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:

McAnneny October Monthly Musings – Ballot Initiatives

Election season is upon us.  In a few short weeks, voters will…

Pioneer Institute Study Finds Wide Range of Approaches to Compliance with MBTA Communities Law

Lexington’s approach seen as a model BOSTON – As Massachusetts’…

Is Massachusetts at a Turning Point – 10 Data Points That Give Me Pause

Massachusetts tops the charts in many studies.  Best public…

Wrap Up of the Massachusetts Legislative Session – Or Is It??

The Massachusetts Legislature meets for two years beginning in…

Massachusetts’s Debt and Liability in 2023

In the last decade, Massachusetts has accrued billions of dollars in debt. However, despite a large amount of debt, both overall and per capita, the state's debt as a percentage of GDP is normal amongst its neighbors.

What’s Included in Massachusetts’ $5.2 Billion Housing Bond Bill?

On August 1, 2024, the Massachusetts state legislature finalized…

 The Largest Groups Driving Massachusetts’s Migration

With Massachusetts losing billions in taxable income every year due to out-of-state migration, it is important to understand the demographics causing the biggest losses.

Highest Paid State Employees in Massachusetts

Every year, Massachusetts spends billions on payroll. With some departments spending significantly more and some employees receiving salaries multiple times their peers', it is important to understand where this money is going.

Understanding the Trends in Massachusetts’ Sin Tax Revenues

Sin Taxes, which are taxes on goods and services that are considered harmful or immoral, have brought in a significant amount of revenue for Massachusetts.

Increasing Number of Retirees Driving Pension Expenditures

Pension expenditures in the two largest public pension systems are on the rise in Massachusetts, so it's important to understand the factors behind the growth in annual payouts, including an increasing average pension and an increasing number of retirees.

Where Does Massachusetts’ Pension Money Go?

Billions of dollars went to retirees in 2023 from the state's two largest pension funds. Not unexpectedly, the data show that the amount of money given to a specific retiree may depend on many factors outside of where the retiree used to work.

Pioneer Institute Statement on the Project Labor Agreement Provision in the Massachusetts Economic Development Bill

Governor Healey should veto a provision in the recently passed…