Response to Rep. Hunter of Washington State
Another day, another misfired STAMP critique.
Despite what people believe about models, they remain, in the absence of sound analysis, the best tool to assess the costs and benefits of tax policy changes. More.
Massachusetts State Tax Revenue Forecast
BHI Forecast: Driven by strong income growth, state tax revenues to rise this year and FY 2015
(Boston, MA) – The Beacon Hill Institute at Suffolk University (BHI) estimates that Massachusetts state tax revenues will come in at $23.283 billion for Fiscal Year 2014, 5.3% above FY 2013. Meanwhile, revenues will be $25.132 billion for FY 2015, 7.9% above FY 2014.
The 7.9% increase for FY 2015 is largely driven by a surge in personal income. The New England Economic Partnership projects state personal income to increase by 6.0% in Calendar Year (CY) 2014 and 6.7% in CY 2015. Read more.
Complete Forecast (PDF)
Press Release (PDF)
Press Coverage: WBUR 12/11: Experts See Rising Tax Collections In Mass.
Response to Critique of BHI's Renewable Portfolio Standards studies
An Appeal to Facts in a “Fact Check”
In their attempt to defend subsidies for green energy, supporters rely on Keynesian arguments to promote policies that will provide much-needed spending in an economy. The assumptions made by advocacy organizations such as the Union of Concerned Scientists are likely to hold only in the short run, if at all. Other arguments often made by critics of BHI's RPS studies have failed repeatedly to address the underlying basics of economics. Ultimately, while BHI sets out to soundly operationalize the true costs and benefits of projects like wind energy, green energy advocates fail to adequately put the relevant numbers to their claims. Read A Response to the Union of Concerned Scientists Critique of BHI’s Renewable Portfolio Studies
What Really Matters in Economics
How to think about job creation and spending: A primer
Policymakers and opinion leaders across the political spectrum seek to increase spending in the economy via regulation. However, the popular view of the relationship between spending and how it relates to unemployment and inflation is often wrong. Both sides should recognize that the purpose of any regulation should be to maximize economic efficiency and growth rather than increasing spending to create jobs. If policymakers aim to eliminate slack in an economy, they should use other more direct and effective methods of reaching the optimal level of spending. In his new study, How to Think About Job Creation and Spending: A Primer, BHI adjunct economist Ryan H. Murphy disentangles the confusion.
Without cost saving reforms, public sector unions pose future liability crisis for states
(BOSTON - May 23, 2013) A one percentage point increase in the unionization of a state’s public sector workforce is associated with an additional $78 of state and local government debt per capita. Meaning, if a state’s public sector unionization were to fall from 50% to 49%, that is associated with a fall in the public debt by $78 per person living in the state. Thus states with higher public sector unionized workforces are more likely to face higher levels of state debt. These are the findings of a new study from the Beacon Hill Institute at Suffolk University.
The Great Recession of 2008 left state and local governments exposed to structural deficiencies that threaten their ability to deliver basic public services in the future. For years, state and local governments took the easy path of not raising taxes or cutting spending to accommodate generous compensation packages negotiated through collective bargaining.
The study first finds that a one percentage point increase in the unionization of public sector employees is associated with an additional $78 of state and local government debt per capita. For instance, 59.8 percent of public sector employees in Massachusetts are unionized. So, the strength of unions in Massachusetts leads to an additional $4,672.17 of state and local debt per person. With its population of 6,587,489 people, Massachusetts faces about $31 billion in debt. More than 31 percent of Massachusetts’s debt is attributable to the strength of public sector unions. Read more.
Proposed tax increases for infrastructure and education in the Commonwealth:
An economic analysis
The current version of the state legislature’s proposed budget will diminish economic activity less than the Governor’s original House 1 proposal. This is the finding of a new study from the Beacon Hill Institute at Suffolk University.
Applying its State Tax Analysis Modeling Program (STAMP), the Institute compared both budget proposals and found that the legislature’s plan would destroy fewer jobs and investment and impose a far lighter claim on real household disposable income. In summary, the model found that the Governor’s proposal would:
• Raise $1.876 billion in new tax revenue
• Reduce employment by 17,800 jobs
• Shrink real disposable income by $1.2 billion, or by $480 per household
• Lower investment in the state by $120 million. Read more.
Press Release (PDF)
12th Annual State Competitiveness Report
Still on top, Massachusetts again ranks first in BHI measure of economic growth and income
BOSTON - (April 4, 2013) Massachusetts once again secured the top spot on the 12th Annual Beacon Hill Institute’s State Competitiveness Index. Traditional strengths in human resources, technology and openness buoyed Massachusetts for the second straight year.
The BHI competitiveness index is based on a set of 43 indicators divided into eight
sub-indexes – government and fiscal policy, security, infrastructure, human resources, technology, business incubation, openness, and environmental policy. The breadth of the BHI index distinguishes it from more narrowly-focused measures of competitiveness that target only taxes, high tech, or economic freedom. The index, which measures the ability of a state to promote economic growth in the form of higher personal income, was first published in 2001.
North Dakota finished second, followed by Minnesota, South Dakota, Utah, Colorado, Texas, Washington, Virginia and Kansas. While the rankings in sub-index measures were far from uniform, states that paid attention to fostering a well-educated and healthy workforce scored well. It also helps for a state to be business-friendly with reasonable labor costs and an environment with consistent firm births as well as sizeable bank deposits which signal local investment. More
Complete Report 2012
Press Release with Rankings (PDF)
BHI Study: MA public sector pension system puts taxpayers at risk
(BOSTON - February 25, 2013) Under current assumptions made by the Commonwealth, fully funding the three largest public employee pension funds would require the state to make the equivalent of mortgage payments of $1.3 billion a year for the next 30 years. Moreover, the taxes that would be required to meet this annual obligation would destroy jobs, investment and disposable income. This is the finding of a new study from the Beacon Hill Institute at Suffolk University (BHI).
Macroeconomic conditions call into question the ability of the state to realize 8.25 percent returns for the funds that it manages. Viewing these unfunded liabilities as mortgage payments over the next 30 years offers a clearer perspective of the true costs to the taxpayer.
The vast change in the ratio of expected liabilities to expected assets, or unfunded liability, for these pension funds over the course of a period of underperforming years shows how the underlying assets and assumptions applied to these assets can create distinctly different predictions of the pension’s viability. More
Complete Study (PDF)
Press Release (PDF)
Fiscally Illiberal: State and local projects cannot create jobs responsibly
Complete Paper (PDF only)
Defining a tax method by increasing personal allowances: A comparison with the 2006 Spanish Personal Income Tax
Complete Paper (PDF)