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About That “Investment per Job”

I recently came across this Rhode Island Public Radio (RIPR) Bottom Line segment from August, in which Dave Fallon discusses with Providence Business News Editor Mark Murphy the value of business incentives financed at taxpayer expense.  At one point, Murphy mentions an Attleboro company that the state promised $500,000 of incentives over five years to move 20 employees over the border and to hire eight more.  He insists that the deal works out to less than $4,000 per job, which he clearly implies was a worthwhile use of taxpayer dollars.

This sort of thinking reveals a systemic desperation that has worked its way into the psyche of Rhode Island opinion-makers.  So what if Rhode Island technically has a few more jobs on paper?  The likelihood that the 20 existing employees will move based on a corporate hop over the border is low, and the likelihood that any movers would choose high-tax Rhode Island is even lower.  As for the eight new jobs, they’re scarcely more available to Rhode Islanders than they already would have been.

Putting that aside and looking more generally, to believe that this $4,000 per job is worth the expense, you have to believe that (1) the jobs wouldn’t have happened anyway and (2) the money given to the company wouldn’t have been used for something better if left in Rhode Islanders’ own accounts.  After all, if we believe that a relatively small subsidy is creating new jobs, there’s no reason to believe that the market wouldn’t have found an even better use than moving an existing company a few miles.  Somebody, somewhere — or maybe multiple people in multiple places across Rhode Island — was not able to do something that might have been more valuable, in the long run, because politicians claimed the authority to pick a company for giveaways.

What taxpayers actually bought with this half-million dollars was a quick talking point for the state’s Secretary of Commerce, Stefan Pryor, allowing him to proclaim the success of Democrat Governor Gina Raimondo’s policies on the grounds that people are willing to take free money that she claims the right to dole out.

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Raimondo Admin’s Dodgy Non-Response to ProJo’s APRA Request

So as you probably know, Rhode Island’s new computer system (UHIP) for qualifying applicants and disbursing social program benefits is a mess. The problems have been well publicized to the point of infamy: a backlog of applications; benefit payments delayed; nursing homes (who have no easy way to stop their expenses) wracking up serious amounts of uncompensated care; even a security “glitch” that could have exposed the personal information of 200-1,000 customers.

It has gotten to the point that the feds were compelled to step in again – this time, breathing fire.

The agency continued to warn that the DHS could soon lose federal funding for administrative costs because of the system’s “failure to meet FNS statutory and regulatory requirements.”

And a Rhode Island House committee held its second hearing into the matter on Monday.

The question is, who is responsible for all of this? Was this a failure by the vendor setting up the new system, Deloitte Consulting? Or did the Raimondo administration force a transition to the new system from the old too quickly? (This, in fact, was a blunt warning by the feds to the Raimondo administration in early September.) If so, why?

In order to shed some light on the matter, the Providence Journal’s ace reporter Kathy Gregg sent the Raimondo administration an APRA request on September 7 for

all correspondence between the state and the company that designed it: Deloitte Consulting.

We pause here to go back, review and note that the subject of Gregg’s request was “correspondence”.

Gregg reports in yesterday’s Providence Journal that six weeks later – on the night before Thanksgiving, to be precise – the Raimondo administration gave her a thumb drive that purported to respond to the request. It contained only reports from Deloitte – and those only through September 6. Critically, the thumb drive contained no correspondence whatsoever between the Raimondo administration and Deloitte.

To reiterate: Gregg asked for correspondence. What she got was reports. (In the same way, Gregg might ask a Raimondo-operated fruit stand for a bag of oranges and receive, instead, a small bag of turnips.)

This non-responsive response by the Raimondo administration would appear to conform to neither the letter nor the spirit of Rhode Island’s APRA law. Nor is it the action of a Governor who, in an interview with Rhode Island Public Radio thirteen months ago, claimed to be “deeply committed to transparency”.

I asked the CEO of the Rhode Island Center for Freedom and Prosperity (full disclosure: I work with the Center), Mike Stenhouse, if he had a reaction to this. He responded,

A curious, honest, and relentless free-press is vital to preserving democracy in our free society and in holding elected officials accountable to the people. In this case, the administration’s pitiful non-response certainly makes it appear as if they have something to hide.

When a reporter like Kathy Gregg asks questions, she isn’t just asking for herself and her newspaper, she makes the request on behalf of all Rhode Islanders. Something went wrong with the launch of a major new state computer system – a system, remember, that has come in at over triple the originally budgeted cost. We are all minimally owed answers about the why and how of all of this. It is time to move from the dodgy non-responses to the straight answers and transparency to which the Governor herself has indicated that she is “deeply committed”.

