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Stop Putting Half Our Eggs in the Federal Basket

Hey, here’s a thought: Maybe the State of Rhode Island should stop acting like a subsidiary of the federal government and start acting like a sovereign state that thrives when its people thrive.  If this isn’t a wake-up call, I don’t know what could be:

While other states – including Mississippi, Louisiana, Tennessee, Montana and Kentucky – are more federal aid-heavy than Rhode Island, a newly-released analysis by the nonpartisan Tax Foundation, of 2014 census data, found Rhode Island 16th highest in the nation in terms of how much of its budget is financed by federal dollars. In that year, 34.7 percent.

Anyone worried? The answer: You betcha. But some more openly worried than others.

In large part, this is the government plantation, but it’s also indicative of the government’s crowding out the private sector as an economic competitor, too.

Any wise investor upon having a scare with a particular stock would figure out the importance of diversifying.  It’s time for Rhode Islanders to stop relying more on government as an economic driver and start relying on each other.

And don’t let fear of President Trump specifically be the end of your consideration of the matter.  Think about how vulnerable to real tyranny it makes us that our supposed leaders apparently have to make decisions about governance in order to keep the money flowing.  Everything else, from culture to global warfare, could easily take a back seat to that bottom line.

As individuals, families, and a state, being dependent makes us weak and vulnerable.

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Money-Grubbing Company’s CEO Praises Politician Who Paid Him

It’s tempting to wonder whether Democrat Governor Gina Raimondo made a governor-praising op-ed by CEO Bob Baird a condition of the state government’s tax-dollar handout to pen-company A.T. Cross:

Enter Gov. Gina Raimondo. In 2014, soon after she was elected, Governor Raimondo called to tell us she loved our history in Rhode Island and looked forward to using a Cross pen to put her signature on official documents. Later, when the governor and her team learned we were talking to other states about pulling up our roots and beginning anew somewhere else, they made it clear they value Rhode Island companies that have been here all along. The governor, Commerce Secretary Stefan Pryor and their team made a compelling case that our business is best served by staying in Rhode Island and that our employees will find everything they are looking for here at home.

Most likely, though, the CEO’s public promotion of the governor was more of a wink and nod affair than a contractual stipulation, or maybe it’s simple etiquette in the you-scratch-my-back-I’ll-scratch-yours crowd.

I will say that I’ll never deliberately buy an A.T. Cross pen, now, although if the company decides to send a thank you gift to every Rhode Islander for our involuntary contribution to the company’s bottom line, I’ll take one.

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Raimondo Insults Your Intelligence with College Plan

This morning, I noted that legislators are the only people in Rhode Island who can promise workers a 10% increase in pay without worrying about where the money will come from.  It just magically appears in their imaginations.  At noon, I suggested that Rhode Islanders should be embarrassed that their state is so dependent on federal government welfare.

The state government’s latest revenue and caseload conference estimated that the government’s revenue will fall $52 million from fiscal 2016 to fiscal 2018.  And during the budget process, last year, the state expected that deficits would climb $40-60 million per year, hitting $333 million by 2021.

So how in the world does Democrat Governor Gina Raimondo state the following — and get away with it in G. Wayne Miller’s Providence Journal article — while promising the new $30 million expense of giving all Rhode Islanders two free years of college at a state institution?

We have the money. This is affordable. It’s a smart solution.

It’s a vote-buying giveaway pure and simple that counts on Rhode Islanders’ not noticing that they’re paying the bill.  It’s an insult to our intelligence.

Moreover, we should expect that the estimated cost is laughably low.  Given free tuition, more families will use the colleges and university, and the institutions will surely increase their tuition rates once the cost to the decision makers (students and their families) is zilch (or half-price, for four-year degrees).  And this doesn’t even get into the governor’s assumptions that people who have no financial skin in the game for their degrees will actually take their studies seriously and apply themselves and that those who do will stay in the state rather than taking their subsidized degrees to states that actually have healthy economies.

One can only hope that Rhode Islanders aren’t so far gone, at this point, that they fall for the governor’s snake oil sale.

