– News covered by Quincy Quarry News.
December’s state tax haul plunges by half a billion dollars.
Add plunging state tax collections to a list of concerns that has recently grown to include a volatile stock market, rising interest rates and increasing talk about when the next recession may hit the fan.
Tax receipts for the month of December alone missed the monthly benchmark by more than half a billion dollars, erasing months of above-benchmark collections and leaving collections $108 million behind their targets midway through fiscal 2019, according to data released late Friday by the Massachusetts Department of Revenue.
Even so, explanations that one should not worry were offered.
“We underestimated the shift of estimated payments from December into January. Early indications are that other states may be having a similar experience,” noted Revenue Commissioner Christopher Harding via a prepared a statement.
Other key categories of receipts such as withholding, sales, and corporate taxes are flowing into state coffers near benchmarks, said Harding, and estimated payments, which are not due until January 15, are “likely to be stronger in January as a result of the shift,” Harding predicted.
“In prior years, many taxpayers chose to pay in December, to take advantage of the federal deduction for state taxes,” Harding said. “The 2017 federal tax reform reduced this incentive to prepay, by placing a $10,000 limit on the deduction for state and local taxes.”
Suffolk University professor of economics David Tuerck said the December numbers, however disappointing, “should come as no surprise.”
“After a very strong recovery in FY 2018, revenue growth is headed downward, in line with historical averages,” he said.