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Immigration and the Choices Your Government Makes

Writing in the Washington Examiner, Paul Bedard lists some programs for American citizens that are seeing their funding drained in order to pay for services for illegal immigrants making their way over the border:

The Department of Health and Human Services is raiding several of its accounts, including money for Medicare, the Ryan White AIDS/HIV program and those for cancer and flu research to cover a shortfall in housing illegal youths pouring over the border at a rate of 255 a day.

HHS is trying to come up with $167 million to fund the Office of Refugee Resettlement that is accepting the youths, according to the Center for Immigration Studies. …

The money, [Policy Director Jessica Vaughan] said, pays for “shelters, health care, schooling, recreation, and other services for the new illegal arrivals, who typically were brought to the border by smugglers paid by their parents, who often are living in the United States illegally.”

I’m most definitely not one to assume that the eight specific transfers mentioned will not come from waste, and I’d rather use money that’s already been confiscated from taxpayers (or put on our massive debt tab) to provide basic necessities for poor children anywhere in the world than to fund the adult-entertainment habits of employees of the federal government (for example).

But the article is useful in framing a basic policy reality.  As a point of fact, money spent on welfare and other services for illegal immigrants necessarily comes from some other expenditure, whether reducing government services for citizens or leading to more taxes.

For that matter, it’s worth reminding people that money collected through taxes, fees, and fines doesn’t just appear out of people’s bank accounts.  It necessarily means the money isn’t spent on something else, especially in an era in which vanishingly few people truly keep cash lying around unused.

Even those who are willing to simply brush aside questions about the government’s right to take people’s money away to pay for things that powerful people value still have to ask whether the thing to be purchased is worth sacrificing the things not purchased.  Too often, we allow government officials and their satellites to spend money as if there is no downside to doing so.

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JOI in the PBN

Providence Business News Web editor Lori Stabile notes Rhode Island’s continuing poor performance on the RI Center for Freedom & Prosperity’s Jobs & Opportunity Index (JOI):

Rhode Island’s score fell to 17.5 in October from September’s 17.9 on the index, which ranks states on a scale from 0-100 on factors including job outlook, which measures optimism that adequate work is available; freedom factor, which measures the level of work against reliance on welfare programs; and prosperity factor, which measures the financial motivation of income versus taxes.

Of all the factors, arguably the clearest cut is the prosperity factor, which is literally a ratio of personal income (including investments and rental income) to state, local, and federal taxes.  The data shows that RI’s ratio puts personal income at 2.4 times total taxes collected, which is the fourth-smallest ratio in the country.

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Empowering Our Families!

Did you have empty chairs at your Thanksgiving dinner table? We all know people who have left Rhode Island for greener economic pastures. The Ocean State’s poor business climate is forcing our people out. For too long, there has only been one voice in the policy discussion in Rhode Island. What if Rhode Island’s political leaders were to realize that policies that focus only on the material needs of individuals were actually harming our state’s families? It is time for Rhode Island to adopt the family friendly policy reforms that can transform our state into a place where people can achieve their hopes and dreams.

We need to empower families, businesses, and all of the people of the Ocean State to make the calls, instead of a small group of insiders. Our state ranks 48th on both the Family Prosperity Index of the American Conservative Union, and the Jobs & Opportunity Index created by our Rhode Island Center for Freedom & Prosperity. We have virtually no population growth, and have suffered the embarrassment of many other near-bottom rankings. Despite all this, our Rhode Island political class appears happy not to make the significant changes that are needed to turn our state around.

The Ocean State needs to dare to disrupt the status quo and boldly evolve itself into a regional outlier so that we can become a magnet – on our own – for businesses, jobs, and families. Will the elitists in Rhode Island learn the biggest lesson of the election? It is time to remember forgotten families. Both President-elect Donald Trump, and Sen. Bernie Sanders have said for a very long time that the system is rigged against regular people. While other states are decisively moved in a new direction, Rhode Island is doubling down on a failed agenda.

Rhode Islanders have had enough of the insider machine. It is time to make a complete turnaround. We must adopt the family friendly reforms that can make our state a place where our families can be prosperous. You are powerful. You do not have to tolerate the cronyism and elitist attitude any longer. Don’t be on the sidelines. The rigged system in the Ocean State has kept too many people out of the process. Now is the time for you to speak out and demand that the status quo changes.

