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:

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?

Cheap, Efficient, Effective: The Lessons from the PVTA and WRTA

The MBTA is recognized as one of the best transit systems in the nation. It's not perfect, however: comparisons to other Massachusetts transit systems can indicate the MBTA's flaws and highlight the regional authorities' strengths.

Fare-Free Public Transit in Boston: A Holistic View

In recent years, ridership on bus routes which run through low-income areas has increased due to programs which have eliminated fares on those routes. With some politicians looking to expand this to all Boston transportation, it is important to remember that while public transit is good for society, it is not a public good.

Boston’s Budget: Wu and City Council Debate

Learn more about the details of the latest Boston operating budget proposal. Mayor Wu and City Council debate on specifics of the bill, such as cuts to different services vital to the city.

A Tale of Two Massachusetts: Wealth and Labor Differences Between East and West

This blog compares the income, wealth, and property values of western Massachusetts to those of eastern Massachusetts, highlighting the west's potential for growth.