From the Executive Director

from NewsLink, Vol. 1, No. 2, Winter 1997

Compassion tax credits, what we like to call "the next step of welfare reform," received a thorough review at our December 12, Washington, DC forum, Compassionate Welfare Reform: Empowering Charities and Private Citizens. Thanks to superb speakers, a thoughtful audience and generous media attention, including coverage on C-SPAN, many more people now appreciate the compelling arguments in favor of the tax credit.
But the work continues. We are pressing forward with our family advocate pilot program. Our plan is to test the feasibility of compassion tax credits through a pilot program implemented at a state level. Theory is one thing; theory plus empirical evidence is better. The pilot program will provide much-needed information on what works and what doesn't work.
One desired pilot program site is, of course, Massachusetts. We are working toward this end.
But other states could prove fertile. In February, I traveled to Arizona at the invitation of State Representative Mark Anderson to speak before the state legislature on tax credits. The Arizona poverty rate for 1995 logged in at 16.1% nearly three points above the national rate. Like other states, Arizona has initiated welfare reform measures, but is paying serious attention to tax credits. I strongly urged the legislature to avoid tokenism in considering this idea to use tax credits specifically to privatize a substantial part of its welfare budget or to adopt a serious pilot program, such as ours, to test the feasibility of full-fledged implementation.
Shortly, I will travel to Michigan to suggest that they consider a test of tax credits through a pilot program. And reformers in Pennsylvania have also expressed an interest in an expanded state-level tax credit program.
This flurry of activity demonstrates that advocates of the compassion tax credit have no intention of working in the shadow of federal welfare reform.

The pilot program will provide much-needed information on what works and what doesn't work.

It is an idea that has captured the imagination of policy makers and the media. (Recently, The Economist, the prestigious British weekly, ran a favorable profile of Sen. Dan Coats, who has filed charitable tax credit legislation on Capitol Hill.)
Under the guidance of Dr. William F. O'Brien, Jr., a BHI resident scholar, we surveyed the executive directors of private charities in six states that currently offer modest tax credits. We found that 88% of them believe that tax credits would help them help the poor. They also believe that a tax credit would increase voluntarism at their organizations.

Meanwhile, as the President and Congress mull targeted tax cuts and believe it or notcapital gains tax cuts, the states are moving ahead with their own versions of tax relief. Using our STAMP tax modeling program, BHI recently advised the State of Oklahoma that by reducing workers compensation premiums by 10%, the state could increase perÜcapita personal income and create thousands of new jobs. Tax cutters in Iowa have asked us to examine the effect of a tax cut on employment in their state.
Social Security is no longer the third rail of politics. A number of recent publications and studies strongly suggest privatization of the nation's social insurance program. We're happy to review Promises to Keep: Saving Social Security's Dream by Marshall N. Carter and William G. Shipman. Shifting to a private system and empowering employees with personal savings accounts could be a boost to the nation's economy. Moreover, the Bay State's seasoned mutual-fund companies are well positioned to manage this new capital. That could mean more jobs for Massachusetts.
The Beacon Hill Institute's website (http://bhi.sclas.suffolk.edu) continues to expand. For your convenience, we've included the transcripts of the entire proceedings from our December forum. Feel free to read and download the proceedings. And let us know what you think.

NewsLink is the quarterly newsletter of the Beacon Hill Institute for Public Policy Research at Suffolk University. © 1996-2002. All rights reserved.

Revised on 9/9/02 3:54 PM


The pilot program will provide much-needed information on what works and what doesn't work.