A New Proposed Income Tax Structure for Rhode Island
Here are the details of the new income tax brackets contained in the state budget that Governor Carcieri submitted to the General Assembly (Article 38)…
| RI Taxable Income Over | But not over: | Pay | + % | on excess Amount over: |
| $0 | $55,000 | $0 | +3.5% | $ 0 |
| $55,000 | $110,000 | $1,925 | +4.0% | $55,000 |
| $110,000 | $175,000 | $4,125 | +4.5% | $110,000 |
| $175,000 | $7,050 | +5.5% | $175,000 |
However, there are also proposed changes in allowed deductions, which a staff report from the Projo summarizes as…
- Treating capital gains as ordinary income. (In general, the state’s maximum capital-gains tax rate now is 1.67 percent, or 0.83 percent in some circumstances.)
- Ending the option to claim a variety of “itemized” deductions, such as those for mortgage interest, local property taxes and charitable contributions. Instead, all taxpayers would claim a standard deduction, the amount of which would be expanded.
- Eliminating most of the state’s tax credits and keeping four: the statewide property-tax relief credit; an expanded earned-income credit (essentially a tax break for the working poor); a credit for lead paint abatement; and a credit for income taxes paid to other states.
>>Treating capital gains as ordinary income. (In general, the state’s maximum capital-gains tax rate now is 1.67 percent, or 0.83 percent in some circumstances.)
So anyone trying to leave RI should best close the sale on their house before this takes effect, yes?
It’s hard to tell from the chart, but did not prior reports indicate that in effect they’re seeking to keep it all “revenue neutral” by raising income taxes on the middle class (under 100k or so) … merely to make Rhode Island “appear” better on Tax Foundation scoring?
In other words, rearranging deck chairs here on the RItanic rather than confronting the real issues of bloated government and welfare magnet social services and terrible public education.
We’re competing with MA and CT only to a limited degree – what we’re really competing against is the Southeast. We’ll still be uncompetitive.
Note today’s Wall Street Journal on this very subject:
http://online.wsj.com/article/SB124260067214828295.html
The Rhode Island government band plays on …