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Forgotten Families

Will the political class in Rhode Island learn the lesson of the election? It is time to remember forgotten families. As President -elect Donald Trump, and Sen. Bernie Sanders have been claiming for a long time, the system is rigged. While other states are decisively moving forward, Rhode Island is falling in the wrong direction. The Ocean State needs to dare to disrupt the status quo and boldly evolve itself into a regional outlier so that we can become a magnet – on our own – for businesses, jobs and families.

The biggest election impact in the Ocean State is status quo politicians may no longer have their government-centric schemes funded by the federal government! We want a government that works for all of us, not just the chosen few. We understand that if the Ocean State is to become a better home destination, we must offer a better life for American families by creating an environment that will organically produce more and better businesses so as to create more and better jobs.

Rhode Island has the worst business climate in the nation. It ranks 48th on both the Family Prosperity Index of the American Conservative Union and the Jobs and Opportunity Index of our Rhode Island Center for Freedom and Prosperity. It has virtually zero population growth, and it has suffered the ignominy of dozens of other near-bottom rankings. Despite all this, our Rhode Island political class appears content not to rock the boat. We need to empower entrepreneurs, families and all of the people of Rhode Island to make the decisions for our state.

Unless we want our home state to continue with failed rankings, we must switch tracks and focus on policies that broadly help families and small businesses. Haven’t you had enough? Rhode Island has been crippled by a rigged system for far too long. Big spending, high taxes, and insider handouts have led us to where we are now. Unfortunately, in far too many cases, there are empty chairs at our holiday dinner tables. We all know people forced to leave Rhode Island. Your voice is powerful. Continue to speak out and the wave of change will come to the Ocean State.

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Stumbling into Better Policy with Tolls?

I tend to believe the assessment of Robert Pitcher, VP of the American Trucking Association, that Rhode Island legislators intended for a fee reduction on truck registrations to be an insider gimme to in-state truckers, not “to apply to vehicles based outside the state.”  As the Trucking Association describes the problem:

“The new section 31-6-1.1 lowers the fees for trucks and tractors registered in RI,” said Pitcher.  “This includes trucks and tractors registered under [the International Registration Plan (IRP)] and based in [] states other than RI, all of which are under the Plan registered in RI to which they pay fees for all travel in RI.  And of course, this means a reduction in registration fees for a whole lot of trucks — including tractor trailers running through Rhode Island on the interstate.”

Everybody’s been focusing on the incompetence of this poor drafting of the law (if it proves to have the warned-of consequence).  The effort to bring in new revenue from tolls may have the effect of removing existing revenue from registrations.

On reflection, though, maybe that’s not such a bad thing.  Any money not collected for more-general purposes and dedicated to maintaining infrastructure is a good thing, and if the trade is entirely within the tax-and-fees structure for commercial trucks, so much the better.

Of course, the trick would be to prevent the state from making up for the lost revenue from registrations by increasing registration fees on others or just increasing taxes on everybody.  That would just make the whole tolling fiasco ultimately an increase of general taxes.

I wish I could be confident that Rhode Islanders could prevent the state government from ratcheting up revenue in this way, but given that we don’t have a legitimate representative democracy, we’ll just have to continue watching the blundering as insiders move to fix the holes the poked in their graft boat.

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CVS Layoffs – Political Policy AGAIN Comes Home to Roost in RI

[The Gaspee Business Network just issued the following statement/exhortation.]

We are incredibly sad to announce that amid the long standing depressed job market in Rhode Island as well as the worst business climate in the nation, hundreds of moms and dads, struggling young adults, and professionals were laid off today at the CVS corporate office in Woonsocket. The members of the GBN family wish to extend our deepest condolences to those who must now find some means of making ends meet right before the holidays amid one of the worst economies in the country.

The people to blame for these layoffs are the politicians that have run Rhode Island into the ground for decades.

Nothing will change until each and every career politician is removed from office on Smith Hill.

These government bureaucrats have made the cost to employ the hard working men and women in Rhode Island so expensive, companies have no choice but to outsource their labor to other countries.

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Influencing Elections for Personal Gain and Power

The Rhode Island Democrat Party and other left-wingers have been trying to make a big deal out of the fact that conservatives aren’t entirely sitting on their hands during this election cycle:

On Thursday, former Democratic party chairman William Lynch, now senior adviser, issued a news release calling on voters to “reject special interest money” from “outside right-wing organizations” trying to influence the election.

