JALSA in WGBH on Charitable Giving State Income Tax Deduction

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Excerpt from ‘We don’t want to make donations more expensive’: Mass. nonprofits decry income tax ballot question

An initiative that aims to lower the income tax to 4% from 5% over the next three years could appear on the ballot in November.

But according to state officials, the measure would not just lower state revenue. It would also wipe out a state deduction for charitable donations and increase a tax paid by several small businesses.

The charitable deduction was approved by voters in 2000, the same year voters approved a tax cut that decreased the rate from 5.95% to 5%.

According to the State House News Service, the 2002 law stipulates that “no [charitable] deduction shall be allowed in any taxable year unless the rate of tax ... in the prior taxable year was equal to 5 per cent.”

The deduction only took effect recently because that reduction to 5% didn’t take effect for two decades. In 2002, state lawmakers postponed its implementation, lowering the tax rate over time. In 2020, the 5% tax rate went into effect, but the charitable deduction was further delayed until 2023 due to the pandemic. [...]

Other effects of the ballot question

Aside from the charitable deduction, supporters and detractors of the ballot question have debated the effect of the loss of state revenue.

Cindy Rowe, president and CEO of the Jewish Alliance for Law and Social Action who is also a steering committee member for the union-backed progressive group Raise Up Massachusetts, said the measure would create a $5 billion dollar hole in the state budget.

“If you rely on state services, you will be feeling the impact of this ballot question. That means people who are low and moderate income earners, and that’s frankly almost all of us in this state,” she said. “It really is something that will benefit the rich corporate interests in our state and no one else.”

Raise Up Massachusetts is headed to the Supreme Judicial Court on Monday to in an effort to keep the question off the ballot.