Rhode Island Lawmakers Poised to Give Retirees Financial Tax Relief

Published in Woonsocket Call on May 31, 2015

During the 2014 legislation session, Rep. Robert E. Craven, (District 32) introduced and successfully pushed for passage in the General Assembly. This legislative proposal would ultimately being signed into law by the Governor. Little did the North Kingston law maker realize that door knocking to get reelected in last November’s election would give him an issue to tackle on Smith Hill this year.

At hundreds of homes, he heard the same issue from his older constituents. One such comment was etched sharply in Craven’s memory: “You’re a nice guy, buy I am not going to vote for you because I am leaving the state, the older voter told him. The puzzled lawmaker asked “why?” The response, “We decided the state is so expensive to live in because of taxes we’re going to sell our house and move to Florida. Wanting the specifics, Craven asked, what specific tax bothers you? “We are only of a few states that tax social security benefits, that’s the straw that broke the camel’s back,” said the older voter.

Craven’s legislative proposal, H 5000, was heard Wednesday night before the House Finance Committee. Strongly supported by House leadership, he says, the legislation would ease the tax burdens on Rhode Island retirees by exempting them from paying state income tax all Social Security benefits as well as income received from federal, state and local government retirement plans, disability benefits, military pensions and private pension plans and deferred-compensation plans.

Among its more than 40 co-sponsors are Rep. Stephen M. Casey (D-Dist. 50, Woonsocket), Rep. Michael A. Morin (D-Dist. 49, Woonsocket), Rep. Samuel A. Azzinaro (D-Dist. 37, Westerly) and Rep. Cale P. Keable (D-Dist. 47, Burrillville, Glocester).

If enacted, Rhode Island would join 27 other states – including Massachusetts and Maine – and the District of Columbia that specifically exempt Social Security income from taxation. (Although Rhode Island does not specifically tax Social Security benefits, that income is identified on federal tax returns. Since Rhode Island’s income tax is based on the federal adjusted gross income of federal tax form filers, the end result is that Rhode Island generates a portion of its income tax collections from Social Security benefits.)

According to Craven, his legislative proposal would financially benefit Rhode Island seniors who receive retirement benefits. ”After paying into the Social Security system their entire working lives, or putting a little money away into private pension plans, or working at jobs that provide them with a pension, it doesn’t seem right that retirees are having taxes eat away at benefits they depend on for their very livelihood,” he says.

“Retirees living on a fixed income are probably more severely impacted by taxes and tax increases than other population groups,” observes Craven. “If we are committed to helping retirees have a safe and secure life in their later years, and if we want to help seniors afford to stay in Rhode Island rather than moving to more tax-friendly locations, we need to ease their financial burdens. Exempting retirement income from the state income tax is one step we should take,” he adds.

Tax Exemption in House Budget

Weaving its way through the legislative process Craven ultimately expects his legislative proposal to be modified to not give older tax payers a complete exemption on paying taxes for their social security income. Specifically, the revised language would say, “If your house hold income is under $100,000 or less than your Social Security is tax exempt from state income taxation.”

While a Senate companion measure has been introduced by Senator Walter S. Felag, Jr., representing Bristol, Tiverton and Warren, an amended H 5000 will be placed in the House Budget because of its cost, says Craven.

The price tag could be between $30 and $35 million, Craven says, noting that better than expected revenues enable it to be funded. “It’s a priority to the state’s economic recovery, he says.

Older retirees, making from $35,000 to $100,000, from Social security and their pensions, will just put their dollars in the local economy, adds Craven. “It’s a good investment and we owe it to them. These retirees have been here all their lives, he says, noting that they ask very little for benefits from municipalities. “They have a lot of time on their hands to volunteer [in their communities] and are very philanthropically included in offering money and services to charities.”

Says House Speaker Nicholas Mattiello, “Representative Craven’s bill to exempt the state tax on Social Security will be included as part of the budget that the House Finance Committee will be considering within the next few weeks. Governor Raimondo included this exemption for low-wage earners in her original budget proposal, but the House will be broadening it to assist the middle-class retirees as well. The House budget exempts retirees, age 65 and over, who have income thresholds of up to $80,000 for individuals and $100,000 for joint tax filers.”

“We believe that by incorporating Rep. Craven’s bill into the budget, this will begin to stop the exodus of retirees leaving Rhode Island for many other states where there is no state tax on Social Security benefits,” adds Mattiello.

