PROVIDENCE, R.I. – It's been more than 10 years since Rhode Island was faced with dealing with the state credit union collapse and a recession, but residents of the state are still feeling the effects in their tax burden. A study by the Rhode Island Public Expenditure Council shows Rhode Islanders are some of the most heavily taxed in the country, ranking sixth among the 50 states as a percentage of personal income. According to the government research group, the average Rhode Islander paid $113.63 in state and local taxes on each $1,000 of personal income, based on the latest data available for year 2002. Two years ago, the council showed local property taxes made up the largest single share of the tax burden – about 40%. The RIPEC study put Rhode Island 18th among the 50 states in income-tax collections as expressed by each $1,000 in personal income. That ranks Rhode Island 34th in sales tax collections. Following the state CU collapse and recession of the early 1990s, the state General Assembly and then-Gov. Bruce Sundlun enacted an income tax increase and delayed a scheduled rollback in state sales taxes to pay for the credit union bailout. In the late 1990s, when the state's economy began to pick up, the legislature and then Gov. Lincoln Almond cut income tax rates by about 10% and also reduced auto taxes. But RIPEC Executive Director Gary Sasse said the cuts didn't bring taxes back to where they were before the credit union situation.
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