BY ELI SHERMAN
Providence Business News Staff Writer
PROVIDENCE – The Center on Budget and Policy Priorities on Wednesday released a report warning state lawmakers against raising the estate tax exemption, saying tax breaks on the wealthiest individuals would negatively impact state revenue and further perpetuate taxpayer inequality.
Rhode Island state lawmakers last year raised the estate tax exemption from $921,655 to $1.5 million, and the House Finance Committee is currently considering new legislation that would raise the threshold again to $2 million. The CBPP, a Washington-based, progressive-leaning think tank, argues that raising the threshold simply allows the very wealthy to shelter assets and avoid paying a fair share.
The report has caught the attention of Rachel Flum, executive director of the Rhode Island-based Economic Progress Institute, who says the state has a choice:
“We can either invest in the things that help our communities thrive and all of us prosper, or hand out yet another tax break to a few of our state’s wealthiest people,” she said.
The EPI estimates raising the current threshold to $2 million would benefit the heirs of fewer than 100 estates. But advocates say it unnecessarily prompts affluent residents to retire in more tax-friendly states. About 32 states, including Florida and New Hampshire, have no estate tax, which is also known as the inheritance tax, or – more morbidly – the “death tax.” Proponents of raising the threshold say the exemption would curb the exodus of retirees, keeping the residential tax base in-state, and allows retirees to protect their descendants from having to pay the tax after they die.