MassBudget: Previewing the FY 2021 budget debate

Previewing the FY 2021 budget debate RON GILBERT / CREATIVE COMMONS / FLICKR.COM/PHOTOS/23161425@N08 In preparation for the Fiscal Year (FY) 2021 budget debate, the Massachusetts Budget and Policy Center (MassBudget) is publishing a series of four major stories to watch. These include whether lawmakers will pass a targeted tax cut to help working families, how the state will fund its newly-passed K-12 education funding overhaul, how the state will generate revenue to revamp its aging transportation system, and how revenue changes and assumptions will determine how much funding the budget can include. This series kicks off today with a brief that considers whether the Baker-Polito Administration will reboot its proposal to double a tax deduction people can claim based on how many dependents (like a child or grandparent) they have at home or whether lawmakers will adopt a measure that would give a better bang for the buck. The Administration earlier proposed to double the state's dependent deduction, from $1,000 to $2,000, which would cost the state $87.5 million per year. This proposal will only save families up to $50 per dependent in taxes. For about the same cost, the state could increase the Earned Income Tax Credit (EITC) by 10 percentage points - from the current 30 percent match of the federal credit to 40 percent. "The EITC is a proven way to move people out of poverty, boost long term health, and educational outcomes," said Phineas Baxandall, Senior Policy Analyst and author of the brief. "Compared to increasing the dependent deduction, an increased EITC would better help those who need it most." Read more about the Administration's proposal and the EITC in FY 2021 BUDGET PREVIEW: Will the Governor reboot his dependent deduction proposal or take a more targeted approach? Additional briefs in the FY 2021 Budget Preview series will be published into the week of Jan. 20. The briefs will be posted http://massbudget.org/budget.php. Once the Governor releases his budget, MassBudget will publish a Budget Snapshot highlighting some of the key stories in the proposal. MassBudget also will update its interactive Budget Browser, which allows users to track the funding for each line item going back to FY 2001. The Massachusetts Budget and Policy Center (MassBudget) produces policy research, analysis, and data-driven recommendations focused on improving the lives of low- and middle-income children and adults, strengthening our state's economy, and enhancing the quality of life in Massachusetts. MASSACHUSETTS BUDGET AND POLICY CENTER 1 STATE STREET, SUITE 1250 BOSTON, MA 02109

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MassBudget: Businesses Avoid $1.4 Billion in 2019 Tax Amid Decades-Long Decline in Corporate Income Tax Share

New MassBudget Report Analyzes the State of Corporate Taxes in the Commonwealth

Businesses Avoid $1.4 Billion in 2019 Tax Amid Decades-Long Decline in Corporate Income Tax Share Despite rising corporate profits, taxes on those profits deliver smaller share of MA tax total Over the past 40 years, revenue collected from corporate excise and related taxes has dropped by a third as a percentage of total state tax revenue in Massachusetts, according to the latest report from the Massachusetts Budget and Policy Center (MassBudget). At the same time, the report finds, corporations across the nation are claiming an ever-growing share of all the income generated in the U.S. According to the report, Rising Profits, Falling Tax Shares: Fixing What's Broken, multiple factors have contributed to the long-term decline in the share of state taxes provided by corporate income taxes. The tax rate on most corporate income in Massachusetts was reduced from 9.5 percent to 8 percent between 2009 and 2012. Growth in the number and cost of state special business tax breaks also has played a role, as have increasingly aggressive tax avoidance efforts by corporations. Key report findings include:  During the last decade, Massachusetts corporate income and related taxes delivered an average of 10.6 percent of total state tax collections, compared to an average of 16 percent in the 1980s; Businesses would have contributed another $1.4 billion in taxes to the Commonwealth in FY 2019 had Massachusetts' corporate excise tax collections remained at the share of total taxes they provided throughout the 1980s (about 16 percent of the total); Massachusetts corporations are seeing a reduction in their annual federal tax bills of around $4 billion due to the 2017 Tax Cut and Jobs Act;  Massachusetts is in the bottom fifth of all states in terms of the share of total state and local taxes paid by businesses "At a time when profits are soaring, taxes on those profits should not be delivering a smaller slice of our total tax pie. Kids, commuters and communities across the state need profitable corporations doing business here in Massachusetts to step up and do more, not less," said Marie-Frances Rivera, President of MassBudget. Interested in learning about state-level policy options that would help restore the share of state taxes collected through taxing corporate income? Read the full Rising Profits, Falling Tax Shares report, click here.   http://massbudget.org/report_window.php?loc=Rising%20Profits%20Falling%20Tax%20Shares.html Other reports from our series on corporate taxes have been flagged on our website here.  http://massbudget.org/taxes.php The Massachusetts Budget and Policy Center (MassBudget) produces policy research, analysis, and data-driven recommendations focused on improving the lives of low- and middle-income children and adults, strengthening our state's economy, and enhancing the quality of life in Massachusetts. MASSACHUSETTS BUDGET AND POLICY CENTER 1 STATE STREET, SUITE 1250 BOSTON, MA 02109