He pointed to $90,294 in combined independent expenditures from the Roosevelt Society, led by former Republican Providence mayoral candidate Daniel Harrop, and the Gaspee Project, founded by activist Mike Stenhouse, and suggested they were being secretly funded by the trucking industry.

That’s two organizations spending on a range of candidates and issues.  A GoLocalProv article out today actually puts the groups’ combined spending at $60,850, but either way, the idea that this represents some invasion of voter sanctity by self-interested parties is absurd.  Just look through the bigger spenders on GoLocal’s list:

  • $335,000 from the URI Foundation and URI Alumni Association to push voters to put taxpayers in $72,937,126 of debt (principal and interest) for spending on URI programs
  • $175,000 from two individuals directly involved in ProvPort to push voters to put taxpayers in $112,210,962 of debt to expand their port and do work at the one in Quonset
  • $100,000 from United Way, as mentioned on this site yesterday, to push voters to put taxpayers in $80,150,687 of debt to fund the local affordable housing industry
  • $1,700,000 from Twin River to promote state and local ballot questions to allow a new casino in Tiverton
  • $146,500 from Alan Hassenfeld, partly to push for passage of ethics reform, but more to back candidates who’ll work to infringe on Rhode Islanders’s Second Amendment rights
  • And rounding out GoLocal’s top 10 list is Planned Parenthood, with $25,712 to promote politicians who’ll fight to continue allowing the killing of babies before every inch of them is clear of their mothers’ bodies

Anybody who’s concerned about the use of government to take away people’s property and rights should be much more concerned about money for debt and left-wing policies.  Voters should also be concerned about a party and ideology that tries to make it seem scandalous that those who disagree with them have the audacity to participate in the political process.  They’d rather be able to take your property and your rights without any opposition.

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Empty Chairs At Our Holiday Dinner Tables

The Providence Journal’s endorsements of House Speaker Nicholas Mattiello, spending bond questions, and incumbent congressman are, in essence, support of the status quo. Such endorsements should be made with a broad, external-looking, national perspective, not with a narrow, inward-looking local lens – as we see so many in our political and media elite continually do.

This perspective is vital for voters. The political class believe that large corporate handouts and small, targeted tax cuts are good for economic development. As compared with other states, these measures are insignificant and ill-directed.

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HealthSource and Defrauding of Taxpayers

Ted Nesi reports that HealthSource RI — the state’s ObamaCare health benefits exchange — wouldn’t accept two lower-cost plans from Neighborhood Health.  Even on its surface the decision is an outrageous scam:

A Kaiser Family Foundation analysis, which originally included the two Neighborhood plans rejected by HealthSource, suggested they would have lowered the average premium for HealthSource’s second-cheapest mid-tier plan by 14% in 2017. Instead that number will only decrease by 0.5%, according to HealthSource.

But HealthSource officials said their decision was driven by the federal formula for premium subsidies, which are provided to about 90% of the Rhode Islanders who buy insurance through the marketplace.

In other words, Rhode Island officials didn’t want prices to go down too much because they want to force federal taxpayers (ultimately through debt) to pay $17 million more for Rhode Islanders’ health care than they ought to.  The openness with which “HealthSource officials” admit this shows they believe Rhode Islanders are happy to have their government stealing on their behalf, but some of us aren’t so immoral.  As a side benefit to local government agents, the after-tax cost of the exchange’s average health plan would have gone up 42% if they didn’t rig the market, making the exchange look even worse in the public eye.

And that’s not all.  Earlier this month, we learned that Neighborhood initially set its prices too high because its inexperience in the market left the organization no good basis by which to set prices.  So, they ended up refunding $2 million to members, probably with much of it simply a transfer of money taken from taxpayers as subsidies.

In summary, Neighborhood Health, which was arguably more like a quasi-public welfare agency before ObamaCare, overcharged its customers from the start, which forced us all to pay more in subsidies in our capacity as United States citizens.  It then refunded a chunk of the excess to its members, none to taxpayers.

Now, state government officials have refused to allow Neighborhood to charge less for plans in order to steal more money from taxpayers.  This action may very well result in another big transfer of wealth to Neighborhood members through another refund next year.

And on it will go.  If a private organization behaved like this, politicians and pundits would be declaring it scandalous.

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You Mean People Make Money by Selling Drugs?

