Letter: Consider a ‘tax holiday’ to help state and businesses

Posted 4/22/21

There exists in Bristol a  pithy expression of truth: “What happens after the Fourth of July Parade?” The answer is “Winter.”

Each year Rhode Island …

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Letter: Consider a ‘tax holiday’ to help state and businesses

Posted

There exists in Bristol a pithy expression of truth: “What happens after the Fourth of July Parade?” The answer is “Winter.”

Each year Rhode Island people and businesses make preparations after the Fourth of July Parade for a large percentage of retirees departing for tax-efficient states in the south where they are legally resident. These people in their working lives had been in employed in State of Rhode Island businesses and government and now receive pensions from these entities. By being resident in these southern states, they are taxed at lower rates than those who are resident in this state and also receive the benefit of reduced taxes on their investment income.

For six months and one day, local businesses and the state government lose the benefit with this annual migration. Businesses, especially those concerned with providing services, such as restaurants, and contractors are particularly affected. The State loses the taxes that could have been obtained from these businesses.

This state needs to be tax friendly to these people and encourage them to be legal residents in this state for more than six months. Raising the tax burden on residents only encourages people to move to tax friendly states.

If the state could extend a ‘tax holiday’ to encourage those who migrate south each year to remain here longer may eliminate the need to raise personal taxes in this state. The state could follow the tax efficient southern states and reduce personal taxes or only tax individuals who reside in this state after residency of, for example, eight months.

Noel Hewitt
Bristol

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