Whats in a Tax Reform?
RI House Leaders unwrapped a slew of tax reforms entitled the “Taxpayer Relief Act of 2006.” Here are the bullet points of the nine-point proposal: • Personal Income Tax Reduction: Instead of the current rate of 9.9% of their federal taxable income, which is then subject to adjustments, deductions, and tax credits, taxpayers could elect to pay 7.5% of their Adjusted Gross Income (AGI), but without any of the reductions. Over the course of five years, the flat rate would be gradually reduced to 5.5% to make it closer to the rate that taxpayers would owe if they lived in Massachusetts. • Sales Tax Holiday: This proposal would institute a sales tax holiday weekend on August 12 and 13, 2006. • Comprehensive Sales Tax Review: A new study commission would aggressively investigate the state sales tax and whether some changes to it are necessary. • Increase Earned Income Tax Credit: The refund that low- and moderate-income taxpayers could get as a result of the earned income credit on their st
