Following years of Statehouse attempts to alter Rhode Island’s taxation of Social Security benefits, Gov. Gina Raimondo included an unprecedented provision in her budget proposal last month that would eliminate the tax for low- and middle-income recipients. By including the measure in her budget — which the General Assembly will likely vote into law this spring — Raimondo effectively introduced it as legislation.
Similarly purposed legislation has failed in the General Assembly for several years. One recent attempt by Sen. Paul Fogarty, D-Burrillville, Glocester and North Smithfield, is still on the floor.
Speaking before a joint session of the General Assembly in March, Raimondo touted her first budget proposal as balanced, focused on stimulating economic growth and rooted in “no broad-based tax increases.”
In fact, Raimondo’s proposed budget stands to lighten the load on both individual and corporate taxpayers in several places.
In the months leading up to the budget announcement, Speaker of the House Nicholas Mattiello, D-Cranston, vocally supported altering the state’s taxation of Social Security income. Rhode Island is currently one of 13 states to tax Social Security benefits. Two days before Raimondo’s announcement, Mattiello told the Providence Journal that he expected the measure to appear in the budget proposal.
Mattiello has called for Social Security benefits’ outright exemption from state income taxes, while the Raimondo budget proposes to eliminate them only for low- and middle-income recipients.
In her address, Raimondo said the tax measures would “help families live a little more comfortably.”
Larry Berman, Mattiello’s communications director, wrote in an email to The Herald that Mattiello believes the measure will make Rhode Island a more appealing place for older individuals to live.
“Keeping people in Rhode Island, with more discretionary income in their pockets, will be a significant long-term gain for our economy,” Mattiello said in a statement to The Herald.
House Minority Leader Brian Newberry, R-North Smithfield and Burrilville, said the tax exemption would also serve to help Rhode Island compete with other states with lower or nonexistent Social Security taxes. “I have constituents who … tell me it literally costs them thousands of dollars to stay here based on Social Security tax alone,” he said.
Newberry and Mattiello both indicated strong support for the bill in the General Assembly. “I’m not sure there’s any real opposition to it,” Newberry said, adding that “It’s obviously going to pass in some form.” Newberry went on to speculate that as the General Assembly revises the budget, the measure may pass in an expanded form — applying to a larger range of incomes.
House Republicans have championed the exemption for several years. “It was our idea,” Newberry said, adding, “I’m glad the Democrats have finally adopted it.”
Correction: The deck for this article previously misstated that a proposal that the Social Security tax exemption apply only to lower-income taxpayers was supported by Democrats. In fact, only Raimondo has expressed support for this specific policy.