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CLT UPDATE
Friday, November 8, 2013
Some welfare reform, maybe a little income tax cut
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After hours of meetings between House leaders and
liberal members and debate between Democrats and Republicans that
was contentious at times, the House passed a welfare reform bill
Wednesday night.
The House bill will likely head to a conference
committee with the Senate, which passed its welfare system changes
in June....
Critics of the current system say Massachusetts
lags other states in its work requirements for public assistance
enrollees and the system needs stronger checks and balances to
prevent benefit fraud and abuse. Lawmakers are also advancing new
supports to move welfare recipients off the rolls and into jobs....
As the chamber stood at standstill for much of
the afternoon and early evening, House Speaker Robert DeLeo and
House Ways and Means Chairman Brian Dempsey spent hours talking to
members of the progressive caucus in the House, before the bill
passed 152-0, as several amendments from both parties were adopted
by voice vote and many others were withdrawn....
Amendments sought by Rep. Shaunna O’Connell, a
Taunton Republican who has led the charge for more anti-fraud
measures in the welfare system, were voted down on party lines,
during a debate in which several Democrats heaped on indignation and
sarcasm.
“If we pursue this, we should probably organize a
secret police and have an agent go with the recipients and make sure
they get a job,” said Rep. Benjamin Swan, a Springfield Democrat,
spoofing an O’Connell amendment, which would require the DTA to
obtain a copy of a welfare recipient’s job application and “verify”
they are seeking work. He said, “I guess some of us have more trust
in the human being.”
Democrats greeted the broadsides with applause,
and Republicans defended their proposals and described them as, in
many cases, mere provisions for greater information from DTA.
“Every time we ask for reports these days, we're
mean. We're punitive,” said Rep. James Lyons, an Andover
Republican....
The Republican amendments that were brought up
for debate were roundly criticized.
Rep. Jay Kaufman, a Lexington Democrat, called
O’Connell’s job application amendment “abusive and offensive,” and
Rep. Anne-Margaret Ferrante, a Gloucester Democrat, suggested
another amendment for a DTA study on recipients who are green card
holders of less than five years would be an “embarrassing
punishment” and put a “scarlet letter” on those individuals – though
Republicans argued they only sought the number, not the names of
people in that category.
Rep. Ruth Balser, a Newton Democrat, said
amendments suggest welfare’s problem is “people ripping off the
system,” when she said it is actually “horrendous poverty.”
Republicans secured some quiet victories, as the
House adopted without debate Minority Leader Brad Jones’ amendments
to cut off benefits to people who spend 90 days a year out of state,
and another that required establishment of an all-electronic
benefits system by 2019....
The House adopted another Jones measure that
would prohibit people who would not be eligible under the more
stringent federal standards from receiving state public housing in
place of someone who does meet the federal standards.
State House News Service
Thursday, November 7, 2013
House adopts welfare reform bill after reshaping it
State tax collections in October rose 11 percent,
or $154 million above October 2012 receipts, the Department of
Revenue announced on Tuesday.
Collections over the first four months of fiscal
2014 are up $616 million or 9.5 percent over the same period in
fiscal 2013...
Tax collections in October surpassed the monthly
benchmark by $75 million, with business collections up $73 million
over last October and beating the monthly benchmark by $84 million.
Tax receipts over the first four months of the fiscal year are
running $273 million above benchmark.
State House News Service
Tuesday, November 5, 2013
Biz tax settlements propel October tax collections
The state’s recent surge in income tax
collections could prove a double-edged sword for Gov. Deval
Patrick and Massachusetts lawmakers as they scramble to plug
various holes in the current year’s budget. The reason: State
law mandates that, should the good times continue to roll, the
commonwealth’s income tax rate will automatically adjust down to
5.2 percent, effective Jan. 1.
What that will ultimately cost the state in
lost tax revenue is still up for debate, but the Department of
Revenue’s early estimates indicate the change will likely rip a
$60 million-to-$70 million hole in the fiscal 2014 budget when
all is said and done. That estimate is based on the net change
in tax collections that would result if the levy is lowered from
its current 5.25 percent rate. As things stand, the state is on
track to haul in about $13 billion in income tax receipts at the
current 5.25 percent rate....
