Public Statement on Implementation of the Charitable Giving Deduction

Share on Facebook
Share on Twitter
Share on
LinkedIn
+

Despite being awash in cash, the state Legislature just overrode Gov. Charlie Baker’s veto of a provision to delay by yet another year a tax deduction for charitable donations. Rep. Mark Cusack, House chair of the Joint Committee on Revenue, said “it doesn’t mean no, just not now.” If not now, when?

In 2000, Massachusetts voters approved by a 72-28 margin a charitable contribution tax deduction, which would allow taxpayers to recoup an additional five cents on the dollar in state taxes for a charitable gift, up to a maximum of $300. The deduction was suspended amid a budget crunch, and the legislature agreed that it would take effect when the state personal income tax was at 5 percent.

The income tax rate fell to 5 percent in January 2020. However, due to uncertainty about the impact of the COVID-19 pandemic on the state’s budget, Gov. Baker delayed the deduction’s implementation until 2022.

Last month, the governor vetoed a provision that would have delayed implementation of the charitable giving deduction yet again. According to Baker, “the combination of strong state revenues and serious needs facing non-profits and charitable organizations necessitates this tax deduction’s going into place.”

Why not incentivize those taxpayers who donate to contribute to their communities? The Massachusetts Nonprofit Network has estimated that a majority of charitable donations are from individuals with lower or middle-income backgrounds; so the charitable tax deduction would put money back into Massachusetts’ citizens pockets, no matter their socioeconomic status.

In 2019, it was estimated that the deduction could cost Massachusetts about $64 million in FY 2021, and about $300 million in full fiscal years after that. This sounds like a hefty number, but it must be put in a proper context.  If collections continue on the projected path, Massachusetts will collect about $31 billion in tax revenue in FY 2021. This surpasses forecast collections, which could lead to a substantial surplus at the end of FY 2021.

The people have spoken — 21 years ago. It’s time to let the voices of the many be heard.

Get Updates on Our Economic Opportunity Research

Related Content:

Pioneer Statement on Continuing Slide in Massachusetts’ Revenue

The Commonwealth’s tax collections continue to slide, totaling $3.594 billion in January, $268 million below what the state collected in January 2023, and short of the revised benchmark by $263 million. Massachusetts state government must live within its means by reducing FY2025 spending. The days of fiscal surpluses, unprecedented increases in year-over-year spending, and flowing federal aid have come to an end.

Pioneer Statement on Decline in State Revenues

The Commonwealth’s finances have stumbled hard in recent months, and based on a report the Department of Revenue (DOR) sent to the Legislature in January, the trend shows no signs of easing. Massachusetts needs a renewed emphasis on fiscal discipline and pro-growth policies to make the state economically competitive again.

Skill-based immigration could ease labor shortage

A recent Biden administration executive order that amends the Schedule A list, which identifies occupations experiencing labor shortages and allows immigrants in those occupations to expedite their employment in the U.S., could positively impact the hiring of skilled international workers for years to come — a welcome development as the country and Massachusetts struggle to attract talent amidst a worsening labor shortage.

My Musings on Massachusetts’ Fiscal Picture

Since the start of FY2024 on July 1, 2023, the state has experienced six straight months of revenues falling short of expectations. The single biggest factor is the unprecedented growth of the state budget since FY2021. The $15 billion increase in state spending contextualizes the seemingly modest projected revenue growth of 1.6 percent for FY2024 by highlighting that the base is very inflated.

Studying the Humanities in the 2020s

At a time of tumultuous and sometimes vitriolic debates on American campuses, here are seven guiding principles to help college student thinking about studying history or any other humanities subject.

The Massachusetts Workforce: Abundant Resources, Steep Challenges

Massachusetts features a strong workforce training system with abundant resources yet faces challenges in matching jobs and applicants, training youth, and attracting sufficient numbers of skilled immigrants, according to a pair of studies from Pioneer Institute.

Statement on Massachusetts Falling from 34th to 46th on Tax Foundation’s 2024 Business Tax Climate Index

Massachusetts policymakers should pay close attention to the latest evidence of the Commonwealth’s declining competitiveness. Last week, the Tax Foundation published its 2024 State Business Tax Climate Index, which showed Massachusetts’ ranking falling more than any other state, from 34th to 46th.

Pioneer Institute Statement on the State Legislature’s FY2024 Tax Relief Package

The recent advancement of a tax bill H. 4104, that is expected to be enacted by the Legislature this week after languishing for more than 20 months, puts Massachusetts taxpayers one step closer to realizing some tax relief. However, it may be too little to tackle the Commonwealth’s affordability and competitiveness challenges.

Poll: MA Voters Oppose Legislative Proposals to Change Tax Rebate Law

A strong majority of registered Massachusetts voters oppose a plan recently announced by state legislative leaders that would change the way tax rebates are distributed in Massachusetts under a state law approved by voters in 1986, according to a new poll sponsored by Pioneer Institute and the Massachusetts High Technology Council.

Changes to the Confounding Massachusetts Estate Tax

Policymakers on Beacon Hill have many visions of tax relief for this fiscal year, and all of them include changing the estate taxes. What are those changes, and what would their impact be?

An Examination of the Commonwealth Rainy Day Fund

Established in 1987, the Commonwealth Stabilization Fund has been a key component of the financial stability of Massachusetts. As of recently, it's seen spectacular growth. Why?

The Curious Case of the Missing Stabilization Funds

Stabilization funds are a key component of a municipality's financial strength, yet many towns (including Boston!) report no stabilization funds. Why is this?