Commissioner Amy Pitter presented DOR's revenue estimates for FY12 and FY13 in testimony heard Monday by the Ways and Means Committee at their annual Consensus Revenue Estimate Hearing.
The commissioner projected FY13 revenues at between $21.612 to $21.763 billion, up from $560 million to $683 million over the FY12 estimate of $21.046 billion to $21.080 billion.
Also presented to the legislators was DOR's FY13 briefing book, which is a treasure trove of economic analysis and forecasting.
The book is also the best single source document for DOR's view of capital gains tax collections, which over the years have proved to be exceptionally volatile and a trigger for deep revenue swings both up and down, so much so that legislation now enacted requires that any capital gains collection in excess of $1 billion go straight to the rainy day fund rather than into the general fund.
On pages 20-21, DOR outlines its estimates. Capital gains taxes increased from $500 million in tax year 2009 (down from $2.155 billion in tax year 2007) to an estimated $986 million in tax year 2010, an increase of nearly 100 percent.
On a fiscal year basis (tax years are calendar years; fiscal years run from July 1 to June 30 and span two calendar years) FY11 capital gains taxes are estimated at $991 million, an increase of $418 million or 73 percent from FY10.
DOR projects that capital gains will stay about the same in tax year 2011 at $986 million, but increase to $1.550 billion in tax year 2012.
On a fiscal year basis, that translates into estimated capital gains of $1.095 billion in FY12, an increase of $105 million over FY11, and capital gains revenue of $1.412 billion in FY13, an increase of $317 million over FY12.
Why the increase? DOR's forecast assumes that the Bush tax cuts will expire at the end of 2012, triggering a sell off of assets before the capital gains tax rate increases from 15 percent to 23.8 percent, along with the introduction of a 3.8 percent Medicare tax on realized capital gains included in the 2010 national health care reform law.
As a result, DOR forecasts an increase in capital gains of 57.2 percent in tax year 2012, and then a precipitous drop of 42.4 percent in tax year 2013.
Commute to work on the T, Commuter Rail or Turnpike? You may be eligible for a Massachusetts Commuter Deduction on your tax return! posted on Jul 16
The Commuter Deduction was enacted by the Legislature to cover specific commuter expenses. To help understand the deduction, the Department of Revenue’s DOR University has released an e-learning module explaining what qualifies for a deduction, real-life examples and how you can claim your commuter deduction …Continue Reading Commute to work on the T, Commuter Rail or Turnpike? You may be eligible for a Massachusetts Commuter Deduction on your tax return!
DOR Offers FREE E-Learning Course on Fraternal Organization Tax Responsibilities posted on Jul 9
Help get the word out! The Department of Revenue’s online DOR University has recently developed a new free e-learning course on the tax responsibilities of fraternal organizations. Fraternal organizations are considered a type of Chapter 180 Corporation, which are formed for charitable or other purposes. …Continue Reading DOR Offers FREE E-Learning Course on Fraternal Organization Tax Responsibilities
New Boat Owners: Don’t Get Landlocked This July 4th Weekend! posted on Jun 25
This is traditionally one of the busiest periods of the summer at DOR offices as new boat owners come in to pay sales taxes on their boats or other recreational vehicles, so they can enjoy the holiday weekend on the water. So, want to …Continue Reading New Boat Owners: Don’t Get Landlocked This July 4th Weekend!