Between July 1 and Oct. 30 — the first four
months of fiscal 2014 — Massachusetts tax collections totaled
$7.1 billion, a 9.5 percent increase from 2012’s corresponding
period and some $273 million ahead of prior forecasts. Roughly
half of those collections, some $3.89 billion, were from net
income tax receipts, which were up 7.4 percent year-over-year
and were around $90 million ahead of earlier estimates.
According to a state law passed in 2002, the
state’s income tax rate is set to automatically adjust down by
0.05 percentage points if certain collections benchmarks are
met. Those triggers will remain in place until a minimum
income-tax threshold of 5 percent is reached.
According to DOR, three of the law’s five
required revenue benchmarks have already been hit this year....
The DOR said its next confirmation statement
is scheduled for Nov. 15, and if necessary a final statement on
the November collections will be issued Dec. 16.
The Boston Business Journal
Thursday, November 7, 2013
State braces for $65M revenue loss as drop in income-tax rate
looms
Stay with us on this one, but CHEERS to the
state’s recent uptick in income tax collections.
Why is it good news that the state will
likely bring in $12 billion in income tax revenue this year?
Well, as the Boston Business Journal explains it, the robust
rate of collection this year will likely trigger a tax cut next
year.
“According to a state law passed in 2002,”
the Business Journal writes, the state’s income tax rate is set
to automatically adjust down by 0.05 percentage points if
certain collection benchmarks are met. These triggers will
remain in place until a minimum income-tax threshold of 5
percent is reached.”
So, be happy — you’ve likely been taxed into
a tax cut, though we’re sure lawmakers are already looking for
ways to recoup the “lost” state revenue. It won’t be lost, of
course. It will be back where it belongs — in the pockets of
taxpayers.
A Salem News editorial
Friday, November 8, 2013
Cheers, jeers for recent newsmakers
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Chip Ford's CLT
Commentary
On Wednesday night the Massachusetts House of
Representatives passed its version of welfare reform by a unanimous
152-0. It's a step in the right direction but still leaves too
many loopholes and opportunities for any serious taxpayer to feel
satisfied. Some of the amendments
CLT supported were adopted, but many reform amendments that
seemed obvious and clearly necessary were summarily rejected by the
Democrat majority.
Next, this House version just passed will need to
be "reconciled" with the welfare reform bill passed by the state
Senate in June. That'll require both bills being sent to a
six-member conference committee made up of senators and
representatives appointed by each chamber's leaders. With only 12
days left until formal sessions of the Legislature end for 2013,
this will likely occur next week.
"State tax collections in October rose 11
percent, or $154 million above October 2012 receipts . . .
"Collections over the first four months of
fiscal 2014 are up $616 million . . .
"Tax receipts over the first four months of
the fiscal year are running $273 million above benchmark . . .
"Between July 1 and Oct. 30 — the first four
months of fiscal 2014 — Massachusetts tax collections totaled
$7.1 billion, a 9.5 percent increase from 2012’s corresponding
period and some $273 million ahead of prior forecasts."
Tax revenue is pouring into the state's
coffers, so much so fast, that it's created a serious Bacon Hill
crisis: All those billions of our dollars piling up might
trigger another downtick in the state income tax rate
— gasp, it might again be
unavoidable!
The last time the Legislature found itself
unavoidably confronting this crisis was in 2011.
In the CLT Update of December 16, 2011 (Five
One-Hundredths of One Percent Tax Reduction: 45 more years before
voters, taxpayers prevail?) I wrote:
Twenty-two years after the "temporary, 18-month" income
tax hike from 5 percent, eleven years after the voters'
overwhelmingly demanded it be rolled back to its
historic rate, it will be reduced to 5.25 percent on
January 1st. Twenty-two
years after
the promise that the hike would be only "temporary," that
promise remains
broken.
Nine years ago
the Legislature unilaterally "froze" the voters' mandate
that it be rolled back to 5 percent, giving taxpayers
another Beacon Hill middle-finger salute. Instead of
returning the income tax rate to its historic 5 percent
in 2003, as 60% of the voters ordered in 2000, next
month the "freeze" will thaw for the first time — a
whole five
one-hundredths of one percent.
