Study finds R.I.’s poorest residents pay more taxes than wealthiest

A RECENTLY RELEASED STUDY FROM the Institute on Taxation and Economic Policy and the Economic Progress Institute found that the Rhode Islanders with the lowest income pay 12.5 percent of their income toward taxes, compared with the wealthiest residents, who pay 6.3 percent. / COURTESY INSTITUTE ON TAXATION AND ECONOMIC POLICY
A RECENTLY RELEASED STUDY FROM the Institute on Taxation and Economic Policy and the Economic Progress Institute found that the Rhode Islanders with the lowest income pay 12.5 percent of their income toward taxes, compared with the wealthiest residents, who pay 6.3 percent. / COURTESY INSTITUTE ON TAXATION AND ECONOMIC POLICY

PROVIDENCE – A new study says that taxpayers in the lowest-income bracket in Rhode Island can expect to pay nearly twice as much of their income toward state and local taxes as the wealthiest 1 percent.
The study, “Who Pays?”, was released Wednesday by the Institute on Taxation and Economic Policy and the Economic Progress Institute.
It found that the Rhode Islanders with the lowest income pay 12.5 percent of their income toward taxes, compared with the wealthiest residents, who pay 6.3 percent. The lowest income is defined as nonelderly making $19,000 or less, while the top bracket features incomes of $411,000 or more.
It also said Rhode Island ranks fifth worst in the nation for taxes on the poor, up from ninth place two years ago. No other New England state ranked among the 10 worst states. Washington topped that list with poor families paying 16.8 percent of their total income in state and local taxes, followed by Hawaii (13.4 percent); Illinois (13.2 percent); Florida (12.9 percent); Rhode Island, Arizona and Texas (12.5 percent each); Indiana and Pennsylvania (12 percent) and Arkansas, (11.9 percent).
“This study underscores why Rhode Islanders who are struggling in our low-wage economy should be the number one priority for any tax relief efforts considered in the coming year,” Kate Brewster, executive director of the Economic Progress Institute, a nonpartisan research and policy organization, said in a statement.
Brewster said last year lawmakers enacted tax reforms for Rhode Islanders at both the top and the bottom of the income ladder. At the top, significant estate tax breaks – totaling $18 million – were enacted for those inheriting over 1 million dollars. At the bottom, she said property tax relief was eliminated for most low-income renters and homeowners and the state’s Earned Income Tax Credit was reduced and made fully refundable.
“Making our state’s Earned Income Tax Credit fully refundable last year was a first step towards making our tax structure fairer. This year we hope to see the EITC increased to at least be on par with our neighboring states who allow working families to keep more of their paycheck,” Brewster said.
Rhode Island was recognized for progressive features of its tax code, such as a graduated personal income tax structure and sales tax base that excludes groceries, but faulted for its comparatively high cigarette tax and failure to provide a property tax “circuit breaker” credit for low-income non-elderly taxpayers.
The study analyzed tax systems in all 50 states and factors in all major state and local taxes, including personal and corporate income taxes, property taxes, sales and other excise taxes. It said that virtually every state’s tax system takes a much greater share of income from middle- and low-income households than from wealthy households.
“In recent years, multiple studies have revealed the growing chasm between the wealthy and everyone else,” Matt Gardner, executive director of ITEP, said in prepared remarks. “Upside down state tax systems didn’t cause the growing income divide, but they certainly exacerbate the problem. State policymakers shouldn’t wring their hands or ignore the problem. They should thoroughly explore and enact tax reform policies that will make their tax systems fairer.”
The study can be found at www.whopays.org.

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