Last week NFIB State Director Christopher Carlozzi testified before the Senate Finance Committee on a series of tax related bills.

First, NFIB opposed Governor McKee’s proposal to add a 3% income tax surcharge on income over $1 million. This could result in pass-through small businesses being taxed at a higher rate, especially when an owner sells their business to retire. The second bill was identical to McKee’s tax hike scheme, only set the threshold for what constitutes a “millionaire” at income of $640,000. This low threshold would likely ensnare more small, pass-through businesses at the new 3% surtax rate.

Carlozzi also testified in support of bills to increase the estate tax exemption or eliminate it entirely. Currently, Rhode Island is the second worst estate tax in the nation of the twelve states that still levy this tax. In his testimony, Carlozzi noted a small business’ assets are usually illiquid at the time of an owner’s death. This results in the family having to sell off land, equipment, or cut jobs in order to pay this unfair tax.

Finally, NFIB supported a bill to reduce the state income tax rates over a series of years. The plan called to reduce all three brackets, essentially creating a tax cut for small businesses who file their taxes as pass-through entities.