Thus, you've got to figure that at least some of these proposals - if not all of them - will wind up becoming law within the next week or two.

So here's a summary of some of the key tax-related elements in the proposed budget for the year that starts July 1, as approved on a 16-to-1 vote by the committee:

Rhode Island would no longer offer favorable tax treatment for profit from the sale of stock, mutual funds or other such assets.

Instead, such profit, often called capital gains, would be treated as ordinary income, the same as wages and bank account interest - no matter how long you've held the asset.

In other words, capital gains would be taxed at ordinary income rates, which range from 3.75 percent to 9.9 percent.

(Current law generally taxes capital gains at rates as low as 1.67 percent - or even 0.83 percent in some circumstances.)

Thus, for many people, this change would represent a tax increase.

House Finance Committee Chairman Steven M. Costantino (D-Providence) said the change in capital-gains tax treatment was prompted by "a tremendous downfall in [state] revenue," a trend he thinks will continue. "We haven't hit bottom yet in terms of revenue," he said.

"None of us on the committee wants to raise taxes," he said. But he obtained a sense from the state's business community that, of all the taxes that could have been increased, the tax on capital gains was "the least onerous," he said.

There is some good news: The provision would not take effect immediately. It would affect only sales made on or after Jan. 1, 2010.

That would give you some time to plan, said Mark Higgins, dean of the University of Rhode Island's College of Business Administration.

"They're giving you a warning," Higgins said. "That's a valid tax-policy decision: to give you time to plan."

Assuming that the provision becomes law, you'd have about six months to decide whether to peddle an asset and take advantage of the current low rates.

Don't decide solely on tax issues; there are other factors to consider (including market conditions, which haven't exactly been favorable, and the federal tax impact).

And keep in mind that your Rhode Island tax treatment depends on how long you've held the asset - your "holding period".

Here's the situation now:

SHORT-TERM: If you've held the asset for 12 months or less, the gain is generally treated as ordinary income.

MEDIUM-TERM: If you've held the asset for more than 12 months, but less than five years, you'll generally pay a maximum Rhode Island tax rate of 5 percent if you're an upper-income taxpayer, 2.5 percent if you're a lower-income taxpayer.

LONG-TERM: Assuming you've held the asset for more than five years, and you're an upper-income taxpayer, you'll pay tax at a maximum rate of just 1.67 percent. If you're a lower-income taxpayer, you'll pay tax at a rate of only 0.83 percent.

(Different rates generally apply to profit from the sale of certain other assets, such as collectibles and rental real estate.)

So consult a tax professional about your options.

And be sure to keep in mind an important twist in your calculations. It's the flat-tax option, described below.

The House Finance Committee on Wednesday voted to keep the flat-tax option in place. Here's the significance:

When you do your Rhode Island personal income-tax return, you have a choice: use the regular system, or the flat-tax system.

The regular system lets you claim a number of deductions, exemptions, and credits. It also provides for favorable capital-gains treatment (at least for now), and carries a top marginal rate of 9.9 percent.

The flat tax option generally does not allow deductions, exemptions, credits, or favorable capital-gains treatment. But it carries a flat tax rate.

The flat rate was 8 percent when the system took effect in 2006. It's now 6.5 percent. Next year, it'll be 6 percent. It's schedule to drop to 5.5 percent for 2011 and later years.

The state enacted the flat-tax option to make Rhode Island more competitive with other states, such as Massachusetts (which generally has a flat rate of 5.3 percent), and to encourage executives to expand existing businesses here, and move businesses here.

John C. Simmons, executive director of the Rhode Island Public Expenditure Council, a business-backed group that monitors state finances, said that maintaining the flat tax is sound policy.

One reason, he said, is that some taxpayers have done their planning under the assumption that the flat-tax system would remain in effect - and that the rate would keep dropping according to the schedule mentioned above.

If the state were to freeze or even repeal the flat-tax system, "People do have the ability to be mobile," and could move to other states - and take their incomes, businesses and other assets with them, Simmons said.

Here's another key point: If the state eliminates favorable tax treatment of capital gains, higher-income taxpayers would be faced with paying tax on their gains at rates as high as 9.9 percent starting next year.

If the flat-tax system remains intact, and taxpayers elect to use it, they'd generally pay a maximum tax of 6 percent on their capital gains next year, 5.5 percent in future years, said House Fiscal Advisor Michael O'Keefe.

The committee on Wednesday voted to raise Rhode Island's estate-tax threshold to $850,000. Here's why that matters:

If you're married and leave all your real estate, savings and other assets to your spouse, there generally is no tax.

