R.I. among states looking to give seniors a break.

Posted by Wayne G. Barber

The efforts under way in Rhode Island, Iowa, Maine, Minnesota and Maryland seek to stop the exodus of older residents to more tax-friendly places in retirement.About half a dozen states are considering giving new tax breaks to seniors over 65, although they already enjoy favorable treatment by the federal government and by most states on their income and property taxes.For some of the states looking to cut taxes, it's an effort to stop older folks from decamping to more tax-friendly places when they retire. For others, it's a way for lawmakers to curry favor with one of the most politically plugged-in demographic groups, which also is the wealthiest."They are worth more, dollar-wise, than young people," said U.S. Census Bureau spokesman Robert Bernstein.Among the states looking at proposals this year are Rhode Island, Iowa, Maine, Minnesota and Maryland. Most would reduce or do away with state taxes on retirement income.
  Moving to a "tax-friendly state" can be important to many seniors, who aren't wealthy and live on fixed incomes, or who are seeking to get the most from their retirement savings and pensions. Financial publications like Kiplinger' Retirement Report compares the taxes elderly residents face in every state. According to Kiplinger, Iowa is a "not tax-friendly" state and Illinois has a "mixed" tax picture for retirees.
   Maine is not a tax-friendly state, according to Kiplinger, and Republican Gov. Paul LePage wants to change that. He has proposed eliminating the state's income tax entirely. But if he can't do that, he'd like to exempt military pensions and up to $30,000 of other retirement income from income taxes. He has said cutting taxes on military pensions will help convince retired military personnel to stay or move to Maine.In Maryland, Republican Gov. Larry Hogan proposed eliminating over four years income taxes on military and public safety retirement benefits. The Democratic-led legislature trimmed the plan, exempting the first $10,000 of their retirement benefits from taxation. Hogan's press secretary Shareese Churchill, said Hogan plans to sign the bill later this week.
  In Rhode Island, residents currently pay state taxes on Social Security benefits, as well as most other pensions and retirement income. Although some lawmakers want to make most of the retirement income-tax free, Governor Raimondo proposed eliminating the tax on only lower- and middle-income Social Security recipients, a proposal that seems to have more support.
Gary Sasse, a former state revenue director and founding director of Bryant University's Hassenfeld Institute for Public Leadership, praised the governor.
"That's a fairer and more efficient way to do it," he said. "Some proposals were for exempting Social Security from tax regardless of income. They make the case that it would keep money in the state and improve the economy. There is no empirical evidence to prove that."

"And let's face it," he said, "states offer tax relief to old folks because those folks vote more than anyone else."  Source Providence Journal