What I have proposed is a comprehensive reform of our tax policy, a reform that makes the first move since 1932 toward progressivity in our tax structure, and, at the same time, provides the increased revenues needed to offset the effects of Proposition 2 1/2 and the Reagan budget cuts.
This plan increases the sales tax from the current 5 per cent to 6 per cent and broadens it to cover public relations, computer programming, and other business services for the first time. This will allow us to increase local aid by 20 per cent or $300 million over next year's budget, ensuring that police and fire protection are preserved in the cities and towns, and property owners aren't forced into raising taxes on themselves once again.
A generous tax credit of $70 for individuals, $140 for couples will more than offset the effects of the sales tax for most families. Further, to promote investment and savings, the tax on unearned income will be cut from 10 per cent to 5 per cent; the capital gains tax on monies reinvested in Massachusetts will be eliminated; and individuals will be allowed to earn up to $500 in interest on savings, a couple $1000, without paying taxes.
Finally, and, perhaps most importantly, to protect the working poor and those living on fixed incomes, the no tax brackets will be raised to $5000 for an individual, $10,000 for a couple.
On housing, I am proposing that we reclaim the abandoned housing in this state, and allow for the use of state pension funds and revenue bonds to finance lower than market rate mortgages so that the working people of this state will once again be able to afford a home. I have proposals for increasing co-operative housing and encouraging private investors to work with community groups and tenant associations, not only to increase the supply of housing, but to encourage greater participation in ownership or management of housing.
These proposals, I believe, constitute a beginning. They provide the basis for making the changes necessary to get us through the '80s and establishing a foundation for the '90s.
There's nothing evasive or coy about them. They don't pander to greed, resentment, or envy. They are not locked in the logic or the rhetoric of the '70s. They are the kind of proposal that made the Democratic party and made the middle class of this country, the kind of proposal that will serve the social, physical and economic well-being of the people of this state. True, they reflect changed realities, but they also reflect a constancy of purpose, and finally, a political honesty about who we are, where we are, and what we must do.