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The Conversation Starts Tuesday: Opportunity To Become Self-Sufficient

Everyone concerned about the well-being of our state’s families should be alarmed by our unacceptable 48th-place ranking. It is time to challenge the status quo insider mindset and to search for a more holistic path to help real Rhode Islanders improve their quality of life. This week, the Center will co-host a forum at Bryant University, that will provide an ideal opportunity for community, religious, and political leaders to convene and begin the process.

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RI Should Be Embarrassed of Federal Dependency

Morgan Scarboro of the Tax Foundation has taken a look at the states’ reliance on the federal government when it comes to taking money from other Americans and padding their own budgets:

In fiscal year 2014, over 60 percent of federal spending in the states went to benefits payments to individuals, including Social Security and Medicare. Aid is also given to states for education, transportation, housing, agriculture and more. Medicare is the largest grant program and continues to grow. Federal aid to states as a whole also grew 25 percent (adjusted for inflation) from 2005 to 2014.

Rhode Island is in the top group of states, with 34.7% of our state revenue transfered to us from the federal budget, more than any state this side of West Virginia other than Maine, which is poorer. This is the government plantation, and it ought to be an embarrassment to Rhode Islanders.

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Again: Minimum Wage Increases Are Political Thievery

When I read the Providence Journal headline, “Rhode Island lawmakers propose $10.50 minimum wage,” I can’t help but wonder: Propose to whom?

A group of Rhode Island state lawmakers has proposed raising the state’s hourly minimum wage by 90 cents this summer.

The bill introduced Wednesday proposes increasing the minimum wage to $10.50 on July 1. The current $9.60 minimum took effect a year ago.

The answer, obviously, is that some legislators are proposing it to other legislators, who are no more the business owners who will be forced to foot the bill than are those doing the proposing.  This is an insular, disconnected group debating whether to claim a political reward for spending somebody else’s money.

Rhode Island legislators are the only group in the state empowered to promise people a nearly 10% increase in pay without having to come up with the money, or even to worry whether people lose their jobs over it.  They’re thieves, plain and simple.

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Left and Right Need to Acknowledge Decisions Based on Policy

Hugh Hewitt makes a great point that conservatives like me sometimes need to hear:

It would be fair to announce the end of the mortgage-interest deduction in 30 years. It would be fair to phrase out the deductibility of state taxes by, say, 2050. But not overnight. Not unless you want to give the gavel back to Nancy Pelosi.

Purists have great arguments against “market distortions” in the tax code—in theory. But Americans don’t live in theory. They live in homes they bought at a value based on the existing deduction, in states whose taxes were partly offset through the federal code. Change those rules and what’s left of the GOP in high-tax states will be gone.

While those on the Left would like to treat this sort of consideration as justification for keeping government programs going forever, those on the Right do have to acknowledge that people make decisions based on bad government policy, and it can be overly harsh to the point of injustice to drop onto their heads the roofs that they’ve built over the policy framework.

Unfortunately, as with everything else, we can expect that reasonable concessions from conservatives will not be reciprocated.  For example, with the beginning of this century, special interests pushing bonds and Tiverton’s Town Council doubled the tax levy in Tiverton in less than a decade, to the point that house buyers who shop based on the monthly payment on a 30-year mortgage payment would have to pay around 15% less for a house in Tiverton than in Westport, Massachusetts, next door.

Those who bought in Tiverton before this punishment was dished out have been unfairly penalized, and many have been responding by cutting their losses and leaving town, not just because of the cost, but also because of the injustice.

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China’s One-Child Policy and Rhode Island Job Initiatives

Something occurred to me when I came across Glenn Reynolds’s link to a New York Times article about China’s change of government heart regarding its one-child policy.  After having forced women to have IUDs implanted, with resulting health problems, the government has decided it needs more people and is now moving to have the IUDs removed.  Says documentary filmmaker Ai Xiaoming:

In the eyes of the government, women are labor units. When the country needs you to give birth, you have to do so. And when they don’t need you to give birth, you don’t.

That’s exactly right.  Humanist-driven progressivism sees people as units to be managed.  I’ll never forget a conversation I had with a pro-choice woman some years back.  She was adamant that her view was all about the freedom of women, so I asked about China’s one-child policy.  Her response: “Well, what do you expect them to do?”… meaning, to address their overpopulation problem.