Gov. Gina M. Raimondo sees Social Security is a key source of income for older Rhode Islanders, noting that her submitted March budget proposal eliminates state taxes on Social Security benefits for low and middle income seniors “to help them make ends meet and stimulate our economy.”
With Rhode Island unions hit hard by the state’s recent pension reform, Craven’s proposal has received thumbs up from some.

James Parisi, field representative and lobbyist for the Rhode Island Federation of Teachers and Health Professionals, says his union supports Craven’s legislative proposal. “Unlike some other tax cut proposals introduced this session, his bill includes state and local government pension benefits. About half of the state’s teachers were never eligible to participate in social security so any tax cut proposal that is limited exclusively to social security benefits would be unfair to thousands of retired public school teachers,” he says.

Jim Cenerini, a lobbyist for Council 94, AFSCME also says his union is squarely behind H 5000. “Council 94 believes that legislation deserves careful consideration and support because: many other states provide some type of income tax exemption to retirement benefits/Social Security; in 2014 Kiplinger ranked Rhode Island as one the least tax friendly states for retirees; and since a significant majority of public employees remain in Rhode Island, and contribute to our local economy by spending on goods and services, it’s important to provide an incentive to remain in-state.”

A Final Note…
Other legislation proposals have also been thrown into the legislative hopper this session to protect older taxpayers. H 5446, introduced by Woonsocket law maker Rep. Stephen M. Casey, would protect the pocket books of retired teachers who are receiving a pension from Massachusetts. “These retirees, whose pension are overseen by Massachusetts Teachers Retirement System, are essentially double taxed because of the state’s tax code,” he says.

On Friday, May 29, the Rhode Island Public Expenditure Council (RIPEC) issued a report noting that the state may have significantly more funds available in fiscal 2015 and 2016 than anticipated when Gov. Raimondo submitted her budget in March. Specifically, state revenues are expected to be up by $106.8 million this year and $36.6 million next year, with additional funds available from expenditure reductions.

For this writer, its sound public policy to use some of the anticipated surplus identified in RIPEC’s report to enact H 5000 and H 5446 to lessen the tax burdens of Rhode Island’s retirees. As mentioned earlier, older taxpayers pull less resources from their cities and towns. But, most important, these retirees have greatly contributed to the quality of life in their communities throughout their working years.

Herb Weiss, LRI ’12, is a Pawtucket-based writer covering aging, health care and medical issues. He can be reached at hweissri@aol.com.

How to Keep Social Security off the GOP Chopping Block

Published in Woonsocket Call on April 6, 2015

One of the first political skirmishes to protect the nation’s Social Security program, 589 days before next year’s Presidential election, took place on March 24th in the U.S. Senate during budget debate. Leading the charge, Rhode Island Senator Sheldon Whitehouse called up Senator Wyden (D-OR)’s budget amendment, requesting a Senate point of order against legislation to cut benefits, raise the retirement age, or privatize Social Security.

During the debate, “Social Security benefits are a solemn promise that our seniors have earned over a lifetime of work,” said Whitehouse, a founding member of the Senate’s Defend Social Security Caucus. “Sadly, Republicans have made it their mission for decades to dismantle that promise, attempting to turn it over to Wall Street and cut benefits through misguided ideas like the so-called ‘chained-CPI’,” he charges, noting that the Democratic sponsored amendment protects Social Security from right-wing attacks and ensure that retirees can count on their earned retirement benefits.

Republican Senator Enzi from Wyoming raised a point of order, calling Wyden’s amendment non germane to the budget resolution being debated. With the Democrats rallying 51 Senators to vote yea, 60 votes were required to wave Enzi’s point of order.

Although his attempts to protect Social Security in the Senate budget failed, Richard Davidson, Whitehouse’s Rhode Island Press Secretary, tells this columnist that the Senator plans to continue his efforts to keep Social Security off the GOP budget chopping block and from being privatized by supporting legislation like the Keeping Our Social Security Promises Act, legislation that would raise the income cap on the payroll tax to ensure the program’s solvency.

Davidson also states that the Social Security trust funds are projected to be fully solvent though 2033, and there’s no immediate funding crisis. But, in the longer run, Whitehouse believes the program must be bolstered by applying the payroll tax, which currently only applies to income up to $118,500, to higher levels of income, he says.

