In early December, I pointed to a story about the state taxing authority going after funeral homes to tax urns and prayer cards. The State of Rhode Island was hitting these small businesses with bills for back taxes on products that had always been handled as tax exempt.
As I looked through the tax changes in Democrat Governor Gina Raimondo’s budgets for the past few years over the weekend, a connection became clear, with an important lesson:
- In fiscal year 2017, the governor called for two new revenue agents for field audits and three new revenue officers for collections, with an estimated increase in revenue of $1,793,806. The General Assembly accepted this proposal, but assumed a net budget impact of $3 million, meaning that the actual revenue collected would be higher in order to pay the five new employees, so actual revenue would be around $3.5 million.
- In fiscal year 2018, the governor called for two more revenue agents and two new data analysts who were supposed to generate another $750,000. The General Assembly accepted this proposal but assumed a $2 million increase in revenue.
- In her current budget, the governor wants to add a lawyer and case management system to the collections unit, to generate another $750,000.
Going after small businesses for back taxes nobody ever told them to collect is what this effort looks like. After the changes in fiscal years 2017 and 2018, the state had nine new employees with an implied mandate to find $5.5 million in new tax revenue.
To the extent anybody even notices these new hires, the impression is that they’ll be going after scofflaws for money they are somehow hiding from the state. There may be some of that, but what the funeral homes are experiencing is the effect of the state hiring people with a monetary target and siccing them on the people of Rhode Island.