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The Stealth Tax Increase in Pawtucket for the Stadium

Kate Bramson’s Providence Journal article hones in on the possibility that Pawtucket might need to borrow more money for the proposed PawSox stadium than is being stated in order to have a fund to pay off the bond in the time before the supposed wave of new economic development.  The other possibility is more of a red flag, though:

Extending the district around the stadium from which commercial property and other taxes would go into a special account to pay back the bonds, rather than into the state’s or city’s general fund [such a district is called a “tax-increment financing district”].

In theory, this means that the city would draw a circle around the stadium and assume that any increase in taxes from within that circle are attributable to the stadium.  This money would go to pay off the bond.

The fact that this would be an “extension,” however, is an acknowledgement that the increase in revenue probably isn’t really attributable to the stadium.  So, in practice, the expanded TIF district means that taxes will have to go up for everybody else in Pawtucket in order to cover the city’s regular operating budget.

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Evergreen Contracts One Positive of Special Session

As Ted Nesi reminds us in his weekend roundup, the legislation making municipal labor contracts, including those for teachers, essentially permanent until renegotiated did not overcome Democrat Governor Gina Raimondo’s veto at this week’s special session of the General Assembly:

The issue has become a game of chicken between the two chambers, with the Senate saying the House needs to vote first because Raimondo vetoed a House bill, but the House saying the Senate first needs to pass its own version and get that vetoed, too. …  a Senate spokesman reiterated that there will be no override unless the House votes. A House spokesman declined to comment, but there’s little indication Speaker Mattiello is inclined to call a vote.

That’s pretty obviously a pair of thin excuses to do the right thing in the face of labor union pressure, but hey, we’ll take it.  The lingering question — as with so much legislation that works its way into law — is why our representatives and senators would pass such horrible legislation to begin with.

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School Repairs and Where the Money Goes

So Democrat Governor of Rhode Island Gina Raimondo wants Rhode Islanders to make a “once-in-a-generation investment” to fix our substandard school buildings, and I can’t help but wonder:  Where is all the money we’re already spending going?

Rhode Island’s public schools need $627.5 million worth of major repairs to simply put students out of harm’s way, according to a major independent study commissioned by state officials.

But it would cost $2.2 billion to bring schools to an ideal condition — buildings that are energy-efficient, offer the right mix of technology and provide plenty of sunlight and fresh air.

The first thing to note is that $2.2 billion isn’t all that much higher (relatively) than the $1.8 billion that the state proclaimed a few years ago.  Suffice to say that it’s a lot of money and that this isn’t a surprise.

But again:  Where is all the money going that we’re already spending?  This whole thing has the feel of a government scam.  The first marker is that, by just about any measure, Rhode Islanders pay a great deal in taxes.  How can that not be enough to cover basic maintenance and improvement of something that’s long been considered a central function.

The second marker that raises questions about this new ask for huge taxpayer expenditures and debt is how we’re coming up with these numbers.  Tiverton, for example, is listed as having $46 million in “deficiency costs,” but the town is already paying off $54 million in debt for construction and repairs.  How did we reach the point of requiring $100 million in school repairs for a district serving about 1,800 students?

Something isn’t right with this whole pitch across the state, and Rhode Islanders should insist that elected officials figure it out before agreeing to put themselves into even more debt.

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Alexion Closure… Centralized Economic Development Not Cutting It

Back in 2012, just as the Town of Portsmouth was beginning to crow about the profitability of its taxpayer-subsidized wind turbine, government officials had to eat that crow when the unit failed, with a fix priced at more than the supposed profit.  That anecdote came to mind when I read of Alexion Pharmaceuticals’ plan to close up its Rhode Island shop.  According to WPRI’s Nancy Krause:

Alexion Pharmaceuticals Inc. announced Tuesday morning it is closing its plant in Smithfield and moving manufacturing operations to other sites in the United States and Ireland.

A spokeswoman told Eyewitness News Alexion has 250 employees at the location, which the company said has been a key manufacturing site for Soliris – a high-priced treatment for two rare genetic disorders – over the past 10 years.

Add that 250 to the 715 Benny’s employees now set to lose their jobs, and it begins to appear that the economic winds might blow away every single job increase that Governor Gina Raimondo’s Commerce Corp. has bribed, or will bribe, companies to create in the state.

Of course, we can’t know whether anything that the State of Rhode Island could have done would have saved the nearly 1,000 jobs that are now going to be erased from our local ledger from just these two companies, but if the economy is shedding jobs while only creating them when heavily subsidized, that’s a very strong signal that we should try another approach.  Simply change the state’s focus to making it easier for residents to live and do business, and companies will have more incentive to stay and innovate here.

All those bribes would have gone a long way toward making such refocusing possible.

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One Thing is Clear: The Progressive Agenda Is A Failure

Despite the false hopes expressed by lawmakers based solely on a reduced unemployment rate, Rhode Island families are hurting. The Ocean State suffers under a terrible business climate, and remains stuck 48th rank on our Center’s Job’s & Opportunity Index. Just this week, it was announced that Benny’s, a Rhode Island institution, is closing.