When it comes to defrosting a tax cut “freeze” we
Massachusetts taxpayers have no fear of global warming;
polar bears don't live long enough to be effected.
Five one-hundredths of one percent. That equates to
5/100ths of a penny on every dollar we pay in state
income tax. Pardon me for not popping the champagne
cork yet. As the Boston Business Journal concluded in
its closing understatement, "Yay."
At this rate — five
one-hundredths of one percent over nine years — the
celebration won't happen for another 45
years. The champagne can continue to age until 2057,
when the "temporary" tax hike will turn 68-years
old.
If you're wondering how to spend your .05 percent income
tax cut, just apply it toward the 25
percent sales
tax hike of 2009.
Last year the pols found a way to maneuver around
and avoid letting it happen again.
In the CLT Update of November 17, 2012 (Promised
income tax rollback "snuffed out" again) I wrote:
After hiking the income tax rate in 1989 — with
the promise that it'd be only "temporary," then revert
to its historic 5% — and
even after the voters in 2000 mandated that it finally
be rolled back to 5% —
twenty-three years later and going into Year
Twenty-Four, that false promise again will not be kept.
Never mind that last year the Bacon Hill pols couldn't
wiggle out of the arcane, convoluted formula they
created, had to reduce it by 5/100ths of one percent
(from 5.3% to 5.25%). Two years in a row of even such a
miniscule reduction was too much for them to allow. Two
years in a row might create expectations, hope that even
twenty-five years later we taxpayers could possibly be
closing in on their long-broken promise, approaching
what voters demanded a dozen years ago which the pols
simply refused to honor and accept.
Why am I not surprised?
I expect the state Department of Revenue's
machinery is cranking and smoking on Beacon Hill burning midnight
oil in a race to find another excuse for again breaking the 1989
"Temporary Income Tax Hike" promise, another dodge to again deny
taxpayers any amount of relief whatsoever.
Twenty-five years ago the
Legislature promised taxpayers that Beacon Hill's income tax
rate hike from 5% would be "only temporary" —
"would only be in place for 18 months and
that revenue generated would only go towards past bills."
A quarter of a century later the
promise remains broken, the rate is still above its historic 5%.
It's been thirteen years since
CLT put the income tax rollback on the ballot and voters
overwhelmingly demanded the rate be returned to 5%.
Eleven years have passed since the
Legislature gave that vast voting majority the middle-finger Beacon
Hill salute and "temporarily froze" the voters' ballot question
victory, replacing it with this arcane, convoluted formula that's
almost impossible to ever achieve.
The very least the insatiable pols can do is toss
us unwashed masses another crumb; reduce the income tax rate by
another one five-hundredths of one percent to 5.2 percent.
Pols brazenly lying to their constituents to get
what they want ("If you like your health care plan you can keep
your health care plan, period!") is becoming much too common
— and increasingly infuriating.
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Chip Ford |
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State House News Service
Thursday, November 7, 2013
House adopts welfare reform bill after reshaping it
By Andy Metzger
After hours of meetings between House leaders and liberal members
and debate between Democrats and Republicans that was contentious at
times, the House passed a welfare reform bill Wednesday night.
The House bill will likely head to a conference committee with the
Senate, which passed its welfare system changes in June. The House
added key provisions backed by Boston Mayor Tom Menino and the
liberal wing of the body along with several reporting requirements
backed by Republicans.
Critics of the current system say Massachusetts lags other states in
its work requirements for public assistance enrollees and the system
needs stronger checks and balances to prevent benefit fraud and
abuse. Lawmakers are also advancing new supports to move welfare
recipients off the rolls and into jobs.
House Democratic leadership agreed to allow public and private
education to apply to the welfare system’s work requirement,
increase from 30 to 60 days the period when applicants must commence
a job search, give more discretion to the Department of Transitional
Assistance on medical waivers for the disabled, and add assistance
in applying for Social Security – a requirement for those who
receive a disability waiver.
The new version of the bill also relaxes a provision that past
welfare recipients comply with a DTA plan while off benefits before
seeking those benefits anew.
As the chamber stood at standstill for much of the afternoon and
early evening, House Speaker Robert DeLeo and House Ways and Means
Chairman Brian Dempsey spent hours talking to members of the
progressive caucus in the House, before the bill passed 152-0, as
several amendments from both parties were adopted by voice vote and
many others were withdrawn.
