Welcome to the Massachusetts Department of Revenue's new blog. We hope to use this blog to carry on conversations with Massachusetts residents on matters related to taxes and revenues. The blog will also provide a forum to discuss city and town finances in accordance with the work done by the DOR's Division of Local Services. Please keep in mind that this blog is not the place for the airing of individual tax matters or for formal comments on DOR rules and regulations. Questions about individual tax matters should continue to be directed to DOR Customer Service, either by using the "Contact Us" information on the website or by calling Customer Service at 1-800-392-6089 or 1-617-887-6367.
Now, with that bit of business take care of, I'd like to take a few moments to put the state's tax revenue decline in some national context. It is a natural response for residents of Massachusetts to stay focused on what happens here, but it is also worth noting that our tax revenues are declining more or less in step with other states' revenues.
The Nelson A. Rockefeller institute of Government, a nationally respected source of independent research on state and local governments, recently reported that all regions of the country were experiencing declines in personal income, sales and total tax collections in the period January-March 2009. Nationwide, tax revenue declined 12.6 percent. In Massachusetts, the overall decline in this same three-month period was somewhat steeper at 16.8 percent, driven largely by a declines of 18.7 percent in personal income tax collections. Why such a steep decline in the personal income tax? Besides and increase in unemployment and underemployment, both of which reduce wages and thus income tax collections from wages, the loss of an estimated $1.5 billion in capital gains tax income over the course of the fiscal year is the largest single factor for the decline. The exceptionally sharp decline in capital gains tax receipts for the Commonwealth this year is the result of the stock market crashes of last fall, and underscores the volatility of capital gains tax revenues.
When declines in personal income tax are combined with declines in sales tax collections due to weak consumer demand, and with reduced corporate income tax collections due to declining corporate profits, the picture of shrinking state revenues comes into clearer focus. In the fiscal year that ended June 30, 2008, Massachusetts collected a record $20.888 billion in state taxes, including nearly $2.2 billion in income taxes paid on capital gains. For the year ending June 30, 2009, we are currently projecting a much smaller collection of $18.4 billion, including a capital gains collection of just $500 million, and an even smaller collection of slightly less than $18 billion for the fiscal year that will end June 30, 2010, again with a collection of just $500 million in income taxes paid on capital gains.
These dramatic declines in revenue have precipitated a robust discussion in Massachusetts about budget cuts, reductions in services and the creation of new revenues to partially fill the hole left in the budgets of cities and towns that rely on the state for local aid payments. This type of discussion is taking place in virtually every state in the nation thanks to the ongoing national economic downturn.
The Department of Revenue reports monthly on tax collections and we will comment here on those reports as they become available. The next scheduled report on revenue will be issued on, or by June, and will be available on our website.
DOR + Social Media — #CheckUsOut posted on Jul 28
State tax administration might not deliver such seismic news events as LeBron’s eagerly-awaited announcement of his return to his old Cleveland team, but knowing what’s going on at any given moment in the tax world could save you some time and effort, and maybe …Continue Reading DOR + Social Media — #CheckUsOut
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