The tax plan Governor Deval Patrick proposed this week would eliminate a flurry of personal tax breaks – from deductions for business lunches and charitable contributions to obscure provisions sparing taxes on settlements with coal miners and septic system upgrades. Administration and Finance officials stressed that under the governor’s plan, all taxpayers would see their personal exemption rate doubled – meaning many wouldn’t be taxed on the first $8,800 they make – and that they aim to simplify the tax code and eliminate special treatment for subsets of taxpayers.
Among the tax breaks that would remain untouched, though, are the earned income tax credit for low-income people, which costs the state about $132.3 million a year, and a film production tax credit that helps about 50 filmmakers save an average of $52,000 a year.
The sortable table below shows the tax breaks Patrick has proposed for elimination and, where available, the average amount a taxpayer is currently saving on the deduction.
-- Stephanie Ebbert
| Tax breaks for elimination | Revenue (mil) | Est. # of Beneficiaries | Avg. savings |
|---|---|---|---|
| Deduction for Employee Contributions to Public Pension Plans, Social Security and Railroad Retirement | $299.6 | 3,585,000 | $84 |
| Exemption of Capital Gains on Home Sale | $239.6 | 55,000 | $4,356 |
| Exemption of Interest on Life Insurance Policy and Annuity Cash Value | $210.8 | N.A. | N.A. |
| Deduction for Dependent Under 12 | $135.8 | 510,000 | $266 |
| Exclusion from Gross Income of Parking, T-Pass and Vanpool Fringe Benefits | $38.8 | N.A. | N.A. |
| Tuition Tax Deduction | $35.9 | 65,000 | $553 |
| Exemption of Premiums on Accident and Accidental Death Insurance | $23.7 | 1,970,000 | $12 |
| Exemption of Scholarships and Fellowships | $19.1 | 255,000 | $75 |
| Deduction for Child Care Expenses | $15.4 | 54,000 | $285 |
| Septic System Repair Credit | $12.5 | 11,000 | $1,139 |
| Health Savings Accounts exemption and deduction | $12.3 | 10,000 | $1,232 |
| Exemption of Premiums on Group-Term Life Insurance | $11.5 | N.A. | N.A. |
| Exemption of Dependent Care Expenses | $9.0 | N.A. | N.A. |
| Exemption of Workers' Compensation Benefits | $8.5 | N.A. | N.A. |
| Employer-Provided Education Assistance | $8.4 | N.A. | N.A. |
| Personal Exemption for Students Aged 19 or Over | $8.4 | N.A. | N.A. |
| Exemption of Meals and Lodging Provided at Work | $7.7 | N.A. | N.A. |
| Commuter Deduction | $6.7 | 225,000 | $30 |
| Exemption of Interest on Savings in Massachusetts Banks | $5.1 | 505,000 | $10 |
| Exemption of Certain Foster Care Payments | $3.1 | N.A. | N.A. |
| Credit for Removal of Lead Paint | $2.5 | 1,850 | $1,354 |
| Exemption of Rental Value of Parsonages | $2.1 | N.A. | N.A. |
| Renewable Energy Source Credit | $1.3 | 2,000 | $658 |
| Deduction for Adoption Fees; Employer-Provided Adoption Assistance | $0.5 | 1,000 | $486 |
| Expensing of Certain Capital Outlays of Farmers | $0.3 | N.A. | N.A. |
| Exemption of Payments Made to Coal Miners | Negligible | N.A. | N.A. |
| Exemption of Cost-Sharing Payments | Negligible | N.A. | N.A. |
| Discharge of Indebtedness for Health Care Professionals | Negligible | N.A. | N.A. |
| Archer Medical Savings Accounts (deduction) | Negligible | N.A. | N.A. |
| Clean-Fuel Vehicles and Certain Refueling Prop. | Negligible | N.A. | N.A. |
| Exclusion of Certain Prizes and Awards | N.A. | N.A. | N.A. |
| Qualified Retirement Planning Services | N.A. | N.A. | N.A. |
| Department of Defense Homeowners Assistance Plan | N.A. | N.A. | N.A. |
| Charitable Contributions Tax Deduction | N.A. | N.A. | N.A. |
| Deduction for Costs Involved in Unlawful Discrimination Suits | N.A. | N.A. | N.A. |
| Business-Related Entertainment Expenses | N.A. | N.A. | N.A. |
| Exemption of Income from the Sale, Lease or Transfer of Certain Patents | N.A. | N.A. | N.A. |
| Capital Gains Deduction | N.A. | N.A. | N.A. |
| Deduction of Capital Losses against Interest and Dividend Income | N.A. | N.A. | N.A. |
| Dependents Exemption where the Child Earns Income | N.A. | N.A. | N.A. |
| Nontaxation of Charitable Purpose Income of Trustees, Executors or Administrators | N.A. | N.A. | N.A. |
| Deductions and exemption for Archer Medical Savings Accounts | N.A. | N.A. | N.A. |
Sources: Massachusetts Executive Office for Administration and Finance, Department of Revenue Tax Expenditure Commission