“They spent hours engaging, not only myself, but also the
progressive caucus. There was a lot of us who really had a lot of
access and conversation,” Rep. Marjorie Decker, a Cambridge Democrat
who backed many of the changes, told the News Service. She said,
“What the leadership did is to say, we’re listening. Let’s talk, and
they made the changes we needed them to make, and I’m proud of
them.”
The bill did not include a change Decker sought to remove the
job-search requirement for pregnant women in their third trimester.
Amendments sought by Rep. Shaunna O’Connell, a Taunton Republican
who has led the charge for more anti-fraud measures in the welfare
system, were voted down on party lines, during a debate in which
several Democrats heaped on indignation and sarcasm.
“If we pursue this, we should probably organize a secret police and
have an agent go with the recipients and make sure they get a job,”
said Rep. Benjamin Swan, a Springfield Democrat, spoofing an
O’Connell amendment, which would require the DTA to obtain a copy of
a welfare recipient’s job application and “verify” they are seeking
work. He said, “I guess some of us have more trust in the human
being.”
Democrats greeted the broadsides with applause, and Republicans
defended their proposals and described them as, in many cases, mere
provisions for greater information from DTA.
“Every time we ask for reports these days, we're mean. We're
punitive,” said Rep. James Lyons, an Andover Republican.
The bill imposes greater requirements on welfare recipients to seek
work and adds job placement services and increased information
sharing in an effort to maintain the integrity of the system. It
includes $20 million in expenditures.
The Republican amendments that were brought up for debate were
roundly criticized.
Rep. Jay Kaufman, a Lexington Democrat, called O’Connell’s job
application amendment “abusive and offensive,” and Rep.
Anne-Margaret Ferrante, a Gloucester Democrat, suggested another
amendment for a DTA study on recipients who are green card holders
of less than five years would be an “embarrassing punishment” and
put a “scarlet letter” on those individuals – though Republicans
argued they only sought the number, not the names of people in that
category.
Rep. Ruth Balser, a Newton Democrat, said amendments suggest
welfare’s problem is “people ripping off the system,” when she said
it is actually “horrendous poverty.”
Republicans secured some quiet victories, as the House adopted
without debate Minority Leader Brad Jones’ amendments to cut off
benefits to people who spend 90 days a year out of state, and
another that required establishment of an all-electronic benefits
system by 2019.
"I am pleased that the House of Representatives has taken yet
another step toward achieving a taxpayer-funded Electronic Benefits
Transfer program which serves those citizens who are in need of
assistance, and who have taken the necessary and lawful steps to
secure those benefits,” Jones said in a statement. “The reform
package approved by the House demonstrates the majority party’s
recognition that by including Republican-led amendments aimed at
eliminating all levels and degrees of waste, fraud, and abuse within
the EBT program, we as a legislature can play a pivotal role in
facilitating a path to self-sufficiency for people currently
receiving assistance.”
The House adopted another Jones measure that would prohibit people
who would not be eligible under the more stringent federal standards
from receiving state public housing in place of someone who does
meet the federal standards.
The House passed a similar provision to its housing bond bill, but
it was dropped in the conference committee, and House Assistant
Majority Leader Byron Rushing previously argued it would exclude
many categories of legal immigrants and said, of the proposal, "I am
sure that if we had all been able to study that amendment, we would
not have overwhelmingly approved it.”
“Something very similar is in the Senate,” Massachusetts Immigrant
and Refugee Advocacy Coalition State Policy Director Shannon Erwin
told the News Service, saying if the provision becomes law it would
result in “domestic violence victims returning to their abusers.”
A member of the House progressive caucus said the caucus was “more
organized” heading into the welfare debate than it has been ahead of
other floor debates.
State House News Service
Tuesday, November 5, 2013
Biz tax settlements propel October tax collections
By Michael Norton
State tax collections in October rose 11 percent, or $154 million
above October 2012 receipts, the Department of Revenue announced on
Tuesday.
Collections over the first four months of fiscal 2014 are up $616
million or 9.5 percent over the same period in fiscal 2013, good
news for state budget managers who swept $160 million in budgeted
revenues off the table over the summer when they repealed a sales
tax on technology services.
