, local, state and federal authorities would never grant the permits needed to make those changes. 
At least since 9-11, there has been a quiet consensus among our political leaders and public safety professionals that Boston’s inner harbor is not a good place for an LNG terminal. 

LNG will never be exported from Boston Harbor.  Period.
The potential to locate a new LNG export facility measurably increases when you move up the coast to Maine and the maritime provinces of Canada.  Nevertheless, one still has to exaggerate the ease with which a facility could be built there if one wishes to speak confidently about how an LNG export terminal is bound to arise in Maine and/or eastern Canada once those pipelines are built in Massachusetts.

A new LNG export terminal in Maine or Canada could cost upwards of $4 billion to plan, permit and construct. There are serious doubts that any group of investors would finance a project that costly when there are many large (and competing) sources of natural gas in the world beyond North America.
You don’t have to take my word on this, or even listen to what I say.  Listen instead, please, to what the Belfer Center for Science and International Affairs said in a 2014 report, which was published as part of its Geopolitics of Energy Project. [Citation for report: Maugeri, Leonardo. “Falling Short:  A Reality Check for Global LNG Exports” Discussion Paper 2014-11. Belfer Center for Science and International  Affairs, Harvard Kennedy School. December 2014.]  It may be found in its entirety at:

Here’s a key excerpt from “Falling Short”:

“As for exporting gas to Europe, several doubts loom large about European capacity to absorb enough natural gas from the United States.  This stems not only from pricing considerations, but also from the sluggish demand for natural gas across Europe, which leaves less room for additional gas to the region, not to mention the attractiveness of higher prices in Asia for US LNG exporters.
“…it is highly probable that, faced with a significant amount of US LNG going to Europe, Russia, Algeria and other big European suppliers of natural gas might start a price war against American gas.

“Consequently, unless one can expect that the European gas price will increase substantially, investors in US LNG export schemes need to be careful about assuming that Europe will be a big market for US natural gas exports.”  [Bold face added]
“Falling Short” cautions that:

“…regardless how optimistic or pessimistic one may be about the continuation of the shale gas revolution, the possibility remains that US shale gas production will not be able to feed growing exports of natural gas, either for environmental reasons (for example, a ban on extending fracking to several areas of the United States), or for having reached the natural limits of shale exploitation at reasonable costs.”


 

New Senator Declined to Cash in on Ties to Obama, Service at White House

Friday, June 12, 2015

It was a little before 5:30 p.m. on Wednesday, May 20, when Eric Lesser, the pride of Longmeadow, the new senator from the 1st Hampden & Hampshire District, arose from his place in the Senate Chamber at the State House to deliver his maiden speech.  The upper branch was in the midst of its annual budget debate, the multi-day period during which it makes final changes to, and then approves, its version of the state budget for the upcoming fiscal year.

Only 30 years old and already a veteran of politics as it is practiced on the highest stage in the world, Washington, D.C., Senator Lesser had taken the oath of office as a legislator 133 days before.  This was not an exceptionally long spell for a new senator or a new representative to wait before giving his first speech on the floor.  (Thanks to the State House News Service, we know what he said; we have an historical record.)
“I come from the Pioneer Valley, the crossroads of New England, a strategic location between Albany and Boston, where George Washington placed the armory during the Revolutionary War,” he proclaimed. “We have been a manufacturing center.  We have also been one of the great engines of innovation.”

That great engine may have lost some of its once amazing power and be limping in the pitiless competition with many other great or greater engines around the world, but it is still running, unnoticed by most of us, and it is deserving of the attention and the assistance of the Commonwealth of Massachusetts, which was the point of Senator Lesser’s speech on May 20.
He had filed an amendment to the Senate budget, #328, which sought to increase by half-a-million dollars, from $945,000 to $1,445,000, the amount to be spent in FY 16 (July 1, 2015-June 30, 2016) on a pilot program to train unemployed and underemployed workers in Greater Springfield in the skills required to get a job in the high-technology-driven factories of today.

“The legacy of advanced manufacturing continues in our area: high tech, solar panels, components of wind turbines, advanced parts that leverage technology,” Senator Lesser said, noting that good-paying manufacturing jobs have always been the “ticket to the middle class” in this country.
“People (with such jobs) can buy homes, they can save for college, they can invest in their futures through these jobs,” he said. “That proud tradition extends ten generations in the Pioneer Valley.”

