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Rhode Island Estate Tax Poorly Designed, Harming Economic Activity
In today's Daily Caller, Bill Felkner of the Ocean State Policy Research Institute (OSPRI) and Dick Patten of the American Family Business Institute urge repeal of Rhode Island's estate tax. They highlight:
- Rhode Island's estate tax is the third highest in the nation, after Ohio and New Jersey. The rate is a maximum of 55% on all assets, including those below the low $850,000 exemption where the law kicks in.
- Congress used to allow dollar-for-dollar credits against the federal estate tax for state estate tax paid. This enabled states to establish "pick up taxes" that transferred money from the feds to the states with no change to the taxpayer. Congress abolished the credit in 2005, and most states have adjusted their estate taxes accordingly. Rhode Island has not.
- Three-quarters of Rhode Island companies are family businesses.
- An OSPRI report finds that the Rhode Island estate tax brought in $27 million in 2009, but induced capital flight and reduced economic activity that lowered income tax collections by $94 million and sales tax collections by $17 million.
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