The Patrick administration estimates that non-tax revenues, such as
federal funds and fee revenue, could fall $150 million short of
estimates. Revenue department officials attributed the jump in
October tax collections to one-time tax settlements and better than
expected estimated individual income tax payments and motor vehicle
sales tax collections.
Tax collections in October surpassed the monthly benchmark by $75
million, with business collections up $73 million over last October
and beating the monthly benchmark by $84 million. Tax receipts over
the first four months of the fiscal year are running $273 million
above benchmark.
The Boston Business Journal
Thursday, November 7, 2013
State braces for $65M revenue loss as drop in income-tax rate looms
By Craig Douglas
The state’s recent surge in income tax collections could prove a
double-edged sword for Gov. Deval Patrick and Massachusetts
lawmakers as they scramble to plug various holes in the current
year’s budget. The reason: State law mandates that, should the good
times continue to roll, the commonwealth’s income tax rate will
automatically adjust down to 5.2 percent, effective Jan. 1.
What that will ultimately cost the state in lost tax revenue is
still up for debate, but the Department of Revenue’s early estimates
indicate the change will likely rip a $60 million-to-$70 million
hole in the fiscal 2014 budget when all is said and done. That
estimate is based on the net change in tax collections that would
result if the levy is lowered from its current 5.25 percent rate. As
things stand, the state is on track to haul in about $13 billion in
income tax receipts at the current 5.25 percent rate.
The DOR’s lost-revenue estimate equates to around 0.2 percent of the
state’s $34 billion budget for fiscal 2014. That calculation
accounts for the tax-rate reduction taking effect for the final six
months of the fiscal year. On an annualized basis, the tax-rate cut
would likely cost the state around $130 million in lost revenue,
based on DOR estimates.
Despite its modest impact on total revenue, the required drop in the
income tax rate is ill-timed, as it is scheduled to occur just
months after lawmakers and Patrick repealed a controversial sales
tax on technology services. The repeal is expected to cost the state
around $160 million in budgeted tax revenue this year.
To be sure, many lawmakers were counting on the state’s
stronger-than-expected tax collections in the current fiscal year to
offset the lost revenue from the software-tax repeal.
Between July 1 and Oct. 30 — the first four months of fiscal 2014 —
Massachusetts tax collections totaled $7.1 billion, a 9.5 percent
increase from 2012’s corresponding period and some $273 million
ahead of prior forecasts. Roughly half of those collections, some
$3.89 billion, were from net income tax receipts, which were up 7.4
percent year-over-year and were around $90 million ahead of earlier
estimates.
According to a state law passed in 2002, the state’s income tax rate
is set to automatically adjust down by 0.05 percentage points if
certain collections benchmarks are met. Those triggers will remain
in place until a minimum income-tax threshold of 5 percent is
reached.
According to DOR, three of the law’s five required revenue
benchmarks have already been hit this year. To reach those
milestones, the state was required to reach or exceed tax-growth
targets in fiscal 2013 as well as the three-month periods that ended
Aug. 31 and Sept. 30. State officials confirmed Wednesday that each
of those targets were met. Based on October's collections, it
appeared as of this week that a fourth benchmark had been reached,
although DOR said official confirmation will not be issued until
Nov. 15.
In fiscal 2013, tax revenue growth was 3.99 percent, well above the
law’s threshold requirement of 2.5 percent. Likewise, in each of the
three-month periods that ended Aug. 31 and Sept. 30, tax revenue
outpaced the law’s required year-over-year growth threshold of zero
percent, according to DOR. To hit its fourth and fifth thresholds to
trigger the automatic decrease in the income tax rate, the state
must record inflation-adjusted tax revenue growth of greater than
zero percent for each of the three-month periods that end Oct. 31
and Nov. 30, according to the statute.
The DOR said its next confirmation statement is scheduled for Nov.
15, and if necessary a final statement on the November collections
will be issued Dec. 16.
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material is distributed without profit or payment to those who have expressed a prior
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only. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml
Citizens for Limited Taxation ▪
PO Box 1147 ▪ Marblehead, MA 01945
▪ 508-915-3665
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