PROVIDENCE – Governor Donald L. Carcieri has signed into law a measure allowing high-income workers at certain firms to cut their state income taxes by shifting the cost to their employers.
The so-called “Jobs Growth Act” was only introduced in late May, but was unanimously approved within days by the state Senate. The House passed an amended version, but only after fierce debate about its fairness. Now the Senate has endorsed the revisions.
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Drafted at Fidelity Investments’ behest, the measure allows workers to pay taxes on only half their “performance-based” compensation, such as bonuses and stock options. In exchange, their employer pays a 5-percent tax on all the performance pay it gives that year. Officials say it’s a cheaper alternative to “gross-up” payments that many top-paid workers demand before they’ll move to Rhode Island, where the 9.9-percent tax rate on incomes above $319,000 is almost twice the rates in Massachusetts and Connecticut.
Only firms that create at least 100 jobs with a combined payroll of at least $10 million – and none paying less than 125 percent of the state’s median wage – would be eligible to participate.
Carcieri has said he’ll sign the Jobs Growth Act, but that he wants broader tax relief as well.