Protecting SSDI

One month before the Senate Budget debate, the GOP-controlled Senate Budget Committee put a spotlight at a hearing on the impending insolvency of the nation’s Social Security Disability Trust Fund (SSDI). The federal government has predicted that SSDI fund reserves will run low by the end of 2016, at which point millions of disabled beneficiaries could see up to a twenty percent cut in benefits.

At the Senate hearing, entitled “The coming crisis: Social Security Disability Trust Fund Insolvency,” Democrats called for an easy quick fix to the problem, specifically the shifting of a small percentage of the Social Security payroll tax from the retirement trust fund to the disability trust fund. No big deal, they say, because these transfers have occurred 11 times in the past with bipartisan support without political bickering. But, from this hearing it seemed clear that GOP Senators, who control the Senate, now see things differently and are threatening to block the infusion of funds to SSDI.

Approximately 10.2 million Americans received SSDI benefits in 2013, including roughly 42,000 Rhode Islanders. In order to qualify, beneficiaries are required to have worked in a job covered by Social Security, and must have been unable to work for a year or more due to a disability.

A February 9 posting on the Plum Line blog, penned by Greg Sargent for the Washington Post web site, takes a look a look at this SSDI entitlement debate.
In his opinion blog, Sargent says that GOP lawmakers claim that a “restricting a fund transfer is all about forcing a necessary discussion on how to improve Social Security’s long term finances, rather than merely “kicking the can down the road.” On the other hand, the Washington Post blogger believes Democrats see the Republicans as “exaggerating the sense of crisis to realize one of two political goals. Either they want to force immediate, and unnecessary, cuts – or they want to hold the disability fund hostage, in order to have another run at cuts to the broader program [Social Security].”

Gathering the Troops

At a March 23rd panel discussion hosted by the Providence-based Headquarters of Community Action Partnership , Whitehouse and Congressman Jim Langevin with Rhode Island Senator Donna Nesselbush, a disability attorney, along with SSDI recipients, disability groups, and the Social Security Administration, came to discuss the solvency of SSDI and its impact on the Ocean State. The lawmakers called for shifting Social Security payroll taxes to financially shore up the ailing SSDI program. Both lawmakers also supported a long-term solution, fully funding the federal retirement and disability programs by lifting the cap on the amount of income that is subject to the payroll taxes that fund the program.

“Right now, a millionaire hedge-fund manager pays the same amount of taxes into the Social Security system as someone who makes $118,500,” said Whitehouse. He called for “wealthiest Americans to pay a fair share into the program, so that it’s not funded disproportionately on the backs of middle-class workers.”

Congressman Langevin stressed “SSDI is not only a critical safety-net for disabled workers, their children and spouses, it is also a promise we make to everyone who pays into the Social Security trust fund that they won’t be impoverished if they are left with a debilitating condition or disability.”
Although Whitehouse’s efforts to protect the nation’s Social Security and Disability programs were derailed in the Senate Budget debate because of a GOP procedural call, it’s only the first of many political skirmishes to come. The upcoming 2016 Presidential elections will firmly put this entitlement issue on the nation’s radar screen, hopefully to address once and for all.

But, here’s my message to Whitehouse: Even if you lose a skirmish, or battle, you can always win the war. Keep pushing.

Herb Weiss, LRI ’12, is a Pawtucket-based writer covering aging, health care and medical issues. He can be reached at hweissri@aol.com.

President’s Budget Addresses Issues of Interest to Seniors

Published in Pawtucket Times on February 27, 2015
President Obama released his 141 page ‘policy and wish list” when he unveiled his politically ambitious FY 2016 budget on Feb 2, not having to worry about running for president in the upcoming 2016 presidential election cycle.

Yes, even inside the Washington Beltway a picture is truly worth a thousand words. Gone is the budget’s plain blue cover replaced by a black and white photo of the Tappan Zee Bridge in New York, an image that projects one of the President’s spending priorities of rebuilding the nation’s infrastructure to create jobs and improve the transportation system.

The $4 trillion presidential budget, a political campaign document outlaying his policies and priorities, would cancel automatic sequestration cuts to domestic and military programs over a 10 year period. According to the New York Times, Obama’s budget proposal would add $6 trillion to the national debt, and the single-year deficit would rise to $687 billion by 2025.

