Wednesday, July 9, 2014

Massachusetts Legislature Approves Hiring Tax Credit Bill

The Massachusetts legislature on June 30 approved a bill that would provide a tax credit to employers who hire welfare recipients.
Massachusetts Governor
Deval Patrick (D)

The Democrat-controlled House voted 151 to 0 in favor of accepting the conference report of S 2211 ; the Senate had accepted the conference report on June 26 on a voice vote. Both chambers on June 30 then enacted the measure on voice votes and sent it to Gov. Deval Patrick (D).

Technically, the bill revives the state's long-dormant "Full Employment Program," which was adopted in 1995 to provide full-time employment in place of welfare benefits that a recipient collected from the state's Department of Transitional Assistance.

Under S 2211, employers who hire from the full employment program would be eligible for a healthcare subsidy. After receiving the healthcare subsidy for one year, employers would be eligible for a tax credit of $100 per month worked, per program participant hired, according to a legislature summary.

The maximum credit allowed for all years for the employment of each qualifying program participant would be $1,200; excess credit could be carried forward for up to five years, according to the 1995 law. The credit could be used against the personal income tax or the corporate income tax (also known as the corporate excise tax).

Nancy Kwan, spokeswoman for Senate President Therese Murray (D), told Tax Analysts on June 18 that the full employment program had remained on the books since enactment nearly 20 years ago but had not been fully funded. If the legislation is signed into law by Patrick, the program would be revived with $11 million in funding.

The tax credit is part of broader legislation aimed at overhauling the state's welfare system. "Through these reforms, we are helping recipients to get the tools and resources they need to live independently outside of welfare and closing existing loopholes in our system," Murray said in a joint legislative statement issued June 30. "However, as past experience shows us, we must remember that this is an issue we need to continuously revisit if we are to ensure a healthy system."

The bill also would:

  • provide an exception from state tax confidentiality statutes by allowing the Department of Revenue to disclose to another state agency the tax return information for individuals or households "if the agency certifies that the information is relevant to determining the eligibility of an individual or household for benefits which are provided by the agency"; and
  • require the Secretary of Administration and Finance to study current benefit systems and programs, including extending the earned income tax credit and the child and dependent care tax credit, "and any other programs deemed appropriate by the secretary that move individuals out of poverty and into situations of economic independence and autonomy." The report is due by January 5, 2015.

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