Report: Proposed tax changes would disproportionately benefit top 1% of R.I. earners

PROVIDENCE – The latest proposed tax reform framework supported by President Donald Trump and U.S. House Speaker Paul Ryan would disproportionately benefit the top 1 percent of earners in Rhode Island, according to an Institute on Taxation and Economic Policy report issued last week.

Sixty-five and two-tenths percent of tax breaks would be for the top 1 percent of earners in the state, those making more than $528,800 a year. The average tax cut for this bracket would be $55,510 a year. The organization said that the gains would in large part come from a reduction of the corporate income tax rate.

The top 1 percent would receive an average tax cut of 3.1 percent as a share of total pre-tax income, a reduction that is proportionately disparate from every other tax bracket in the state. The second-closest reduction in taxes as a share of pre-tax income was for the second-lowest 20 percent of wage earners, with an additional average tax reduction of 0.8 percent of per-tax income.

The report also said that if the proposed framework were to be instituted in 2018, 18.8 percent of households in Rhode Island would have their taxes increased. The report attributes this to the elimination of specific itemized deductions.

“Tax cuts that largely benefit the wealthy often come with a heavy dose of cuts to vital programs and services,” said Rachel Flum, executive director of the Economic Progress Institute, in a release in response to ITEP’s report. “Reducing investments in health care, education, food assistance, disability insurance and other programs is too steep a price to pay to give the wealthy a tax cut.”