Sometimes following the news makes one feel as if everybody else is willfully living in some sort of fantasy.  Today’s Providence Journal article on the profits of medical marijuana in the state, by Jennifer Bogdan and Tom Mooney, gives me that sensation:

Medical marijuana is big business in Rhode Island. It wasn’t intended to be.

Advocates wanted dispensaries to provide a safe, ample supply of medicine for those who needed it. But the program has proliferated virtually unchecked, offering yes, relief for the ill, but also opportunity for investors who can operate behind the opaque screen surrounding Rhode Island’s three dispensaries. …

There were so many questions that they couldn’t answer at the time [legislation was crafted]. “I mean who knew?” How should the dispensaries operate? How much marijuana should they be allowed to grow? Would the legislature be more receptive if dispensaries weren’t influenced by shareholders?

“We said they were supposed to be nonprofits. Why? Well, first of all, we didn’t want them to be in it for the money.”

Oh, come on.  Are people really that unable to break down issues to their core components and categorize them properly in order to predict outcomes?  With medical marijuana, our (famously corrupt) state gave oligopoly authorization to three entities to sell an otherwise illegal product.  As I put it in 2011, the state was estimating that each dispensary would be “an instant $20 million business facilitated by the Department of Health.”  According to today’s article, the profits appear to be smaller and not quite so instant, and yet, the article presents 78% growth over a year, to $17 million for all three dispensaries, as if it’s unexpected and suspicious.

To the extent that the organizations aren’t making big returns on their investments, the article expresses suspicion about other ways in which participants are trying to make money.  It never fails to surprise that people really believe that those who work for non-profits can’t be “in it for the money” and that government power tends to breed corruption.

Look, there’s nothing wrong with making a profit.  Money is just an indication of value, and our economic system is supposed to determine what people value and provide it — whether that means innovating to create new products or building new capacity to produce and supply existing products.  People value drugs, but it takes an investment to get the industry over a start-up hump, and then it takes the flow of money to prove the consumer interest.  (As a society, we love to harvest the fruits of investment, but we never want to pay the reward.)

The way in which Rhode Island legalized marijuana was almost expressly designed to ensure that the government maintained pent-up demand in order to drive up prices and increase the tax take.  That’s been obvious along; people who are surprised really need to go back and review the assumptions that they have about the way things work and reevaluate how they believe government should behave.

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Enough Of The Insider Machine

It is a result of the failed status quo of increased government intervention in our personal and business lives that the Ocean State ranks so poorly on so many national indexes. It is not acceptable that we rank 50th with the worst business climate in the nation, 48th on the national Family Prosperity Index, and 48th on the Center’s Jobs & Opportunity Index. It is up to voters to review all the data, and decide whether or not to hold lawmakers accountable for their voting records this November.

This week, the Center released a new voter guide for the upcoming ballot questions. In heaping over $321,000,000 of additional debt burden on Rhode Island families, as well as on future generations, we are recommending to voters that they “reject” bond Questions #4-7. Just like families who must tighten their credit card debt and avoid luxuries they cannot afford, voters should reject the exorbitant spending proposed by the state, much of which is earmarked to benefit special interest insiders. Only Question #2 – to amend the state constitution restore Ethics Commission authority – received an “Approve” recommendation from the Center.

Haven’t you had enough of the broken status quo here in the Ocean State? We have seen over and over again that the special interest thinking is failing the people of Rhode Island, while enriching the elites. You and your family deserve more. The headlines are full of examples of regular people being kept out of the process and silenced. It is time to stand up to the same old way of doing things here in our state. It will be up to voters to decide this November if they want to continue down the path our state is on or to change things here in Rhode Island.

I think Rhode Islanders have had enough of the insider machine. It is time to make a complete turnaround from the poor scores and last place rankings. We must adopt the free market reforms that can make our state a place where our families can be prosperous. You are powerful. You do not have to tolerate the cronyism and elitist attitude any longer. Don’t be on the sidelines. The rigged system in the Ocean State has kept too many people out of the process. Now is the time for you to speak out and make sure your legislator does more to make Rhode Island a place where our families can achieve their hopes and dreams.

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Take-Aways from the Blockbuster Curt Schilling Interview?

Rhode Islanders for the first time this morning started getting some straight answers about the 38 Studios debacle that put us all on the hook for $89,000,000 as 38 Studios founder and CEO Curt Schilling broke his silence for three riveting hours on the John Depetro Show on WPRO.