While manufacturing has declined in Western Massachusetts, as it has in every part of the U.S., Senator Lesser struck an optimistic note. (One would be chagrined if a promising young man or woman had not done so on the first occasion that the State House spotlight was shining exclusively on him or her.) 
“There is a vision for the future.  There is a path to reinvest in the industries and to reinvest in the middle class,” he said, “and that’s to marry our traditional history of a manufacturing center to the intellectual firepower of our schools.  There is a renaissance in making wind turbines, solar panels – all the things that fuel the modern economy.  It is projected that, over the next 10 years, there will be 44,000 vacancies in the manufacturing field – in a field that pays average salaries of $75,000 a year.”

Senator Lesser exhorted his colleagues to “imagine the wasted potential if we don’t take this on.”
He said, “Imagine the families that won’t be able to put a kid through college, buy a home, if we don’t take this on.  One of the most fundamental things we can take up is to address this skills gap, between the jobs that are being created and the people looking for work, not only in Hampden and Berkshire and Hampshire Counties, but in all of Massachusetts.”

The senator was on a roll now.  “Shared prosperity is our goal!” he declared.
“I would argue,” he added, “that so many of the challenges we face are connected to this fundamental challenge, which is a middle class that is increasingly squeezed.”

He asked, “In an economy where a 19-year-old can become a billionaire by creating an iPhone app, how do we create an economy for everybody else?”
He said, “We have to reinvest in our middle class.  Amendment 328 is a modest proposal.  It’s 1.5 million dollars.  It might not seem like a lot, but for the hundreds of people who will benefit from it, it’s the world to them.”

When he finished, all of the senators and all of the senate staffers in the Chamber, as is the custom for maiden speeches in the legislature, stood and applauded.  Many observing the budget debate from Senate galleries also gave him a standing ovation.
Then the clerk, at the direction of Senate President Stanley Rosenberg, a fellow champion of the Pioneer Valley, called the roll.  Thirty-nine senators were present; each voted yes on Amendment 328.  For a few moments, Senator Lesser could feel like the rookie who hits a home run in his first at-bat in the major leagues.

I like this Eric Lesser -- his set of mind, his imperatives of heart, his immunity to greed. 
In May of 2007, three days after graduating from Harvard, he joined the presidential campaign of Barack Obama as a baggage handler and advance man. He was so good at his job, so well organized and relentlessly conscientious and task-focused, that Obama predicted he would run a Fortune 500 company one day.  Lesser was only 22 years old when Obama won the White House and he joined the president’s staff as a special assistant to David Axelrod, Obama’s political guru, at a desk only a few steps from the Oval Office.  He would later become an aide to the President’s Council of Economic Advisors, and would remain in service to Obama until the fall of 2011, when he departed for Harvard Law School.  HBO hired him as an advisor to the series “Veep” during that time. (Former movie star and U.S. Senator Fred Thompson memorably likened acting  to "finding money on the ground;" advising actors has to be the next closest thing to that.)

Early in 2014, Lesser was considering various options when he decided to run for the state senate seat occupied by Gale Candaras, who had decided not to stand for re-election and to run for Hampden County Register of Probate.  (Candaras lost the Probate race by fewer than 300 votes.)   

Lesser could have used his connections to Obama and Axelrod, one of the top political and media consultants in the world, to land a lucrative job in the private sector.  Instead, he set his sights on a job in the legislature with a base salary of $60,032 per year. 
At Longmeadow High School, Lesser had been elected president of his class four years in a row, but the fall of 2014 would be the first time his name appeared on a public ballot. Geographically, the 1st Hampden & Hampshire is very large; socially and economically, it is very diverse.  The district includes all of Belchertown, East Longmeadow, Granby, Hampden, Longmeadow and Wilbraham, and parts of Chicopee and Springfield.  It’s hard for a veteran politician to get elected in a district like that, never mind a first-timer.  Lesser faced a very real risk of rejection and failure -- death by voter.

