When Rhode Island Tax Hell Freezes Over

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Gary Sasse is, without a doubt, one of the foremost authorities on the tax situation in Rhode Island.  Still, one can’t help but feel that his essay on GoLocalProv started with the conclusion and tried to fill in the text from there, without quite completing the circle:

In his 2009 State of the State Address Governor Donald Carcieri told the General Assembly, “I am tired of people writing stories that Rhode Island is tax hell.” Perceptions linger, but today it is inaccurate to characterize the Ocean State as a non-competitive tax outlier, much less tax hell.

The real tell that something is off comes with his assurance that the Providence region’s ranking on tax burden by one measure “was as close to the middle as the bottom.”  You know another way of saying that?  Around the bottom quarter.

The following chart just takes the ranks that Sasse cited, so it misses a lot of important caveats.  Still, proclaiming the end of a “tax hell” seems premature, to say the least.

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Consider where the Ocean State does best.  If our sales tax is low per capita, it could that Rhode Islanders and non-Rhode Islanders go elsewhere for their shopping.  (These numbers probably don’t include the new taxes on Internet purchases.)  If our income tax is middle of the pack, it could have something to do with the fact that our median income is about 20% lower than our neighboring states.  Those two factors could combine to produce our best ranking, sales tax per income.

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The fact remains that we’re in the worst quarter of states for total taxes, whether per capita or as a ratio with income.  As Sasse notes, our property tax is high per capita, but that’s something one can only escape by leaving the state.

The bottom line is that taxes are still too high in Rhode Island.  The next essay that Sasse writes should explain why he thinks it’s important to cast a rosier light on them.



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