So many interesting items came out of the interview. Two of the bigger ones – but by no means the only big ones – for me are:

1.) Gordon Fox crony Michael Corso played a huge role in putting the deal together and acted as traffic cop for the lucrative contracts that arose from the company coming to Rhode Island. Were all of his actions legal? And were the Rhode Island State Police permitted to conduct an adequate investigation of this question? Or was it … um, shepherded by the Attorney General so as to narrow its scope?

2.) Rhode Island and Providence have some of the most onerous building and fire code requirements in the country. Yet the newly built-out 38 Studios headquarters NEVER OBTAINED A CERTIFICATE OF OCCUPANCY because at least in part, Schilling said, he signed autographs for people. (Editorial comment: We pass highly intrusive laws and they don’t get enforced??? ARGH!!!)

Ahem. What were your take-aways?

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Anti-Tolling Rally Tomorrow!

At the truck stop in West Greenwich off Route 95: 849 Victory Highway, West Greenwich, RI 02817. Tuesday, October 18, at 11:00 am. (No question, a bit of a tough time of day for a lot of us working folks.)

The Rhode Island Trucking Association and NATSO, the national association representing travel plazas and truckstops, announced today that they will host an informational rally and press conference Oct. 18 to discuss the devastating effects that “RhodeWorks” — the Rhode Island Department of Transportation’s truck-only tolling plan — will have on local businesses and commercial truck drivers that operate within the state of Rhode Island.

The small group of state officials advocating for truck tolls say that they are necessary because the money to repair our bridges cannot be found within the budget. Like most of the data and talking points that accompanied the passage of truck-only tolls, this is a flat-out lie. This money can be found in the budget. Remember also that, under Governor Gina Raimondo’s highly destructive RhodeWorks toll plan, shepherded through the General Assembly by a flip-flopping Speaker Nicholas Mattiello, hundreds of millions of dollars would be completely squandered on items other than bridge repairs: gantries, toll fees, interest – meaning that hundreds of millions of dollars would be coming out of the pockets of truckers and all Rhode Islanders and going down a rat hole rather than into infrastructure repair.

Adding urgency and danger to the situation, a recent federal court ruling in New York has brought tolls on cars in Rhode Island one giant step closer. As WPRO’s John Loughlin correctly pointed out on air Saturday morning, this is almost certainly why the start of work on the 6/10 Connector was rushed. Governor Raimondo and her organized labor supporters want to be sure to sink their toll claws into the state as quickly as possible by getting projects hooked on this destructive new revenue source ahead of a court ruling. (“Oh darn. The courts ruled that we can’t toll just trucks. We have no choice but to toll cars because look at all of the borrowing and construction that we rushed through … er, that is now underway.”)

In addition to the big red flag of the federal court ruling in New York, it is important to note that no other state tolls only trucks. From the beginning, this posed an enormous constitutional flaw in the RhodeWorks toll law. (For more on this, check out Rep Blake Filippi’s excellent op-ed in Thursday’s Providence Journal.) Accordingly, any state leader or legislator who voted for truck tolls in February took the unnecessary and very dangerous step of inviting the toll vampire into all of our homes. If state leaders don’t wise up and rescind truck tolls, it is now just about impossible to envision a scenario by which the toll vampire doesn’t turn to feast on the blood … er, wallets of car owners. It is critical, therefore, that state legislators who voted for tolls be held accountable. Please go here to see how General Assembly incumbents voted on tolls, where their challengers stand on the matter and vote for the candidate who did NOT invite the toll vampire to Rhode Island.

And if you’re able to get away from work for an hour tomorrow, please also stop by this rally. Garlic is optional. But your presence at the rally and, especially, your anti-toll vote on November 8, would send an important message against the toll vampire.

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There are Better Solutions Than Rhode Island’s Status Quo Public Policy Environment

Does anyone trust that an elite cabal of political cronies should centrally engineer our economy? Or do we place more trust in the great people of Rhode Island to be able to unleash their suppressed capacity in a fair and free-market economy, via major tax and regulatory reductions across the board? The top down ideas being presented in the upcoming election would be harmful to our state. It is up to voters to decide for themselves if Rhode Island will be a place where our families can prosper.

There are many examples. We have proven in our Freedom Index that the status quo is moving our state in the wrong direction. Led by Rep. Patricia Morgan and Sen. Elaine Morgan, only 11 of 113 lawmakers earned positive scores on our 2016 Freedom Index. The Sheeple Index, released in partnership with WatchdogRI, shows that there is a dangerous pattern of lawmakers blindly following the leader.

