Rhode Island: Gubernatorial Candidates Know a Good Idea When They See It


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While the current holder of the office may still be in denial about the best ways to deal with his state’s continued fiscal woes, it now appears that most of the major gubernatorial candidates in Rhode Island support an idea whose time has come. Most would repeal – or at the very least, suspend further changes in – the state’s alternative flat income tax.  

As the Rhode Island Poverty Institute explains, the alternative flat tax was originally enacted in 2006 and gives Rhode Island taxpayers two choices. The first choice is using all available deductions and exemptions and paying taxes using a set of graduated rates that range from 3.75 percent to 9.9 percent or. The second choice is applying a single flat rate to federal adjusted gross income with no exemptions or deductions.  For tax year 2009, the flat rate is 6.5 percent, but it is scheduled to fall to 5.5 percent by tax year 2011.  

At present, only about 9,000 taxpayers choose to use the alternative flat-tax approach, but virtually all of them are among Rhode Island’s wealthiest taxpayers and all of them, by definition, see an enormous reduction in taxes by using the alternative approach.  In other words, repealing the flat tax would not only generate significant revenue for the Rhode Island budget – as much as $53 million according to the Providence Journal – but would also improve tax fairness substantially.

Here’s hoping that Rhode Island doesn’t have to wait until it has a new governor to see such a change made.

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