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MassBudget: Statement on Proposed Gas Tax Increase

October 30, 2019 Statement on Proposed Gas Tax Increase  Statement by Marie-Frances Rivera, Massachusetts Budget and Policy Center President, in response to discussions on increasing the gas tax:  With congested highways, antiquated public transit, and limited transit options outside of Greater Boston, the Legislature and business community are debating the merits of increasing the gas tax to modernize our state's transportation system. It is critically important to understand that not only would this increase hit low and middle income communities the hardest but it would draw on a source of transportation revenue that will likely decline over the long term. Our report, 14 Options for Raising Progressive Revenue, outlines a variety of fair and sustainable ways we can raise revenue, including raising corporate taxes. These options ask those who are benefiting most from economic growth to contribute a little more to help bring our transportation system into the 21st century. If policymakers decide to raise the gas tax, increasing and expanding worker tax credits, such as the Earned Income Tax Credit, can create a financial buffer for some who would be hardest hit by a gas tax increase. Interested in learning more about the pros and cons of higher gas taxes? Read our latest report here. The Massachusetts Budget and Policy Center (MassBudget) produces policy research, analysis, and data-driven recommendations focused on improving the lives of low- and middle-income children and adults, strengthening our state's economy, and enhancing the quality of life in Massachusetts. MASSACHUSETTS BUDGET AND POLICY CENTER 1 STATE STREET, SUITE 1250 BOSTON, MA 02109

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MassBudget: Gas Tax Hikes May Challenge Long-Term Revenue Sustainability and Equity

Gas Tax Hikes May Challenge Long-Term Revenue Sustainability and Equity Read Our Latest Report Examining The Pros and Cons of Higher Gas Taxes Raising Massachusetts tax revenue by increasing the state's gas tax would hit low- and moderate-income residents hardest and may be a shrinking source for the state's long-term transportation goals. If policymakers decide to increase the gas tax, its impact could be offset with tax credits for low-and moderate-income households. Our latest report, The Pros and Cons of Higher Gas Taxes, and How They Could be Offset for Lower-Income Families, models how an increase to the state's Earned Income Tax Credit (EITC) can create a financial buffer for low- and moderate-income families that would be most impacted by an increased gas tax. For example, a 10-cent increase in the gas tax, now at 24 cents, could be offset by an 8 percentage point increase in the EITC, which would benefit families in the lower 40 percent of household earnings. Net revenue to the Commonwealth would be lower, but the financial impact on lower-income households would be offset by the tax credit. Among the report's highlights: A 10-cent tax increase would represent almost 0.20 percent of income for the lowest-income fifth of households, while households with the highest-income 1 percent of incomes would contribute less than 0.001 percent of their income in gas taxes. Offsetting the impact of a 10-cent gas tax increase on lower-income families would require an 8-percentage point increase to the state EITC match, reducing the revenue gain by $75 million. Including all state and local taxes and fees, the U.S. average gas tax nationwide is 36.17 cents - almost 10 cents above the Massachusetts total rate of 26.54 cents. The number of gallons of gasoline taxed in Massachusetts used to grow substantially faster than the population. For the last two decades the number of gallons taxed per person has declined. The Earned Income Tax Credit (EITC) is a refundable tax credit for low-income working families that supports about 400,000 households in Massachusetts. "This paper identifies how increasing the Earned Income Tax Credit could support low-income families who'd otherwise bear the greatest brunt of a gas tax increase," said Stephanie Ettinger de Cuba, Executive Director of Children's HealthWatch.   https://childrenshealthwatch.org/  "The EITC is one of our most successful programs at keeping working families out of poverty, with large benefits for children's health and education and maternal mental health. If the increase to this program was large enough, it could be a win-win." There has been discussion in recent months about a potential increase to the gas tax, last increased in 2013. "Transportation for Massachusetts supports a 25-cent gas tax increase to improve roads, bridges, and transit statewide. To help address equity concerns, it makes sense to pair this increase with low-income tax credits such as a stronger state EITC," said Chris Dempsey, Director of the Transportation for Massachusetts https://www.t4ma.org/ advocacy coalition. To read the full report, click here http://massbudget.org/report_window.php?loc=GasTax_Pro-Con_2019.html The Massachusetts Budget and Policy Center (MassBudget) produces policy research, analysis, and data-driven recommendations focused on improving the lives of low- and middle-income children and adults, strengthening our state's economy, and enhancing the quality of life in Massachusetts. Connect with us on Facebook and Twitter.