I like that, after having the run of the White House, Lesser didn’t feel too big for a back bench at the State House.  It says something about the proportionality of his ego that he can enjoy being on the streets of Wilbraham as much as the streets of Washington.
I like that he’s a sincere student of the Masssachusetts legislature and that he sees the formidable value and potential in being a state senator.  For example, besides wanting to revive manufacturing in the Pioneer Valley, he’s hoping to establish high-speed rail service between Boston and Springfield.  “For our economy to grow,” he says, “we need to better link ourselves to the red-hot economies in the eastern part of the state, and give families more opportunities to root themselves in Western Massachusetts.” 

If you get off the highways that crisscross Springfield and take a slow drive around the city, you’ll see a lot that will distress you.  Poverty has been entrenched in some areas for decades.  You’ll also see the city’s great natural assets, and you'll quickly grasp why they built Springfield where they did, at a commandingly beautiful point on the Connecticut River. 
You’ll see, as George Washington did when he chose it as the site of the arms factory needed to win the War of Independence, that it’s a natural inlands crossroads. You’ll see, as Senator Lesser and others do, why many more people would want to live on those gracious old streets above the Connecticut if they could get to their jobs in Boston by train in a little over an hour, a feat well within our engineering, if not our monetary, capabilities.
Legislatures are like all human organizations: they constantly need new blood. We’re witnessing again how the likes of a Lesser can make a legislature greater.

Feds Aim to Take Down Cambridge Lawyer Who Once Seemed Destined for Politics

Thursday, May 28, 2015

I read the news today of the federal indictment against Attorney Tim Flaherty, who once came close to winning the Cambridge-Everett seat in the Massachusetts Senate and now stands accused of tampering with a witness in a criminal case.  Oh, boy.

It was a big surprise to me that Flaherty was indicted. He’s smart and has always had his head screwed on straight.
Several years ago, my firm worked with Flaherty on case before the Cambridge Zoning Board of Appeals for a client we had in common.   It was a quick assignment, over in less than a month.  I have not had any contact with him since.  I doubt that he could up with my name if he bumped into me on a sidewalk or subway car. 

If I did bump into him, I’d shake his hand hard and try to project as much warmth as I could.  I like him, I trust him, I respect him.
A federal grand jury says Flaherty paid a man who was the victim of a bigotry-tinged assault and battery to stop cooperating with the authorities who were prosecuting the alleged perpetrator of the assault, thus making the case go away.  At the time of the alleged payment, Flaherty was serving as the alleged perpetrator’s attorney. 

Flaherty’s client was arraigned in Cambridge District Court on December 15, 2014.  That afternoon, according to the indictment, Flaherty called the alleged victim, apologized to him on behalf of his client, and “then offered the victim $1,000 to $2,000 if the victim was willing to tell the Middlesex District Attorney’s Office that he was too busy to appear in court and was not interested in cooperating with authorities.”
The indictment further states that:

  • On December 17, 2014, “…Flaherty called the victim and informed him that he had $2,500 in cash that he was prepared to give to the victim in exchange for the victim not appearing in court to testify against Flaherty’s client.”
  • “On or about December 23, 2014, at the direction of law enforcement, the victim called defendant Flaherty and accepted Flaherty’s offer of $2,500 in exchange for the victim advising the Middlesex District Attorney’s Office that he was too busy to appear in court and was no longer interested in the case.”
  • “On or about December 24, 2014, the victim met defendant Flaherty at a coffee shop in Medford, MA.  Defendant Flaherty provided the victim with an envelope containing $2,500 cash and instructed the victim, among other things, that if anyone ‘from the court’ contacted the victim, ‘just f***king ignore it because they will never bother you.’ "

It’s probably safe to assume that law enforcement was audiotaping the 12-23-14 conversation and both audiotaping and videotaping the 12-24-14 encounter in the coffee shop.  If so, it could be difficult for Flaherty to dismiss the accusations as a he-said/I-said misunderstanding.
The son of a former Speaker of the Massachusetts House, Flaherty, age 50, has many loyal friends and admirers.  Some were quick to defend him publicly after the indictment was made public yesterday afternoon.