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Rhode Island Costs Take Years Off Your Retirement

Ted Nesi highlighted a telling finding about how long $1 million in retirement savings will last you from state to state:

It’s not easy to save $1 million for retirement. But if you do, the money will last you nearly two decades in Rhode Island.

A new study by GOBankingRates, a personal-finance website, estimates that $1 million will last a retiree 18 years and 2 months in Rhode Island. That’s less than most states – Rhode Island ranks 42nd out of 50 for how long the million can stretch – but about a year longer than Massachusetts or Connecticut.

The difference between Rhode Island and Mississippi (the top state by this measure) is eight additional years of having to work in order to stay in the Ocean State.  A Rhode Islander willing to move to Mississippi, Tennessee, Indiana, Texas, or a variety of other states could retire in his or her 50s, rather than at 65.

Putting it that way brings our political problems to the fore.  For those who have bought into the state’s insider network, mainly as employees of state and local government, the corrupt system allows them to retire in their 50s anyway, if they want.  And they can still move to a more congenial state when they’re ready, having “gotten theirs” while here.

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Rhode Island Motto: “Hope for Bribery to Live Here”

Kate Bramson has checked in on Rhode Island government’s “Wavemaker” program, which bribes college graduates to live in the Ocean State:

The state has selected 224 college graduates to receive personal income tax credits under the state’s Wavemaker Fellowship program, which would defray their student loan debts totaling about $868,000 while the recipients work in science, technology, engineering, mathematics and design jobs in Rhode Island. …

This year’s average annual tax credit is approximately $3,875 per student, but recipients earn varying amounts based on their education levels. Those with associate’s degrees are eligible for up to $1,000 of credit each year, while those with postgraduate degrees are eligible for up to $6,000.

The working class and underemployed in the state must be very comforted by the knowledge that they’re helping to give a $6,000 bonus to a Ph.D. in a high-paying job.  But that’s the key to living in Rhode Island: do something (or be something) that local elites like.  Otherwise, you’re out of luck.  You’re a nobody loser.

Many of us have watched in disbelief every time some government-employed or otherwise-connected schemer walks away from an impropriety scot-free, but the mystery is solved when once one understands a quirk about Rhode Island culture.  Just as many Americans romanticize mafiosi, Rhode Islanders tend to look up to those who “got theirs.”  The insider crooks are the archetypes around which we build our entire system of government.  The political message is, “Vote for me, and I’ll get you yours just like my pal got his.”

Sure, it is odd that the same folks who implicitly acknowledge that we have to pay people to live here and companies to set up shop here also tend to insist that the tax-and-regulatory burden doesn’t drive people out.  But that seeming contradiction only underscores the principle:  Doing something for insiders means you’re not a mooch, but somebody deserving of support.  If you just want to mind your own business and keep what you earn, then you’re a mooch.

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Center Blasts Newest Truck Toll Tyranny; RIDOT’s Laughable Denial

It has come to light that, on August 11, RIDOT *corrected* requested a hearing, scheduled for today, to issue commercial truck route restrictions within the state. The Rhode Island Center for Freedom and Prosperity (for whom I am Communications Manager) has just issued a statement strongly condemning this. It says, in part,

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The Complexities of Tax Policy

I’ve always been skeptical when wonky types on my side of the ideological aisle start proclaiming one tax or another to be universally better than others.  Typically, among conservatives, that becomes a preference for consumption taxes, like the value-added tax (VAT).  What appeals to them (and me, honestly) about such a tax is that it applies taxes to consumption, meaning everybody who consumes something has to factor the value of government into the equation.

What may appeal to big-money donors is that it pushes the tax burden down the economic ladder.  Joseph Sternberg points that out in the context of Europe and, specifically, Germany:

Indirect taxes, such as the value-added tax on consumption and social-security taxes (disguised as “contributions”), are a different matter. The VAT disproportionately affects lower earners, who spend a higher proportion of their incomes. And social taxes tend to kick in at lower income levels than income taxes, and extract a higher and more uniform proportion of income.

A chart at the link shows that Germany’s tax burden, as a percentage of income, falls pretty evenly across the socio-economic landscape.  Take social security out, and essentially, the country has a VAT for lower-income households and an income tax for higher-income taxes.

I’m not sure that spreading the tax burden on paper ought to be the goal, though.  The cost of government is spread out in one way or another, even if we don’t capture the effect of, say, lower wages and lost jobs because wealthy job creators pass on the cost of government to their employees.

The really lost component is the effect that particular taxes have upon the economy, and that will depend greatly on the specific conditions of the local area… its culture, its industry mix, is geography, and so on.  Rhode Island, for example, could boost its economy with a low sales tax because none of the state is far from the reach of out-of-state consumers.

These questions get impossibly complex, though, and the best approach is probably to tax based on the legitimate claims of government, meaning a philosophical rationale for each tax, not an economic one. That way, the cost of government will be most accurately priced into the economy.