To make you happier, government has to make you less human.  It’s in the same line as government confiscating resources and distorting the market to retrain workers to fill the jobs that politicians declare necessary for their own political benefit.  They know what’s best for us, and to implement that wisdom, we’re just cookie-cut shapes on a board.

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Corporate Welfare – Are We Being Played?

For years, the insiders have conspired to create the cronyism rampant in the Ocean State. In their zeal for headlines, does the political class ever question the value of these corporate welfare deals? Just this week, we saw the results in questions surrounding the Governor’s claims in the Wexford deal. The tone-deaf Brookings report lays the ground work by recommending that we can achieve better results if, instead of taking the arbitrary approach to 38 Studios-style corporate cronyism that has dominated Rhode Island public policy for decades, we take the same approach in a more targeted and strategic manner. Nonsense.

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Rhode Island Buying the Economic Development Stock at a High

This recent unsigned editorial in the Providence Journal about economic development and innovation is telling:

Another lesson, just as important: Massachusetts has been at this for decades. Its success didn’t just happen overnight. Which suggests that Rhode Island must steer itself in this direction and pursue the policies that foster innovation as part of a long-term plan. Only over the long haul can such a strategy succeed.

The editorial board is, sadly, in the don’t-disrupt-anything, “government first,” insider crowd, but its musings do inadvertently raise an important point: The Massachusetts approach worked through some decades of growing national debt, wild market speculation, and the early explosion of IT.  In emulating the Massachusetts model, Rhode Island is “buying in” to the trend late.  As we’re seeing with the price tag for corporate cronyism, the price of this particular investment is currently high.

A question none of the big-government central planners are asking is whether the next few decades will continue the last few in the key ways that have worked for states like Massachusetts.  Personally, I think not.  I think the next few decades are going to favor (even more) states that get back to basics and allow individuals to experiment with technology, business models, employee compensation and schedules, and so forth.

But the uncertainty is one reason politicians shouldn’t be planning in this way.  The incentives for people who translate votes into favors are all wrong.  Their personal investment is minimal.

More importantly, they aren’t that smart.

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No More Blind Eye – General Assembly Must End Corporate Welfare Scam

In light of GoLocalProv’s blockbuster expose Friday that the Wexford job creation claim is off by nine hundred, the General Assembly needs to immediately defund all corporate welfare – and request that the Governor claw back much if not all of the taxpayer subsidies currently earmarked for Wexford.

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Big Wexford Deal, Big Exaggeration on Jobs

Kate Nagle and the GoLocalProv news team have dipped into a topic that has likely nagged at a lot of Rhode Islanders who follow the news:

Governor Gina Raimondo has repeatedly claimed that the $32 plus million in public subsidies will create 1,000 new permanent jobs in Rhode Island [at the I-195 Wexford development]. After weeks of requesting information about tenants, rents, and job creation, GoLocal was finally able to secure actual job numbers for the project and then fact check those claims.

In fact, actual jobs created will be closer to 80 to 90, at a cost of more than $32 million.

The two tricks of the higher estimate (which might even make the 80-90 projection high) are:

  1. The jobs are estimated based on square footage, and a key tenant, Cambridge Innovation Center (CICO), will actually just be renting out space to start ups, which may or may not utilize the space in accordance with the rule-of-thumb guest.
  2. Many of the claimed jobs, from Brown University and CIC, would have been created whether or not taxpayers gave Wexford such heavy subsidies, simply in other spaces.

I recently described how the Wexford-Brookings-CIC package is being sold for taxpayer handouts around the country.  GoLocal’s review of the jobs claims certainly advances the impression that Rhode Island has merely bought into a pitch.  If that’s the case, the next question is whether progressive Democrat Governor Gina Raimondo was duped or is in on the scam.

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About Those “Jobs for Rhode Islanders”

While “roasting” the news of 2016 on WPRO, one of the guys joked that Rhode Island politicians constantly talk about “jobs for Rhode Islanders,” but whenever they’ve got an actual job to fill, they look to out-of-state individuals and firms.  Even more broadly than that, though, journalists oughtn’t let this particular talking point slide by as easily as it does.