Terrence Kennedy, a popular Everett-based attorney and member of the Governor’s Council, which approves judicial nominations, was quoted in the Boston Herald as saying, “…He (Flaherty) may have chosen his words poorly, but this is a good, honest lawyer.  I am outraged by the indictment.  I’m outraged by the way it was handled.  Criminal defense is a minefield, and any of us can get blown up.”
Flaherty’s defenders pointed out to the Herald that criminal defense attorneys offer settlements to accusers every day of the week.

I am inclined to agree with Councilor Kennedy.  If the case goes to trial, we’ll likely find there’s a great deal of ambiguity in the recorded conversations between Flaherty and the alleged victim.  I can’t believe Flaherty would approach a situation like this in the ham-handed way described in the indictment.
Regardless of what I think, Flaherty is in a huge heap of trouble.  When the feds decide to come down on you with their full power and resources, as they have with Flaherty, they can ruin you even if, ultimately, you are found innocent.  You will lose most if not all of your assets in paying for a necessary first-class defense.  You will lose so much shine from your professional reputation that you can never come close to recovering your full earning power.  And you will suffer the endless scorn of cynics who will always say you are crooked even though you were exonerated in a court of law.  Then there’s the toll a case like this takes on your physical and emotional well-being.  All ugly. 

Senate Wants to Spend $2 Million to Gain Much More Than That in Tobacco Taxes

Friday, May 22, 2015

Before long we could have a new, state-funded team of revenue agents targeting the illegal sale of tobacco products in Massachusetts, a surprisingly profitable criminal endeavor.

This past week, the Massachusetts Senate included $2 million in its version of the new state budget to create a “multi-agency illegal tobacco task force.”   The House of Representatives and governor still have to give their approvals before the expenditure can go forward.
The case for spending that money is convincing.  I’d be surprised if the envisaged task force is not up and running by the fall under the auspices of the Department of Revenue.  A specially appointed nine-member group known as the Commission on Illegal Tobacco, which studied the issue back in 2013-14, estimated the state could operate a 20-member task force on an annual budget of $2 million.

In recommending a new task force, the commission said “lost revenue from illegal tobacco distribution” ranged from $62 million to $246 million per year.  It noted that, if the state could recover even 10% of those sums, “revenue protection and enhancement of between $6.2 and $24.6 million” would result.  
In other words, a $2 million task force would pay for itself many times over.

Massachusetts is a hotbed of illegal selling of cigarettes, cigars and related products, such as chewing tobacco, for the simple reason that we tax the hell out of these products.  The higher the taxes on anything, the harder and more ingeniously some persons work to beat the system.
According to the commission’s formal report, submitted March 1, 2014, “Violators avoid paying the tobacco excise and sales taxes in Massachusetts in multiple ways, including individual bootlegging, organized wholesale domestic smuggling, international smuggling, and counterfeits,” that is, cigarettes made in unlicensed facilities and packaged for sale as established brands.

At $3.51 a pack, Massachusetts has the second-highest taxes on cigarettes in the U.S., behind New York, at $4.35 a pack. 
By contrast, Vermont taxes cigarettes at $2.62, the 9th highest rate; Maine at $2.00, 12th highest; and New Hampshire at $1.78, 18th highest. 

The other New England states, Rhode Island and Connecticut, have the third- and fourth-highest cigarette tax rates, respectively:  Rhode Island’s is $3.50, one penny below Massachusetts;  Connecticut’s is $3.40.
The Massachusetts legislature voted in 2013 to raise the per-pack taxes on cigarettes by $1 to $3.51.  The commission estimated the impact of that change at $157 million in annual additional state revenue.  The commission also estimated that the total cost of cigarette tax avoidance would rise by $24 million per year to $129 million.

Thus, the net advantage to the state of the new rate would be $133 million, ($157 million minus $24 million).
I’m sure there are folks who believe we’re overdoing it with tobacco taxes, that we’re forcing ordinary citizens into criminal behaviors by having the second-highest cigarette taxes.  Why can’t we be more reasonable, they probably wonder, like, say, Ohio, which has a per-pack cigarette tax of $1.25, the 28th highest in the nation?

I understand that view but I’ll never be won over by it.  Our “unreasonable” taxes have produced a smoking rate among Massachusetts high school students of 10.7% versus a national average among high schoolers of 15.7%. 
Anything that keeps kids off the cancer feed is good.