State Rep Proposes Raising Estate Tax Exclusion to $1.5M
Tuesday, January 25, 2011
A state rep has proposed increasing the amount of money that is excluded from the Rhode Island estate tax, in the wake of a study that claimed the tax was driving the wealthy to leave the Ocean State for states like Florida, where there is no estate tax.
Rhode Island currently excludes estates of approximately $850,000 or less from the tax—which is the lowest threshold of any New England state.
“Rhode Island’s low exemption is backfiring on us if people really are leaving the state because of it,” said Rep. Deborah Ruggiero, D-Jamestown and Middletown.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLAST“I’m sure it was set there with the hope that it would generate money for the state, but if people leave the state to avoid it, not only is the state losing the tax on their estate, but first we’re losing the revenue from all the other taxes they’ll pay to the state and their city or town in their lives, including income taxes, sales taxes and property taxes,” she added. “That’s a losing proposition for Rhode Island, especially at a time when we face state budget deficits in the hundreds of millions of dollars each year.”
The study, done by the Ocean State Policy Research Institute, found that the state had lost $4.6 billion in wealth from 1995 to 2007, resulting in a loss of $540 million in state and local tax revenue. (The study has not gone unchallenged. Click here to read about the debate it has generated.)
Ruggiero has introduced legislation to raise the exclusion from $850,000 to $1.5 million. The exclusion has already been raised once—from 675,000 to $850,000 in 2009. (It is also indexed to inflation, so the current exclusion level is actually $859,350.)
“The estate tax is a small business issue,” Ruggiero said. “If you have to write a check for $65,000, that could be two jobs in your company. My legislation is aimed at keeping those people and jobs in Rhode Island, where they will continue contributing to our state.”