The point was emphasized, for me, when shortly after hearing progressive Democrat Governor Gina Raimondo use the phrase on Newsmakers, I caught the panel on RIPR’s Bottom Line emphasizing how these companies have people commuting down from Boston, and how that’s a recruiting tool.  Here’s Providence Business News Editor Mark Murphy:

The companies that really are in the information technology business, they employ people who live in Boston and take the train down, take Amtrak down.  (They’re not taking the MBTA; they’re taking Amtrak down.)  And it’s actually a recruiting point.

So the question: Was GE, for example, wooed into Rhode Island by the governor’s sales pitch, or did the massive company simply maximize its taxpayer subsidies — adding Rhode Island’s handouts to those already secured in Boston — by breaking off a piece of its business to put in Providence, with the expectation that it wouldn’t change much for business or employees except the direction in which they headed when they left their Massachusetts homes?  Some of them might even work from home, or even “telecommute” from a Boston office.

If so, yeah, maybe RI gets a cut of the income taxes, but that’s about all the benefit we get from those employees.  Meanwhile, we’re taking money out of the pockets of Rhode Islanders that we could otherwise use to advance and improve our own lives and communities.

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The EPA Restricts Lifeboats While Driving into an Energy Iceberg

Ah, the tender extremism of the Environmental Protection Agency, as John Daniel Davidson writes on The Federalist:

… now comes the federal government to tell the inhabitants of Alaska’s interior that, really, they should not be building fires to keep themselves warm during the winter. The New York Times reports the Environmental Protection Agency could soon declare the Alaskan cities of Fairbanks and North Pole, which have a combined population of about 100,000, in “serious” noncompliance of the Clean Air Act early next year.

Read the whole thing, but in sum, according to Davidson this is a local problem isolated to an area that people can choose to leave.  The writer, for one, is willing to take the health risks associated with some wood-fire-related pollution for the benefits of life in the area, but the distant federal government isn’t willing to allow him that option.

Like much progressive, big-government action, the effect of this regulation (intentional or not) will be to limit the places humanity can settle… except, naturally, those privileged few with money to burn.  To be sure, it must be difficult for federal bureaucracies to tell people how to live their lives when we’re so spread out into the wilderness.

Indeed, one finds it difficult not to see a deliberate restriction of human freedom if the picture combines Davidson’s explanation of the energy challenges in the region…

Heating oil is too expensive for a lot of people, and natural gas isn’t available.

… with the EPA’s restrictions and President Barack Obama’s imperial ban on oil drilling along Alaska’s coast.

In The Titanic, one passenger laments that there aren’t enough lifeboats for half of the passengers, and the movie’s wealthy villain proclaims that it won’t be “the better half” who are stranded.  Think of government as a crew both steering toward an iceberg and restricting access to escape and you’ll have something of the sense of how progressive policies function.

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Rhode Island “Company of the Year” (and State Ward) Already Has a Broken Turbine

Much to the detriment of the state’s rate payers, Deepwater Wind began generating electricity on December 12. Less than three weeks later, one of its five turbines broke (oopsie). As though wind energy isn’t already expensive enough, now we have to add the cost of making repairs thirteen miles out on the ocean. (‘Cause the cost of water and seawater-related repairs is always very reasonable, right, boat owners …?)

It probably was not a coincidence that the company made this embarrassing admission on a day – the Friday before Christmas – sure to glean the absolute minimum amount of public attention.

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Social Dynamism in Government Policy

A Wall Street Journal editorial has gotten some attention with the headline, “School Choice Saves Money“:

Using data from a crime and graduation study by Corey DeAngelis and Patrick Wolf at the University of Arkansas, the Milwaukee study finds that through 2035 Wisconsin will receive a $473 million benefit from higher graduation rates by choice students. More education translates into higher incomes, more tax revenue and a lower likelihood of reliance on government welfare or other payments. Meanwhile, greater economic opportunity also prevents young adults from turning to crime, which the study estimates will save Wisconsin $1.7 million from fewer misdemeanors and $24 million from fewer felonies over the same 20 years.

