Priorities in Policy (Taxes and Unions)


I love the online headline that the Providence Journal gave to an AP story about President Trump’s tax reform:

Trump tax plan could be good news for many, bad for deficit

The good of the many… or the bloated federal budget?  That’s really what it comes down to, isn’t it?

This applies at the state level in Rhode Island, too.  The RI Center for Freedom & Prosperity is out today with a one-page brief that I put together showing the results when Rhode Island eliminated the sales tax on wine and spirits (creating parity with Massachusetts).  Spoiler: Sales of those products increased 21.4% over two years, versus the trend of just 8.3% for all retail sales.

The Center, incidentally, projects that all retail sales would increase by 21.2% if the sales tax on everything were reduced to a rate of 3.0%.  That would mean a $3.1 billion increase in total retail sales in the state and lead to more than 12,000 new jobs.  The good of the many… or the bloated state budget?

Of course, at all levels of government, the question quickly moves on to the services that the budgets represent, and special interests and government employees vehemently warn of the loss of safety nets and basic services.  In that regard, turn to Jason Richwine’s National Review Online post summarizing a recent Congressional Budget Office report on federal employment:

… the CBO concludes that federal employees receive total wages and benefits that average 17 percent above what comparably skilled workers earn in large private-sector firms. The federal premium comes from slightly higher salaries — about 3 percent higher than the private sector, on average — coupled with massively higher benefits, which average 47 percent above private-sector levels.

Having spent a good amount of time handling this sort of data over the years, I can tell you that — at least in Rhode Island — the premium goes up the more local you get.  If the federal premium is 17%, you can be confident that the state’s is higher and municipalities’ higher still.

At the end of the trail kicked off by the Projo’s headline, we come back to the basic question of priorities and who comes first.  Unfortunately (but not surprisingly), those who profit most directly from government budgets come to understand the choice and the stakes much more readily than the broad mass of the population, who are therefore easily distracted or misled.