But if you are widowed or otherwise single, the Rhode Island estate tax can kick in if the net value of your estate - after deducting funeral expenses, debts and certain other items - exceeds a certain threshold.

In general, the lower the threshold, the more likely than an estate will trigger the tax.

Connecticut's threshold is $2 million. In Massachusetts, it's $1 million.

Rhode Island's is $675,000, where it's been stuck since 2001.

So if a Rhode Island resident leaves behind an estate valued at $750,000, for example, the state may claim the first $20,400 in tax; heirs and other beneficiaries receive the remainder.

The House Finance Committee would raise the threshold to $850,000, effective Jan. 1, 2010.

What's more, the committee would link the threshold to inflation, so it could increase in later years (in increments of $5,000, if there's enough inflation, as measured by the consumer price index for all urban consumers, O'Keefe said).

"That's a major policy decision," Costantino said. Had the threshold been linked to inflation since 2001, it would be more than $800,000 today, he said. So raising it to $850,000 was "rational," he said.

Higgins said that Rhode Island's estate tax, sometimes called the death tax, "affects more people than people probably realize." And most people don't understand the impact until a loved one dies, he said. Raising the threshold would be "great news for everybody in the state," Higgins declared.

The committee on Wednesday approved a provision modeled on New York's "Amazon" law.

It generally would require out-of-state retailers to collect Rhode Island sales tax on purchases that are made through affiliated Rhode Island Web sites.

Here's why that matters:

If you buy a book from a store in Rhode Island, the store must collect the state's 7-percent sales tax.

If you buy a book from an online retailer such as Amazon.com, odds are that the online retailer won't charge you the sales tax.

That's because the retailer doesn't have a physical presence in Rhode Island. And the U.S. Supreme Court has ruled that a state cannot force an out-of-state retailer to collect a state's sales tax unless the retailer has a substantial physical presence in that state.

Online retailers such as Amazon don't have a physical presence in most states.

But New York last year enacted what has since become known as the "Amazon" law.

It's triggered when the online retailer has some kind of link with the state - for instance, if an author in the state has a link on the author's Web site to a retailer such as Amazon.

That alone is enough of a connection to establish a "physical presence" for the out-of-state retailer, which is enough to require that retailer to collect and remit that state's sales tax, New York says.

Rhode Island wants to take the same approach. Costantino says it's a matter of fairness to local businesses that have operations in Rhode Island and thus are required to collect and hand over state sales tax.

Keep in mind that if you buy a book or other such item from an online retailer like Amazon now, you must pay a 7-percent use tax to Rhode Island.

But most people don't.

In other words, most people break the law.

The committee's proposal would, in effect, enforce the law by requiring the retailer to collect the tax.

The Amazon law has held up so far in New York courts. But it has yet to be challenged in the U.S. Supreme Court.

There's a bunch of other tax provisions that the committee approved on Wednesday. For example, the committee would:

Change the state's Jobs Development Act, effective July 1, 2009, to encourage the creation of higher-paying jobs with benefits.

Under current law, a business generally may qualify for a reduction in the state corporate income tax rate if it creates a certain number of jobs that each pay at least 150 percent of the state's minimum wage. The proposal would generally allow the rate reduction only for jobs that pay at least 250 percent of the state's minimum wage and that provide health insurance and retirement benefits. (Businesses that use the tax break under existing law would generally be subject to the new provisions only for new hires and replacement hires, Costantino said. Thus, they could keep the tax breaks they've already earned, assuming they maintain the higher level of employment they've already reached, he said.)

Require the state Division of Taxation to prepare and submit to the General Assembly, every March 15, an annual statistics of income report for corporate income tax data. The first such report would be due March 15, 2010.

Allow your Rhode Island personal income-tax refund to be reduced or "offset," if you owe money under the state's medical assistance program.

Require the electronic filing of sales-tax returns starting Jan. 1, 2010, for any filer who has an average monthly sales and use tax liability of $200 or more per month for the previous calendar year. (The measure would also require the electronic filing of withholding tax by anyone with 10 or more employees.)

Tax cancellation-of-debt income in the same year it is earned. The proposal would decouple Rhode Island from a federal law, enacted in February 2009. That law generally allows businesses that repurchase their debt in 2009 and 2010 to defer reporting, as taxable income, the related cancellation-of-debt income until 2014, then spread payments across a number of subsequent years.

The committee left intact the state's 9-percent corporate income tax rate.

Also, the committee decided not to require corporations to use a controversial "combined reporting" method for state tax purposes (though Costantino said that legislators will continue to study the issue).

MoneyLine@projo.com