Some years back the RI Center for Freedom & Prosperity had a victory, in our view, pushing dynamic scoring into the legislative debate with our proposal to eliminate the state sales tax.  Dynamic scoring means that one considers the economic effects of a policy and subtracts the increased tax revenue from the policy’s “static” (“sticker,” or first-order) cost.  The above paragraph reminds us that there is a social dynamism, too, reducing the need for government services as well as increasing the tax take from a healthier economy.

Obviously, this has perverse relevance to Rhode Island’s “government plantation,” which might gain back some lost tax revenue but lose clients and political leverage over them.

But imagine if we had policies that kept kids engaged in good schools (through school choice) and gave them opportunities for more entry-level jobs (through a lower minimum wage and reduced licensing requirements). It might just reduce the cost of paying government to mitigate social problems, create an environment of entrepreneurship, and turn our state around.

Of course, it would require us to shift away from the government plantation, so it won’t happen.

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A Proposal for RI, Surrounded by Minimum Wage Increases

Eric Morath reports in the Wall Street Journal on minimum wage increases that have gone into effect for this new year:

Economists and policy makers are of two views on the costs and benefits of minimum-wage increases. While the policy puts more money in the pockets of low-wage workers, it also gives employers less incentive to add to their payrolls, leaving some workers behind.

A 2014 study from the nonpartisan Congressional Budget Office found raising the federal minimum wage to $10.10 an hour would reduce job creation by 500,000 over two years. At the same time, the report estimated that the increase in the federal minimum wage would raise the pay of 16.5 million workers who kept their jobs.

The accompanying chart shows that Connecticut went up by fifty cents, while Massachusetts went up a whopping dollar, tying Washington state for highest in the country (not counting D.C.).  Rhode Island employers with minimum wage workers now have a fifty-cent advantage over their Connecticut competitors and a $1.40 advantage over Massachusetts.  That goes right to their bottom line.

Here’s what the Ocean State should do:  Keep our minimum wage the same but implement a dramatic reduction of the sales tax, at least down to 3%.  That will boost sales in RI and increase employer demand for minimum wage workers, some of whom will be those frozen out of Massachusetts and Connecticut by the too-high minimum wages there.  However, the increased demand for labor and the improving prospects for retailers and all industries that serve them should drive up wages naturally.

Rhode Island faces a golden opportunity to increase the prosperity of its population, and all we need is for our politicians to resist the easy “me, too” of voter giveaways at businesses’ expense and make budget adjustments that put Rhode Island families first.  Those who object that states should not enter into this sort of attempt to undercut each other must then explain why we have to resign to giving money-grubbing businesses taxpayer handouts in order to compete with other states in that way.

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The Key Question When Government Enlists Stylists as Informers

On the sagacity of Illinois’ forcing beauticians to be trained in discerning signs that their clients are in damaging relationships (and, presumably, to do something with that knowledge), Mark Steyn offers his usual insightfulness:

Just as the Stasi turned neighbors and relatives into spies, the State of Illinois is making your stylist one. Will the “spirit of camaraderie” survive this new legislation? Or will such stock inquiries about coming vacations and plans for the weekend suddenly seem far more loaded and alert the customer that she’s now in the blow-dried equivalent of a Bulgarian hotel lobby circa 1978? …

… like so much government makework paper-shuffling schemes, it won’t do anything to reduce the problem it’s meant to be addressing, but it will be just one more tedious time-consuming obstacle to making a modest living.

There is likely one of two processes behind this legislation.  One is that activists with some ulterior motive (whether reducing competition in the beauty industry or padding the budgets of abuse and assault activists) pressured legislators.  The other is that some Illinois lawmaker observed that stylists fill somewhat of the same role that bartenders used to be considered as filling for men and thought it would be a great way for government to “do something” if the law went straight from social truism to professional mandate.

Either way, the most important question is:  Who keeps electing these people?

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Government in the Loan Servicing Business

I have a quick question after reading Christine Dunn’s Providence Journal article on the quasi-public Rhode Island Housing’s new deal with Maine Housing to service the latter’s mortgage loans:

“The agreement will allow Rhode Island Housing to generate additional funds to be used to support programs, including the financing of housing to meet the state’s growing demand,” the agency said in its announcement Thursday.

