A week ago, I wondered why the state’s top marketing officer would reside in the quasi-public (as in less-under-public-control) Commerce Corp. (aka, CommerceRI). Today, the Providence Journal has an op-ed by Connecticut business owner Harry Kenworthy, who learned the hard way never even to try to do business in Rhode Island, at least not by the books:
June 24, 2013: upon bidding for RFP #7468369, Lean Process Services, my firm was told we needed to be registered with the Rhode Island secretary of state’s office as a foreign entity (since our business was registered in Connecticut). I paid the $150 fee on June 26, 2013.
Our bid was not accepted, so I saw no need to do anything more with the state, as was the case, in our experience, with other states.
Thanks to a failure of state officials to inform the company about the rules of the game, a habitual disconnect between state agencies, and the money-grubbing, red-tape-weaving policies of the State of Rhode Island, Kenworthy’s company found itself owing the state government $1,902.50 in fees, fines, and minimum corporate taxes as the folly wore on, all to simply bid on a job. In typical Rhode Island fashion, the company was able to get a reprieve of $500 of that total when another agency — our friendly quasi-public CommerceRI — “intervened.” (Kenworthy has owned a second home in Narragansett for two decades, so it’s not impossible he had some connection within that agency.)
This anecdote is Rhode Island’s doom in a nutshell.
As I intimated the other day, plenty of Rhode Islanders strive to start businesses and seem to do OK for as long as their operations are small enough not to have to follow all of the rules. Once they begin to solidify their establishments, however, the state’s burdens start to weigh on them. This state of affairs clearly helps insiders and established players by limiting competition and putting a premium on being able to work the insider system of clearing hurdles and having friends who are able to stand them back up when they’re occasionally tripped up by them.
Perhaps the biggest hangup that Rhode Islanders need to understand in order to fix this problem is that it cannot be done without shrinking the size and reach of government. For evidence of this proposition, one need only flip through the rest of the newspaper. An article on page A3 touts “A lower minimum corporate tax in R.I.” John Simmons, of the government-satellite think tank, the Rhode Island Public Expenditure Council, notes the benefit of improving people’s “perception” of doing business in Rhode Island, but the $50 reduction of the $500 tax would have taken all of $150 from Kenworthy’s ordeal ($100, after the CommerceRI intervention).
Meanwhile, the article highlights the increased earned-income tax, which is simply a wealth-redistribution program, with this change costing the state budget millions of dollars that have to be found somewhere else. Such programs are one reason the state can’t do obvious things like eliminating minimum corporate taxes for the privilege of theoretically being able to do work in the state.
Another article, on the front page, fills out the theme of a state government that makes it difficult and costly to live and operate in Rhode Island:
- A higher minimum wage will make it more expensive for businesses to expand and add employees.
- Those receiving Social Security (i.e., those who are older and less likely to be working or trying to raise families) will see their tax burdens lifted, more money that the state will have to find elsewhere in the budget.
- In a civic echo of the challenges that caught up Kenworthy, even small-time political novices will have to create separate accounts (with in-state banks) for their campaign money, providing the Board of Elections with paper copies of their bank statements at the end of the year, and those who reach $10,000 in donations or expenditures will have to find other people willing to act as their treasurers and take responsibility for the finances.
- Any property owner with a cesspool — even a fully operational one away from any body of water — will have to subtract the cost of replacing the system from the value of the property when selling it
Any politician, bureaucrat, or activist who claims a desire to help Rhode Island and turn around its economy — and perhaps prevent its losing a seat in Congress due to a fading population — shouldn’t be taken seriously unless he or she intends to do so by reducing the cost of state and local government and withdrawing fingers from their meddling in every aspect of human, animal, and plant activity within the state’s borders.