The budget as proposed benefits wealthy heirs at the expense of
low-income Rhode Islanders, according to an Economic Progress Institute
analysis of the House Finance Committee’s revenue and spending plan released
late last week.
The proposed budget would increase the exemption on the estate
tax from $921,655 to $1.5 million while eliminating $3.9 million in tax breaks
to low and moderate income Rhode Islanders. The budget lowers the Earned Income
Tax Credit and eliminates a property tax refund.
Unemployed homeowners and renters are
among the biggest losers, because they will no longer qualify for property tax
assistance and are not eligible for the earned income tax credit. Many of the
lowest-wage workers will also be negatively impacted by the loss of the
property tax refund, even with an eventual boost in the EITC.”
According to EPI, if you are a Rhode Island taxpayer who dies
with a million dollars, your heirs will owe $30,555 of their inheritance to the
state. The proposed budget would eliminate the estate tax for everyone who dies
with less than $2 million. Those heirs would owe $35,200.
On the other hand, the proposed budget would reduce the Earned
Income Tax Credit overall. According to EPI: “Lawmakers are reforming the
credit by reducing it to equal 10 percent of the federal EITC and making it
fully refundable.
This change is likely to result in larger refunds for some of
the lowest-wage workers in our state, and some workers who did not receive a
refund will now get to keep more of what they earn come tax time. Still, many
modest-income EITC filers with relatively higher income tax liability will pay
more in taxes as the credit is reduced.”
The budget plan also eliminates what is known as the “property
tax circuit breaker.” This tax refund is for Rhode Islanders who earn less than
$30,000 a year whose property tax rate is more than 3 percent of their
household income. 40,000 renters and homeowners took advantage of this
deduction last year for an average refund of $272, according to EPI.
“The $4 million being taken directly out of the pockets of low-
income taxpayers is money that would have been spent right here in the Ocean
State at local businesses,” said EPI Executive Director Kate Brewster. “On the
other hand, high-income households don’t need to spend every dollar they have
to meet their basic needs and are more likely to save their tax cut.”
Bob Plain is the editor/publisher of Rhode Island's
Future. Previously, he's worked as a reporter for several different news organizations
both in Rhode Island and across the country.
