Backers of spending cap lose a key ally in Massachusetts

ONE of the world's oldest military and political strategies -- divide and conquer -- is thriving anew in Massachusetts. While it is too early for any bows, Gov. Michael S. Dukakis has to be delighted that a major force in the state's business community and the commonwealth's most aggressive band of tax-choppers will be going separate ways, at least for the next few months.

The governor, whose enthusiasm for revenue shrinking is at best inaudible, has persuaded the Massachusetts High Technology Council not to throw its weight behind a new drive to cut taxes through the ballot box. That leaves Citizens for Limited Taxation (CLT), the business group's partner in the 1979-80 campaign that led to Proposition 21/2, alone in pushing an initiative petition to curb state spending.

The early-August decision by the high-tech executives to sit out the campaign to collect the signatures has hardly jeopardized the effort's prospects. But it does pose a challenge to CLT leaders, including Barbara Anderson, its articulate, no-nonsense, executive director. She certainly was counting on the prestige of the council in circulating the petition.

Particularly encouraging to CLT, however, is the enthusiastic support of businessman Raymond Shamie, the 1982 and '84 Republican candidate for the US Senate.

The proposed initiative seeks a cap on state spending tied to the average increase or decline in Massachusetts worker salaries and wages during the previous three years. Also sought is repeal of the decade-old 7.5 percent surcharge on state income taxes.

At the same time the CLT is bent on cutting the current 10 percent tax rate on unearned income (other than salaries, wages, and bank interest) to 5 percent, the same rate as on earned income. That reduction would be accomplished in three stages between 1987 and '89.

Even were Governor Dukakis to support some sort of restrictive measure, legislative approval is uncertain. It will be particularly difficult to sell lawmakers on anything put a ceiling on what they could spend.

To be sure, the House has approved a three-year phase-out of the surcharge. But it is questionable whether the Senate will pass it.

Already collecting senatorial cobwebs is the $64 million one-time rebate on income taxes which Governor Dukakis proposed last January along with his fiscal 1986 state budget.

Part of the reason the High Tech Council elected to see what the legislature would do before taking the tax-pruning and revenue-curbing cases to the voters may be a mistake born of naivet'e.

At the same time, there is an understandable reluctance to become involved in a move that could displease the governor and legislative leaders. While some high-tech chieftains are not about to form a Dukakis admiration society, they can hardly overlook the current strength of the state's economy.

Were the High Tech Council to embark on an initiative-petition campaign to cut taxes, it could be politically awkward, since the proposal is aimed for the November 1986 ballot, on which Governor Dukakis is expected to seek reelection and could well be challenged by former Gov. Edward J. King.

Under such circumstances, cutting taxes and capping spending would almost surely emerge as dominant issues -- something Dukakis would hardly welcome, since it might divert attention from other matters or at least provide political ammunition to Republicans.

Thus, the council, by its current course, is keeping all options open. That, of course, is assuming the CLT gets the signatures needed to place its proposal on the ballot.

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