Sen. Pearson, Rep. Marshall legislation would establish tax credit for charitable contributions to state coffers
STATE HOUSE — Concerned about the impact the newly enacted federal tax law will have on Rhode Islanders, Sen. Ryan William Pearson (D-Dist. 19, Cumberland, Lincoln) and Rep. Kenneth A. Marshall (D-Dist. 68, Bristol, Warren) have introduced legislation that would combat the $10,000 cap the federal law has placed on the state and local tax deduction (SALT).
The SALT deduction permits taxpayers who itemize deductions on their federal income tax to deduct certain taxes paid to state and local governments from their gross income for federal income tax liability purposes.
The legislation (2018-S 2216, 2018-H 7550) would create the Rhode Island Ocean State Fund within the general fund, which would accept monetary contributions for exclusively public purposes. The legislation would allow a credit equal to the amount contributed by a taxpayer.
“Now that the federal government has seriously crippled the deductions for state and local taxes, this legislation would allow taxpayers to make contributions in lieu of taxes to the Ocean State Fund, so the payment would be considered a tax-deductible charitable contribution,” said Senator Pearson, who serves as senior deputy majority leader and is a member of the Senate Finance Committee. “The tax plan in Washington has placed an unfair burden on our state. With a uniform cap of $10,000, it does not take into account the differences in the cost of living across the country, and it unfairly punishes many states like Rhode Island.”
The legislation would require the general treasurer to establish a procedure for the public to make monetary contributions to the Rhode Island Ocean State Fund and for any taxpayer to obtain from the general treasurer a certification for the credit allowed.
“Our goal is to enable taxpayers who take itemized deductions on their federal tax returns to claim the full amount of their state tax payments under the charitable deduction, rather than being limited to the $10,000 available under the revised state and local tax deduction,” said Representative Marshall, who serves as senior deputy majority leader and is a member of the House Finance Committee. “Since the IRS allows charitable contributions to state agencies only when the contribution ‘is solely for public purposes,’ this legislation would require all amounts in this fund to be used for those public purposes upon appropriation by the General Assembly.”
The Senate version of the bill, which is cosponsored by Senators William J. Conley Jr. (D-Dist. 18, East Providence, Pawtucket), V. Susan Sosnowski (D-Dist. 37, South Kingstown, New Shoreham), James A. Seveney (D-Dist. 11, Bristol, Portsmouth, Tiverton), and Joshua Miller (D-Dist. 28, Cranston, Providence), has been referred to the Senate Finance Committee.
The House version of the bill, which is cosponsored by Representatives William W. O’Brien (D-Dist. 54, North Providence), John G. Edwards (D-Dist. 70, Tiverton, Portsmouth), Michael A. Morin (D-Dist. 49, Woonsocket) and Stephen M. Casey (D-Dist. 50, Woonsocket), has been referred to the House Finance Committee.
For more information, contact:
Daniel Trafford, Publicist
State House Room 20
Providence, RI 02903