To Rhode Island’s seemingly weekly appearance on some list or another decrying its fiscal position or business environment, we can add one more walk of shame.
Kiplinger magazine has named the Ocean State the least tax-friendly state for retirees in the nation for the second consecutive year.
This ranking should be a warning to the state’s political leaders, especially those taking office after the coming election. Tax policy with regard to retirees is about more than the recently updated estate tax.
As Kiplinger pointed out, Rhode Island taxes social security benefits, pension income and has one of the highest property-tax bites in the nation. In a state whose population is old and not growing, this kind of approach holds the potential to add yet another fiscal disaster to the pile already in place – including the continuing unfunded long-term liabilities, high per-capita public debt and high unemployment rate – to name three. Just when the state needs to keep as many citizens as it can, they may decamp for warmer climes and more friendly tax environments.
It’s not that Rhode Island doesn’t have a good base to start from. Quality-of-life issues, from low crime to a beautiful natural environment and recreational activities, to an outstanding food culture, the Ocean State is a great place to spend time. But we need more than tourists or part-time residents.
A good place to start: exempting IRA and 401(k) withdrawals from income tax. People on fixed incomes (and who pay a lot in property tax) could use the break. And it’s one that might keep them here. •