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MassBUdget: Concentrated Poverty Affects 90,000 Massachusetts Children

Economic Growth Doesn't Reach All Neighborhoods in the Commonwealth

90,000 Kids in Massachusetts Live in Concentrated Poverty New Data Highlights How Concentrated Child Poverty Persists Despite Economic Growth  Did you know that more than 1 in 16 children live in concentrated poverty in the Commonwealth? Using recent data from the U.S. Census Bureau and the Annie E. Casey Foundation's data snapshot, we examined how concentrated poverty has affected children across the state despite a long period of national economic expansion. In Massachusetts, living in high-poverty neighborhoods affects six percent of all children, and these neighborhoods are mostly in the Gateway Cities and the City of Boston.  Our new snapshot on concentrated poverty in the Commonwealth http://massbudget.org/reports/pdf/Concentrated%20Poverty%20(002).pdf "Growing up in high-poverty neighborhoods has long-term impacts on our kids," said Marie-Frances Rivera, MassBudget's President. "All children and families deserve quality education, housing and access to opportunity. Investing in solutions that uplift children in poverty will create the change needed for everyone in the Commonwealth to thrive." Growing up in a community of concentrated poverty - that is, a neighborhood where 30 percent or more of the population is living in poverty - is one of the greatest risks to child development. Alarmingly, more than 8.5 million children live in these settings. That's nearly 12 percent of all children in the United States. Children in high-poverty neighborhoods tend to lack access to healthy food and quality medical care and they often face greater exposure to environmental hazards, such as poor air quality, and toxins such as lead.  Financial hardships can also cause chronic stress linked to diabetes, heart disease and stroke. And when these children grow up, they are more likely to have lower incomes than children who have relocated away from communities of concentrated poverty. Children should be allowed to learn and grow no matter where they live or their socioeconomic status. Policies at the community and state level that can have a significant impact on the lives of children in struggling families include: Fixing our "upside-down" state and local tax system so that those who have benefited most from our economic growth pay their fair share and invest in the public good to ensure a bright future for our children; Providing equitable education funding so that opportunity is available to young people from all communities and backgrounds to give them the chance to succeed; Ensuring that all our neighbors and family members have the same opportunities to thrive regardless of immigration status; Investing in our public transit systems, roads, and bridges to allow everyone access to economic opportunity and jobs; and Guaranteeing that all workers can earn decent wages to help keep a roof overhead, provide for their families, and receive dignity and respect from their employers. MassBudget thanks the Mass. Association for Community Action (MASSCAP) for supporting our research on poverty and their work in calling on national, state and local stakeholders to act now to help families lift themselves out of these circumstances.  Interested in learning how you can help combat child poverty? View the snapshot here and join the conversation with us online @MassBudget.  The Massachusetts Budget and Policy Center (MassBudget) produces policy research, analysis, and data-driven recommendations focused on improving the lives of low- and middle-income children and adults, strengthening our state's economy, and enhancing the quality of life in Massachusetts.  Connect with us on Facebook and Twitter.

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MassBudget: FY 2020 budget provides education funding increase, includes some revenue

Read our report of the final FY 2020 budget

September 27, 2019 FY 2020 budget provides education funding increase, includes some revenue As lawmakers finalize the Fiscal Year (FY) 2020 budget, here is a look at the key stories from this budget cycle. Throughout the FY 2020 budget debate, two questions rose to the top: Will the FY 2020 budget adequately fix the state's outdated school funding formula? Will the FY 2020 budget include adequate revenue to pay for important investments? For K-12 school funding, the FY 2020 budget gets closer to what it actually takes to provide a high quality education to all Massachusetts students. However, it does not include a multi-year plan to update the education funding formula. In the coming weeks, the Legislature will debate a recently released multi-year plan to update the formula for our K-12 schools starting in FY 2021, which could increase state funding for schools by $1.5 billion in 7 years when fully implemented. (For a detailed look at just the FY 2020 budget for school funding, see the K-12 Education section of the analysis.) The FY 2020 budget does include some anticipated revenue from recently enacted policy changes and from expected growth of existing revenue sources. These tax and non-tax revenue sources are expected to deliver $504.4 million in additional revenue in FY 2020. A number of already-scheduled tax cuts and other revenue losses, however, will eliminate most of this half billion in anticipated and proposed gains (see the Revenue section of the report for details). The big revenue story in the FY 2020 budget, however, came not from the revenue proposals in the budget itself, but from the surprisingly strong tax collections through FY 2019 and how these affected the FY 2020 budget. Collections in FY 2019 exceeded earlier projections by more than a billion dollars, which allowed lawmakers to boost the funding for many programs and services, while also adding to the state's Stabilization Fund. Yet there is a real question of whether these strong tax collections will continue into FY 2020 and beyond. Read the full analysis here http://massbudget.org/report_window.php?loc=Analyzing-the-Final-Budget-FY-2020.html The Massachusetts Budget and Policy Center (MassBudget) produces policy research, analysis, and data-driven recommendations focused on improving the lives of low- and middle-income children and adults, strengthening our state's economy, and enhancing the quality of life in Massachusetts. MASSACHUSETTS BUDGET AND POLICY CENTER 1 STATE STREET, SUITE 1250 BOSTON, MA 02109

Massachusetts Budget and Policy Center, 1 State Street, Suite 1250, Boston, MA 02109 Sent by rwilliams@massbudget.org in collaboration with Try email marketing for free today! Funding for early education and care in the FY 2020 budget