Pioneer Institute

Public Statement on Implementation of the Charitable Giving Deduction

/in , , , , , /by Pioneer Institute
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:

Supply Chains Understood: Covid’s Global Demand Stress Test

https://www.podtrac.com/pts/redirect.mp3/chtbl.com/track/G45992/feeds.soundcloud.com/stream/1148317750-pioneerinstitute-hubwonk-ep-78-supply-chains-understood-covids-global-demand-stress-test.mp3 This…

John Dearie: Halt Immigration? Fall Behind

This week on JobMakers, host Denzil Mohammed talks with John Dearie, founder and president of the Center for American Entrepreneurship, a Washington, D.C.-based research, policy and advocacy organization. Immigration is core to his mission to build a policy environment that promotes entrepreneurship because he knows all too well that the United States was and continues to be built by entrepreneurial immigrants who had the drive and determination to pick up, leave everything they know behind, and build a new life in a new homeland.

Competition Amongst States: How Tax Policy Drives Residents to Seek Better Value

This week on Hubwonk (our debut video & audio edition), Host Joe Selvaggi talks with research analyst Andrew Mikula about the findings from his recent report, A Timely Tax Cut, in which he explored the relationship between state tax rates and policy and the direction of interstate migration.

Bernat Olle Gets a Visa to Improve the World

This week on JobMakers, Host Denzil Mohammed talks with Dr. Bernat Olle, co-founder and CEO of Vedanta Biosciences, about his journey from Catalonia, Spain, to Cambridge, Massachusetts, where he continued his Chemical Engineering studies at MIT. Navigating the complex immigration system while seeking purpose in his career, he eventually found his calling and was lucky enough to remain in the U.S. to see it through: designing a new class of medicines to modulate the human microbiome. 

Rent Control Re-Explored: What the Past Can Teach the Future

Hubwonk Host Joe Selvaggi talks with economist and MIT Professor Chris Palmer about his research and analysis of the effects of rent control in Cambridge during its 25-year implementation and in the aftermath of its repeal.
Welcome to New Hampshire Sign: Live Free or Die

Study Warns that New Hampshire Tax Policies Would Exacerbate Impacts of a Graduated Income Tax

Drawing on migration patterns between Massachusetts and states like Rhode Island and Tennessee, Pioneer Institute is releasing a study showing a direct correlation between personal income tax rates and household domestic migration patterns between 2004 and 2019. The study suggests that instituting a graduated income tax will shrink the tax base and deter talented workers and innovative employers from coming to and staying in the Bay State.

Marathon Endurance Test: Leaders Pave the Way for Boston’s Return

Hubwonk host Joe Selvaggi talks with Boston Athletic Association’s CEO Tom Grilk about the leadership challenges of cancelling the world’s oldest continuous marathon, a $200-million benefit to the region involving eight municipalities and 10,000 volunteers, in the face of a pandemic - and how cooperation among stakeholders brought back the epic event to be run this October.

Study Finds SALT Deduction Cap, Graduated Income Tax Will Combine to More Than Double Tax Burden on Some Households

A provision of the federal Tax Cuts and Jobs Act of 2017 strictly limiting deductions for state and local taxes (SALT) will greatly exacerbate the adverse effects of a proposal to create a constitutionally mandated graduated income tax, according to a new study published by Pioneer Institute.

Jim Stergios on Why Immigrants Are Crucial to Our Success

This week on JobMakers, Host Denzil Mohammed talks with Jim Stergios, executive director of Pioneer Institute, about why Pioneer collaborated with The Immigrant Learning Center to produce this podcast. They discuss the overrepresentation of immigrants in terms of job creation in America, contrary to the myth that immigrants “take” jobs.

Economic Long Covid: Mixed Health Messages for Baystate Businesses

Hubwonk host Joe Selvaggi talks with NFIB’s Chris Carlozzi and Retailers Association of Massachusetts' Jon Hurst about the challenges and future prospects for businesses as they adapt to widespread consumer confusion caused by vague and often conflicting public health messaging from our political leadership.

Enduring the Maelstrom: Lessons from MassPort Leadership During 9/11

Hubwonk host Joe Selvaggi talks with author and former MassPort CEO Virginia Buckingham about her recently released book, On My Watch: A Memoir, which chronicles her experience leading the organization through 9/11 and the life and leadership lessons learned from that tragic day.

Jeff Goldman on How Immigrants Keep America Competitive

This week on JobMakers, Host Denzil Mohammed talks with Jeff Goldman, immigration attorney and Chair of Massachusetts Governor Charlie Baker’s Advisory Council on Immigrants and Refugees, about how best to ensure that highly skilled and innovative immigrants can remain in the U.S., start companies, and create jobs for Americans.