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What a Fair Tax System Would Look Like

In a recent Prager University video, historian Amity Shlaes articulates a pretty straightforward position for many of us on the right end of the political spectrum: In taxation, percentages are implicitly fair and inherently progressive.

Unfortunately, she also correctly points out the difficulty facing those who would return the tax code to fairness:

… reversing a century of progressivity won’t be easy. For when you cut taxes for all in a progressive rate structure, the rich necessarily get a larger tax break. That is so because they pay a greater share to begin with, and advocating “larger breaks for the rich” is not a popular political move, to put it mildly.

She then goes on to touch on a theme that’s popping up in a variety of contexts.  We need to stop attempting reform by addition and make it, well, reform.  In other words, adding more and more tax credits for this group or that group in an effort to get back to what’s fair, we should intelligently assess what we have and simply revise it.

Of course, talking about intelligence in policy and politics has become just about a sign of insanity in modern America.

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In Rhode Island, Nothing’s Certain but Death and Taxes

Well, the policies of the State of Rhode Island aren’t getting you to shop, earn, or do business as much as the government expected, but at least you’re dying!

According to an Office of Revenue Analysis report, sales and use taxes came in 0.9% lower than expected, personal income taxes came in 0.6% short, and business corporations taxes missed their estimate by a whopping 12.1%.  That’s $35 million you didn’t produce for your lords in Providence.

The good news is that you’re drinking, dying, and letting the state keep your unclaimed property more than expected, which more than made up the difference ($47 million).  But if that doesn’t sound like a healthy or sustainable way for a government to pay its bills, well, it isn’t.

Comparing the 2016 fiscal year to the year before, of the three sources of tax revenue that would indicate real economic health, only the sales tax went up.  (Patrick Anderson has the income tax wrong in today’s Providence Journal.)  Income taxes were down $10 million (0.8%); business corporation taxes were down $13 million (8.8%); and sales and use taxes were up only $8 million (0.9%).  The net change of all three was a decrease of $15 million.

If it weren’t for dying Rhode Islanders, the state government would have seen its revenue go down from one year to the next, and more than analysts had expected.  That doesn’t bode well for the deficits that the state estimates growing into the future.  The Providence Journal headline, “Rhode Island ends fiscal year with more money than expected,” does us a civic disservice.  We need to acknowledge that the current strategy of our state is not working so that we can change it.

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The 2016 Rhode Island General Assembly Freedom Index

It is a result of the failed status quo of increased government intervention in our personal and business lives that the Ocean State ranks so poorly on so many national indexes. It is not acceptable that we rank 50th with the worst business climate in the nation, 48th on the national Family Prosperity Index, and 47th on the Center’s Jobs & Opportunity Index. It is up to voters to review all the data, and decide whether or not to hold lawmakers accountable for their voting records this November. This trend is exemplified by continued deeply negative overall General Assembly scores on our 2016 Freedom Index.

Loaded with information that will be useful to voters this fall, the Freedom Index is part of our larger transparency initiative. The index examines legislators’ votes in terms of their likely effect on the freedom in the Ocean State.

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Social Services & Negotiating How Much to Take from Others

Sometimes it’s helpful to put stories in chronological order, rather than news-report order, as with this one, from today’s Providence Journal, concerning panhandling and homelessness in Providence:

Complaints about vagrancy, open drug-dealing and drinking exploded after Mayor Jorge O. Elorza decided months ago to stop enforcing ordinances against aggressive panhandling and loitering.

And now the news is that we’ve got Democrat Joseph Paolino getting the heartless 1% treatment because he’s only looking to get $100,000 from the Downtown Improvement District for social workers, along with jobs for two panhandlers, a free apartment for use of a homeless shelter, and up to $5 million in state taxpayer money, in combination with a whole new ordinance that would be even broader than the ones the mayor isn’t enforcing (stopping all transactions through a car window).  The activists protesting Paolino’s PR event have a more comprehensive list:

Less enforcement of minor criminal offenses against people who are poor; more jobs for panhandlers; funding for 150 housing vouchers; drug and alcohol treatment; and amenities such as a day center, public bathrooms and free food distribution. They want the Rhode Island Public Transportation Authority bus terminal to remain.

The core of this proposal is to double down on the policy approach that created the controversy (non-enforcement) and to add into the mix amenities that will draw even more vagrants, dealers, and loiterers to the area.  The protesters chanted, “Whose city? Our city!,” and they sure want it to be evident in the public square each and every day.