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Cranston’s Disability Pension Funny Factory

This is hilarious… but unfortunately not so hilarious that Rhode Islanders won’t accept it or step up their laughter into a demand for change.  In Cranston, 69% of retired firefighters and 77% of retired police officers in the state municipal pension system have disability pensions, which are meant to provide the additional benefit of a two-thirds-of-salary, tax-free pension in compensation for some disabling injury on the job.

Of course, when the large majority of your employees receive enhanced benefits, they’re no longer “enhanced.”  They’re just the norm.

The funny part comes with Cranston union boss Paul Valletta’s explanation:

What could explain the difference [from other municipalities’ disability percentages]? There are no easy answers, although Cranston fire union chief Paul Valletta suggests that “bad luck” plays a role.

Valetta, readers might recall, was a visible presence in the successful push this legislative session to add “illness,” not just “injury,” to the language allowing a disability pension.  Everybody from the union activists to the Democrat Governor Gina Raimondo, when she courageously let the expansion become law without her signature, has insisted this is a mere correction to an oversight in the law.

That’s laughable.  To see why, consider that the law includes mental incapacity, as well as physical.  Allowing disability pensions for mental illness is clearly something broader than for mental injury.

The task of successful comedy writers — think Seinfeld — is to put characters in zany circumstances that seem like they really could happen.  It isn’t funny if it isn’t at least reasonably plausible with just a mild quirk of the character to make the difference.

The task of successful negotiation con artists is to make their special deals seem plausibly reasonable, with just the minor supernatural intervention of “bad luck” to explain what would otherwise be outrageous.  Bad luck, indeed… for Rhode Islanders.

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Chilling: H5069, Single Payer Healthcare (And the Inconsistencies It Poses)

In the course of reviewing certain bills filed during this year’s General Assembly session, I clicked on H5069 — and stared in growing horror at all of the red-lining (i.e., everything to be struck from current law). I turned to the succinct description of this bill written by Justin Katz, Research Director for the RI Center for Freedom & Prosperity, for the Center’s Freedom Index and the horror did not abate:

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Taxing the Rich Across the Country

Reading an Oklahoma editorial that cites public policy in Maine while I sit here in Rhode Island can’t help but make me wonder how it is we fail to learn with the entire nation — the entire world — as a real-time generator of examples and case studies:

Last year, voters in Maine approved a ballot measure that increased by 3 percentage points the income tax rate for those earning more than $200,000. This set Maine’s top income tax rate at 10.15 percent, second-highest in the country.

The tax increase, promoted by teachers unions, was a classic “soak the rich” proposal. The 41 percent rate increase was expected to impact only around 7,000 filers in Maine, and was expected to generate $157 million per year, which would be earmarked for schools.

Pause and think about a pair of aspects, here.  First, you’ve got the teachers unions using government literally to confiscate money from a targeted group of people and give it to themselves.  (The one step of separation that sends the money to the school districts makes no difference.)  To progressives, that’s called “representative democracy.”  If one side can manipulate political processes, their “representatives” will give it things taken from another side.

Second, following on that idea of taking from others, do a little quick math.  Taking $157 million from 7,000 people means taking $22,429 from each.  How is that not plain plunder?  Sure, maybe wealthy people can afford that hit, but robbing from rich people is still theft.  And what would make people think families wouldn’t seek some way to adjust their finances in order to prevent the taking of so much money?

It isn’t at all surprising that the Maine Revenue Services office reported no evidence of increased revenue a month ago.

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What It Means to Be 45th

In all the years I’ve been following Rhode Island’s standing on various national rankings, about the only substantive comeback from the forces of the status quo has been that we do okay when it comes to “quality of life.”  As I’ve pointed out, “quality of life” is only much use to those who can afford to enjoy it, and Rhode Island fails by that standard.  Great restaurants may impress an organization ranking states, but they’re utterly irrelevant to the family that can barely put food on the table.

So, now the buzz is that Rhode Island finally moved from dead last on CNBC’s “Top States for Business” ranking.  Here’s Ted Nesi on WPRI:

“Just one year ago the Ocean State finished dead last,” Cohn wrote. “The improvement is no accident. Every time we rank Rhode Island at or near the bottom, state officials take it to heart.”

The CNBC list and its methodology have plenty of critics, particularly on the left. But Rhode Island’s elected leaders have made clear over the years that they care a great deal about the state’s perennially poor showings on this list and other national business-climate rankings.

Exactly.  It’s been clear for years that state officials in Rhode Island are very concerned about the ranking, but not so much about what the ranking is actually telling us.  Consequently, they’ve sought policies to game the methodology, not to address the underlying problems — policies such as income and corporate income tax “reforms” that lowered rates on paper but wound up increasing the amount of tax collected.  Folks, you’re missing the point.

This is how Rhode Island produces an unemployment rate drop, but only because it’s driving people out of the labor force.

It’s also how we get a change that nobody’s talking about.  Our “quality of life,” according to CNBC, fell from 24th best in the country to 31st.  And observe that our state experienced this drop despite the fact that it includes such measures as health insurance coverage, at which we supposedly excel.

Our politicians may be improving our statistics, but they’re making our lives worse.

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