TAX NEWS - June 2010
Rhode Island Tax: Governor Carcieri signs personal income tax reform plan into law
Governor Carcieri signed the legislation, passed by the General Assembly last week, during a ceremony Wednesday afternoon at the State House, amid a large gathering of legislative and business leaders.
The new law, which goes into effect Jan. 1, eliminates the optional flat-tax method of preparing individual income taxes, reduces the number of tax brackets from five to three and lowers the highest marginal tax rate, bringing it down to 5.99 percent from 9.9 percent.
Legislative leaders believe lowering the marginal tax rate will help make Rhode Island more appealing to companies looking to come to the state. It will help change the negative stigma that Rhode Island has of being a high-tax state.
"We are living in a mobile global economy. There are those people who will embark upon entrepreneurship … and they will shop around," said Senate Finance Committee Chairman Daniel DaPonte, D-East Providence, who sponsored the bill. "This is a plan that makes us more competitive with other states."
The law does away with itemizing deductions. But it allows for increases in the standard deduction for single adults, up to $7,500 from $5,700, and for married couples, up to $15,000 from $9,500.
Peter Asen of Ocean State Action, a coalition of community organizations and unions criticized the law, saying it does not do enough to help taxpayers. He said that some of the credits being eliminated, such as the mortgage-interest deduction, may hurt middle-class families.
"I think it's an enormous missed opportunity. It fails to address the biggest tax problems in the state, namely the property tax," Asen said. "That is the least fair tax. Whether you lose your job, or win the lottery, you still have the same property tax."
© 2009-2012 TaxRates.cc
2011 - 2012 Tax Rate Guide and Tax Help Website
