R.I. group recommends reduction in state income tax rates
1:15 PM Wed, Feb 04, 2009 | Permalink
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Governor Carcieri's tax-reform panel today recommended a sharp reduction in Rhode Island's maximum individual income tax rate, to 5.5 percent from the current 9.9 percent. The panel also recommended cutting the state's lowest individual income tax rate, to 3.5 percent from the current 3.75 percent. Because of these and other changes, most taxpayers would wind up paying less in personal income tax than they do now, said Paul L. Dion, chief of the state Department of Revenue's Office of Revenue Analysis. Those with more than $1 million in federal adjusted gross income would end up paying more, he said. Under the proposal, capital gains would be treated as ordinary income, the state's optional flat-tax system would be eliminated, and most tax credits would be scrapped. The panel recommended that the state continue to make available a credit for taxes paid to other states, a credit for lead paint abatement, the statewide property-tax relief credit, and an expanded earned income credit (which is essentially a tax break for the working poor). The panel held its final meeting today at the State House in Providence. It was appointed by Carcieri in May 2008 to come up with reforms to the state's overall tax structure. The group's final report probably won't be available for another 10 days or so, said the panel's chairman, Gary S. Sasse, who is also director of the Rhode Island Department of Revenue. 
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