By Mary Markos, Boston Herald | June 8, 2019
Almost $3 billion in state revenue hasn’t been collected over the years, according to a Herald analysis of state data, while legislators prepare to vote on the “millionaires tax” in an attempt to fatten the state’s wallet.
The lapse in collections remains as lawmakers are set to meet in a June 12 Constitutional Convention, where they will debate the Fair Share Amendment, which would add a 4% surtax on household incomes that earn over $1 million.
“Lawmakers should be looking at taxes already owed before they start imposing higher taxes for everyone else,” Massachusetts Fiscal Alliance spokesman Paul Craney told the Herald. “This isn’t insignificant money, this is revenue that would make a dramatic difference to the state budget if they would just go and collect it.”
The vast majority of that uncollected revenue, about $2.4 billion, can be traced back to the Department of Revenue as well as its Child Support Enforcement Division, according to data from the Comptroller’s Office.
While the DOR’s debts are categorized as uncollectible in comptroller data, the department maintains that it still considers tax debts collectible until the expiration of a 10-year statute of limitations or when written off in a legal settlement. A DOR spokeswoman did not answer multiple requests over a period of weeks for a total amount that has been written off and that has expired.
“The lack of transparency surrounding these deadbeat accounts is staggering,” said Mary Connaughton, director of finance and administration and government transparency at the Pioneer Institute. “While it’s certainly appropriate to protect the private information of those involved, it’s also reasonable to expect that bad debts, settlements and write-offs of public funds should be disclosed in a manner the public understands.”
The DOR also couldn’t provide a breakdown by tax type, according to the office, because uncollectibles are an “estimate” of how much of those tax receivables might never be collected. The Child Services debt involves decades of unpaid child support, interest and penalties owed to the state.
Massachusetts collected $1.1 billion more in tax revenue than anticipated in fiscal year 2018, Minority Leader Rep. Bradley Jones (R-North Reading) pointed out, saying that the juxtaposition to a call for more money, “leaves people scratching their heads.”
“It raises a serious number of questions from a policy standpoint and a philosophical standpoint. … It’s something we should be looking at doing,” Jones said. “That’s a huge number — one would like to think at least some of it is collectible.”
Trailing behind the DOR, the three largest uncollected accounts among state agencies are in the Department of Transitional Assistance at $55.9 million, the Executive Office of Labor and Workforce Development at $24.3 million and the Department of Public Health at $18 million, according to the Comptroller’s Office.
Another $30.5 million that has gone uncollected in the University of Massachusetts system is composed mostly of student bills, according to spokesman Colin Murphy, but he said the university will still collect a portion of that.
“There is an alarmist view of needing revenue. … If you listen to certain advocates and lawmakers, they’re desperate for more revenue because they just want to spend more money,” Craney said. “Here is a great opportunity to collect taxes that are supposed to be owed to the state. They should go collect that money before they even think about raising more taxes.”
Catherine Williams, a spokeswoman for House Speaker Robert A. DeLeo, said, “The speaker has expressed his support in the past for Fair Share. We await information from the Comptroller’s Office.”