As Rhode Island struggles to pull itself out of the recession many have been asked to sacrifice. Cities and towns have seen drastic cuts in state aid, schools have had their budgets cut, the poor have endured program cuts and public sector employees have had their benefits slashed.
Now it’s time to ask Rhode Island’s wealthiest residents to help out, too.
There are a number of bills before the General Assembly this year that would do this by creating new tax brackets for the state’s wealthiest residents with the most interesting one being a bill sponsored by Maria Cimini, D- Providence.
“We’ve really called on low and middle income Rhode Islanders to feel the pain of this recession,” Cimini said. “I don’t feel that we’ve called on upper income Rhode Islanders to feel that pain or share that sacrifice.”
Her bill, H7729, would increase the amount of income taxes people pay who make more than $250,000 a year from 5.99 percent to 9.99%.
“What this bill does is calls upon people who are better off to chip in during this time of economic crisis,” she said.
A similar bill proposed by Rep. Larry Valencia in the previous legislation was estimated to bring in about $130 million to the state coffers. That’s about a third as much as the landmark pension reform bill passed in the fall saved the state.
The bill would actual restore the tax rate to the exact level that former Governor Donald Carcieri cut it from (at the time, Carcieri said doing so would spur economic development in the state), except instead of being applied to everyone making more than $125,000 – or the richest 20 percent of Rhode Island – it would only apply to those who make more than $250,000 – or the richest 4 percent of the state.
Cimini’s bill also offers an economic incentive for the so-called job creators to actually creating jobs in the state. According to Cimini, the tax rate increase proposed in her bill would drop by one percentage point with every percentage point that the state unemployment rate drops. So if the unemployment rate drops from 10 percent to 9 percent, the tax rate increase would drop from 4 percent to 3 percent. The potential decrease would be capped at the same amount as the proposed increase.
“What this bill does if you do hire people and you do help to lower unemployment in Rhode Island,” she said, “we will recognize those efforts.”
Cimini said there are 37 co-sponsors of the bill – that’s almost half of the 75-member House of Representatives. On the Senate side, Josh Miller, D- Cranston, is expected to introduce similar legislation.
Similarly, Sen. Harold Metts, D-Prov, has introduced a bill that would increase income taxes on people making more than $500,000 by 3 percent. Even Gary Sasse, who helped orchestrate the Carcieri tax cuts, has said that he thinks taxes should be raised on Rhode Island’s wealthiest. But he suggested only raising taxes by less than 1 percent on those who earn more than $400,000 annually, which would only mean an additional $10 million in state revenue.