In short, the only solutions on the table, apparently, involve a negotiation over how much taxpayers have to pay for how much additional imposition.  Both parts of the plan are sure to exacerbate the underlying problem: namely, a domineering government that strangles the private sector and creates incentives not to work or bring behavior within a tolerable range.

We need another approach that doesn’t treat people as categories or as social-workers’ statistics, but as free individuals (from independent families) who can determine their own destinies in a community of mutual respect and charity.  The longer we deny this necessary change of perspective, the more the government plaque will build up in society’s arteries, making it more and more difficult to clear them.

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And Now on to the General Election and More Debt

With the general election now the next big event (if the primaries in Rhode Island can even be said to be a big event), I took a look at the bonds that will be on the November ballot.  In total, we’ve got $227.5 million (nearly a quarter-billion dollars) in new debt that Rhode Islanders will likely approve, not including the tens of millions more that municipalities are surely seeking.

That’s crazy.  Government bonds are one area of democratic action that make me mildly sympathetic to progressive inclinations to limit the franchise to those with some basic knowledge.  They’re also a reason I wonder if progressives might be incorrect to assume a more-educated electorate would tend in their direction.  What might voters do differently if they understood that debt isn’t just free money to spend on feel-good projects?

Making matters worse, these bonds aren’t just desperate attempts to gain money to build things for which the state should have budgeted with regular revenue; some of them are clearly policy issues.  How many voters, I wonder, would really want to supply the state government with borrowed money to buy up even more property in the state?

Would voters really fall for these schemes if they took the time to consider just how much of it will (or at least can) become subsidies for private businesses — from the URI “innovation campuses” to help private businesses use public-university research to come up with new products and services for a profit to the government purchase and discounted resale of farmland to improvement of ports that benefit a limited number of businesses at public expense?  All of these things benefit narrow groups at the expense of everybody else.

Even more concerning is that, when you add them all together, the picture becomes one not of a few included groups siphoning off public resources, but a comprehensive system that ultimately excludes those who don’t receive some sort of public aid.  If you’re an ordinary Rhode Islander who wants to know who those excluded parties are, take a look at your latest selfie.

Apparently every hyper-informed person in every ideological group believes that the public would agree with his or her beliefs if only people were better educated, but I can’t help but think that my ideological group is correct in that belief.  As the saying goes, everybody’s conservative when it comes to the things he or she knows best.  I simply don’t believe that people who’d been shown the corrupt, incestuous connections building into a web that ensnares our freedom and opportunity would continue to support such things… or the politicians and organizations who work so hard to make them a reality.

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Warwick and RI Can’t Be Generous While Shrinking

The Warwick school department is considering closing up to three schools, and predictably, people aren’t happy about it:

So far, the city has fielded complaints of traffic jams, unfinished construction projects and overcrowding at Warwick’s high schools.

And in an excellent civics lesson, democracy is producing candidates implying they’ll make all the problems go away if elected:

School committee candidate Dean Johnson said he lives nearby and sees the problems every day.

“Nothing but traffic,” he said. “It was 15 minutes from Benny’s to Pilgrim – it was absolutely ridiculous.”

Fellow school committee candidate Nathan Cornell is just 18 years old and said he still has friends in high school.

“At the first day, I called them and say, ‘how was school for you,’” he said. “And they told me it was crowded, especially the lunchrooms.”

Rhode Islanders want to run things as if the state is economically healthy and growing.  It’s not.  When I looked at Warwick’s population in 2012, it had dropped nearly 4% from the 2000 Census to the 2010 Census.  This May, I wondered how the school department could be considering any raises at all (let alone the 10% per year the teachers union reportedly wanted) with a smaller, less-working population with shrunken house values, and what justification there could be when the under-performing district had seen its enrollment drop 34% since the 2000-2001 school year.

Look, if you want neighborhood schools, you need the population and the enrollment to support them.  If you want small class sizes, you need to control the costs of teachers.  Rhode Islanders can’t keep up the economy-strangling approach to government and the union-gorging approach to employees and expect to maintain the quality of life they’ve enjoyed.  It is not paradoxical to observe that when you let government take more money from you and your neighbors and to limit your freedoms, you wind up getting less from government.

What will it take to make Rhode Islanders realize this?  Or more precisely, what will it take to make Rhode Islanders realize this and then change things rather than simply move away?

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