Waiver on Retirement Income Tax Gains Steam in Rhode Island

Rhode Island is one of a handful of states that tax social security and pension benefits. But the idea of offering a waiver on those taxes is gaining momentum in the state, and the push for retiree tax relief is coming from several directions. The idea has been proposed by labor group leaders, who say a waiver could be part of a settlement in the lawsuit over the state’s 2011 pension reforms. From the Providence Journal:

The president of the Rhode Island retiree chapter of the American Federation of Teachers is “cautiously optimistic” that a waiver of state taxes on pensions and Social Security benefits could provide the framework for a settlement of the high-stakes pension lawsuit. […] Roger P. Boudreau, the state retirement board member who is also president of the Rhode Island branch of the AFT’s retirees chapter, made this prediction on October 28, at an informational meeting of members of the Rhode Island Public Employees’ Retiree Coalition. The coalition was created to represent retirees’ interests in the union challenge to the state’s 2011 pension overhaul. Boudreau could not be reached for comment on Friday. But his Oct. 28 comments were captured in the “RIPERC Legal Defense Fund Newsletter” for October-November 2014 that said, in part: “Roger also expressed cautious optimism that an opportunity to settle the dispute through negotiations with the General Assembly would occur in the upcoming session. One of the things that Roger spoke about exploring is a waiver of RI income taxes for pensions and Social Security; a statutory waiver would have a major impact on retirement security for all retirees, and the labor movement has always represented all workers, including nonmembers, in a quest for economic and social justice.” […] Added Robert Walsh, the executive director of the National Education Association of Rhode Island: ”The idea has been around for years – probably before Gina was Treasurer [and] dating back to the first pension lawsuit. “I think it makes sense either on a stand-alone basis or as part of a larger settlement but no discussions are ongoing that I am aware of, but the retiree group has its own steering committee and lawyer,” Walsh said. “On the bigger issue, I support the resumption of settlement discussions and if there are ideas such as income tax relief on pensions and Social Security that will help resolve the issue they should be fully explored,” Walsh said. “Until the lawsuits are resolved it will be hard to focus on other issues, so a comprehensive settlement would be good for all concerned.”

Unions aren’t the only ones championing the waiver on retirement income. State lawmakers are looking for ways to make Rhode Island friendlier to retirees, although they remain non-committal on specific proposals. According to the Providence Journal:

House and Senate leaders just this week cited tax relief for retirees as one of their top priorities for the new legislative session that will begin in January. […] This was the response from House Speaker Nicholas Mattiello’s spokesman on Friday, when asked if Mattiello had [a waiver] in mind when he pledged on Thursday to seriously consider the exemption of state taxes on pension and other retirement income: “He said the intent of the legislation he is looking closely to enact is to help all retirees and has nothing to do with the pension lawsuit. He said any consideration of the pension lawsuit would be dealt with independently.” When asked Friday where she stood on a state tax exemption for retirement income, Governor-elect Gina Raimondo said she would need to see specifics before she could evaluate the proposal.

In Rhode Island, out-of-state government pensions are fully taxed as income.   Photo by John Morgan via Flickr CC License