Pragmatic Surrender Must No Longer Be “Impressive”

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How many Rhode Islanders rolled their eyes or uttered phrases like, “Give me a break,” upon seeing the editorial headline in the Providence Journal, “Pragmatism at the State House,” with reference to the Rhode Island House’s budget proposal?

The budget that passed the House Finance Committee Friday, and soon will be before the full House, appears to reflect a necessary pragmatism. While it represents a $393-million increase over the current budget, it spurns new taxes proposed by Gov. Gina Raimondo that could have badly damaged taxpaying businesses, and applies the brakes to expensive new programs, given that Rhode Island faces massive projected deficits in the years ahead.

Yes, a budget could always be worse, but asking for much too much as a first bid is a the standard negotiating tactic.  As a state, Rhode Island falls for that trick over and over again.

Imagine how different reactions across the state would be, though, with even a relatively modest nod toward the tax burden.  I’m thinking in particular of the provision in the budget that repeals the state government’s promise to drop the sales tax rate to 6.5% if online purchases were ever taxed.  The RI Center for Freedom & Prosperity highlights the negatives of this move:

The original rationale for the law was to relieve Rhode Islanders of the added burden of a sales tax imposed on a broader range of “internet” purchased goods, by easing the overall tax rate. The Center, in its 6.5% Sales Tax policy brief argued that the legal threshold had effectively been met by the continued expansion of the sales tax on internet purchases by remote sellers.

“If the political class breaks this sales tax promise, how can Rhode Islanders ever trust the promise made about not imposing tolls on our cars,” asked [CEO Mike] Stenhouse. “This loss of hope for our state’s political system is one reason why so many of our family and friends are fleeing our state.”

What if, instead, the budget lowered the tax to its promised level?  Even using a static calculation (that is, without considering the dynamic increase in taxes that would come from increased sales), the cost of upholding this promise would be just under $85 million.  That’s less than 1% of the total budget or about one-fifth shaved off the budget increase from the enacted budget for this year.

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Such a move would send a signal to all Rhode Islanders that they can hope for more than just a slower march to collapse.  Every purchase would come with a reminder that maybe things can improve.

How many Rhode Islanders snorted sardonically when they read the line in the Providence Journal editorial, “Unfortunately, the state’s economy is not yet booming”?  There’s an understatement!  The economy will not boom until pragmatic surrender is no longer good enough, let alone “impressive,” as the paper insists that it is.



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