Obama’s FY 2016 budget puts more funding into education, rebuilding the nation’s infrastructure, increased defense spending, along with providing tax relief for America’s middle class while increasing the taxes for corporate America and the wealthy. Political insiders say that Obama’s budget, one that gives to the middle class and assesses higher taxes from corporate America and the wealthy, sets the issues to be surely debated in the upcoming presidential election. .

A Look at Aging Priorities

On her Feb. 3 blog post, Nora Super, executive director of the upcoming White House Conference on Aging, details how the recently released budget proposal will “ensure that older Americans enjoy not only longer but healthier lives.”

As to retirement security, Super notes that the Obama Administration strongly opposes any legislative measures that would privatize the nation’s Social Security program, or slash benefits for future generations or reduce basic benefits to current beneficiaries. Super says that half the nation’s workforce, that’s about 78 million, does not have a retirement savings plan at work. “Fewer than 10 percent of those without plans at work contribute to a plan of their own. The President’s FY 2016 Budget expands retirement opportunities for all Americans to help families save and give them better choices to reach a secure retirement,” she says.

According to Super, Obama’s Budget proposal supports healthy aging by strengthening the Medicare program by “aligning payments with the costs of providing care, along with encouraging health care providers to deliver better care and better outcomes for their patients, and improving access to care for beneficiaries.”

To put the brakes to rising prescription drug costs, Super notes that the President’s Budget proposes to close the Medicare Part D donut hole for brand drugs by 2017, rather than 2020, by increasing discounts from the pharmaceutical industry. The Budget proposal also gives the Secretary of Health and Human Services new authority to negotiate with drug manufacturers on prices for high cost drugs and biologics covered under the Part D program.

Linking nutrition to healthy aging, Super says that Obama’s Budget provides “over $874 million for Nutrition Services programs, a $60 million increase over the 2015 enacted level, allowing States to provide 208 million meals to over 2 million older Americans nation-wide, helping to halt the decline in service levels for the first time since 2010.” Also, Obama’s budget ratchets up funding for supportive housing for very low-income elderly households, including frail elderly, to give these individuals access to human services, she adds. .

Protecting older persons from elder abuse, neglect and financial exploitation, Super blogs that the President’s budget proposal includes $25 million in discretionary resources for Elder Justice Act programs authorized under the Affordable Care Act. “Funding will “improve detection and reporting of elder abuse; grants to States to pilot a new reporting system; and funding to support a coordinated Federal research portfolio to better understand and prevent the abuse and exploitation of vulnerable adults,” she says.

Here’s Super’s take on the Obama budgetary blueprint: “Taken together, these and other initiatives in the Budget will help to change the aging landscape in America to reflect new realities and new opportunities for older Americans, and they will support the dignity, independence, and quality of life of older Americans at a time when we’re seeing a huge surge in the number of older adults.”

In a released statement, AARP Executive Vice President Nancy LeaMond gives thumbs to the president’s efforts to “lower the cost of prescription drugs, promote better care, reward improved outcomes and make health care programs more efficient and less wasteful.” She also expresses her nonprofit group’s support for the President’s budgetary priorities to “create opportunities for the middle class” and his goal “to make saving for retirement easier.”

But, LeaMond expresses concerns that higher premiums, deductibles and copays might shift costs to older Americans. “As the federal deficit continues shrinking, we must find responsible solutions for strengthening critical programs and improving the retirement and overall economic security of current and future generations. We must also look for savings throughout the entire health care system, as the rising cost of health care threatens people of all ages,” she says.

In his statement, President/CEO Max Richtman, of the Washington, DC-based National Committee to Preserve Social Security and Medicare, agrees with LeaMond’s concerns of higher premiums, deductible’s and co pays, too. “While some tout increasing means testing in Medicare as a way to insure ‘rich’ seniors pay their share, the truth is, the middle-class will take this hit as well,” he predicts.

Political pundits say that Obama’s 2016 budget was dead-on arrival at Capitol Hill the day it was released at the beginning of February. In the shadow of the upcoming 50th Anniversary of Medicare, Medicaid, and the Older Americans Act, as well as the 80th Anniversary of Social Security, GOP leadership in both chambers of Congress must work with the Democratic President to hammer out a bipartisan compromise. Putting budgetary proposals that strengthens the nation’s programs and services for older Americans on the chopping block for purely political reasons is not acceptable, especially to a nation that opposes political gridlock.

Herb Weiss, LRI ’12, is a Pawtucket-based writer covering aging, health care and medical issues. He can be reached at hweissri@aol.com.