Why is this a government agency?  Somewhere in the deal must exist some artificial restriction from government or some implicit public backing of the business.  Whatever the case, if RI Housing is engaged in profitable business, it ought to be spun off from government because that oughtn’t be the way government operates.

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If It’s “Unpaid Care,” It Cuts into the Government Plantation’s Market

It seems a point of personal pique for him, but Wesley Smith makes a great point when he objects to the characterization of families’ taking care of their own special needs children as “unpaid care”:

Really? What about mothers providing “unpaid care” for their babies? Or spouses for each other? Should such care also be measured in terms of the cost of having services provided by professional caregivers?

As Smith goes on to insist (emphasis in original), “the societal expectation should also be that families are the first line of care-giving.”  The first line of care-giving.  The first line of financial assistance.  The first line of loan guarantees.  The first line for education.  The first line, period.

The problem is that such activities cut in on the government plantation’s market.  Governments can’t tax other people to provide the services.  Labor unions can’t take a cut (although they do try).  And politicians can’t count on votes from people who aren’t dependent on government.

The deeper affront of the “unpaid care” attitude is how it teaches us to see caring for those we love.  The insinuation can be that families would (and maybe should) offload care if they can afford to do so, just as a homeowner may patch a wall to save the cost of a tradesman.  As a new state senator from Lincoln touchingly exemplifies, caring for loved ones can be a joyful fulfillment, and society should encourage us to see it as such.

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Drop in Manufacturing in RI Most Worrying Because of Government Solutions

Highlighting the change in the Providence area’s mix of employment, Ted Nesi reviews a study finding that the metro has seen the nation’s greatest drop in manufacturing jobs, as a percentage of all jobs, with jobs requiring a college degree increasing in the mix.

This is a percentage, not the absolute number of jobs, so all sorts of jobs could go up or down, but if they do so at different rates, the mix will change.  In that light, this metric could be indicative of Rhode Island’s government plantation approach.  As the economy shifts toward emphasis on government services, more of the available jobs require college degrees (not because, by the way, government-service jobs necessarily require degree-level skill sets, but because it suits politicians and labor unions to require degrees.)

Beyond such considerations, the response from the governor caught my eye:

In his paper, Whitaker notes concerns “that the growing industries do not provide enough work opportunities or middle-class incomes for people without college degrees.” That echoes frequent comments by Rhode Island leaders including Gov. Gina Raimondo who say the state needs to do more to encourage the creation of jobs for workers who don’t attend college.

She may have said such a thing somewhere, but the emphasis of her policies has been on “well-paying” jobs in trendy fields.  More importantly, her premise about government effort is wrong. State politicians and bureaucrats are not well positioned to create targeted jobs.  And even if they were, they haven’t the right.  When the government attempts to create specific jobs, it is either manipulating the public to match politicians’ preferences or replacing residents who don’t fit the plan with outsiders who do.  Note this:

A study earlier this year by Boston Fed economist Mary Burke reported manufacturing employment in Rhode Island plunged by 57% between 1990 and 2015, and found a growing number of the state’s skilled jobs requiring college degrees were going to out-of-state workers.

If the state government is to maintain democratic legitimacy, it has to represent the people who are here, not a marked-off place on the map or a collection of preferred industries.

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Why Go After the Car Tax?

I’ve been meaning to suggest that this doesn’t look like such a great idea:

[Democrat Speaker of the House from Cranston Nicholas] Mattiello says the state’s recent increase in revenue will help.“Our revenues are on the rise,” he said. “They’re $40 or $50 million ahead of our projections just last year. The first year I was elected our revenues were dropping like a lead ball, hundreds of millions of dollars almost overnight, and now we’re getting that revenue back. So it’s that revenue that we get back that we’re going to dedicate to our taxpayers.”

I get that the car tax is an emotional issue for some people, although it has seemed to come under fire mostly for the unfairness of assessments.  But tax policy should not be determined by emotion.

Other taxes have a more negative effect on jobs and the economy.  That means not only that the state would be better off applying its tax-cutting motivation to other taxes, but also that replacing the car tax with other revenue, as Mattiello suggests above, is by itself a job-killing reform.

Additionally, shifting more decisions about tax revenue and the spending thereof to state government reduces the independence of local government, and to the contrary, that’s something of which we need more.

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