Taxation RSS feed for this section

The Education Legacy of the Chafee Era

NAEP scores and comparisons of trends across the country suggest that the stall of education reform during the Chafee era has not been good for Rhode Island’s children.

Rally Tomorrow To Oppose The Disbursing of Illegal Alien Children to Rhode Island

RIILE, Rhode Islanders for Immigration Law Enforcement released the following alert this afternoon via e-mail.

Rhode Islanders for Immigration Law Enforcement invites all concerned Rhode Islanders to gather tomorrow from 1 p.m. to 3 p.m. on the Smith Street side of the Rhode Island Statehouse to protest the Obama administration’s plan to disperse illegal alien minors to Rhode Island.

“Two planeloads of illegal aliens have already landed at Hanscom Air Base in Massachusetts, only 45 miles away, and Massachusetts has declined to accept them,” said Terry Gorman, president of Rhode Islanders for Immigration Law Enforcement. “This may be our only chance to express our concerns to Governor Chafee and to discourage him from overwhelming our state with an unknown number of additional people needing government social services.”

Governor Chafee so far denies having been asked by White House administration officials to harbor the illegal alien minors in Rhode Island.

With the ink barely dry on a new state budget, Rhode Island is clearly in a fragile economic condition. Concerning illegal aliens, there exists a thriving underground network of grayscale government policy that combines passive sanctuary, benefit compensation, and lax, selective law enforcement. Accepting an unplanned influx of undocumented, unimmunized, and unsupervised aliens of minor age – all of whom illegally crossed the United States border to gain entry and none of whom can provide for themselves – is not an acceptable course of action for any state government, but especially not Rhode Island’s.

“We are not a people lacking in compassion, but this is a practical matter of survival and the obligation we have to Rhode Island citizens. Suicide is not noble and compassionate – it’s reckless,” Gorman said.

State Taxes and Economic Health

The effect of taxes on a state’s economic health is one of those repeated questions that is never resolved.  The obvious reason (I’d propose) is that it’s one of those areas that depends hugely on specific circumstances, but the ideological intentions of those having the discussion tend to promote specific findings as broad conclusions.

The last sentence of the most recent academic contribution to the debate, by Pavel Yakovlev of the Mercatus Center, probably captures about the broadest statement that can be made:

… not all tax variables exhibit a significant correlation with the selected measures of economic activity, but when they do, the relationship is usually negative.

Yakovlev concludes his summary in a way that’s probably more comprehensible to the average person:

Not all types of tax increases can be expected to significantly harm economic outcomes, but higher taxes are generally correlated with lower standards of living.

In the phrasing of a popular meme: I don’t always affect the economy when I increase taxes, but when I do, it usually hurts.

Another important variable that Yakovlev mentions in the course of presenting his findings is the quality of public services provided.  It is assumed that in some circumstances (or at least to some people) the trade-off of higher taxes for quality government services favors the latter.  Presumably, it is less common for people to want to have high taxes in order to finance poor government services.

Throughout the study, Yakovlev looks at two competing ways of calculating the correlation of variables that can sometimes serve to support different ideological preferences.  On the government-spending side of the ledger, the results find a positive correlation between taxpayer migration and education spending, but negative correlation of migration with infrastructure spending, public health spending, and public welfare spending.

Especially on the infrastructure count, that finding might be counter-intuitive, because we tend to think of better roads and bridges as a contributor to economic health.  One plausible explanation for the results is that the amount of spending on infrastructure doesn’t translate well into results.  In other words, over a basic minimum of spending on roads and bridges, additional dollars are wasted.

Of course, an objective viewer of Rhode Island would have to conclude that this level of discussion is mostly moot in the Ocean State, as the latest competitiveness report card from the RI Center for Freedom & Prosperity illustrates.

All of our taxes are high.  Most of our services are poor.  People are generally leaving; opportunity remains difficult to find.  And the hope of substantive change is limited.

Illegal Alien Children: Governor Chafee’s Strangely Narrow Statement

The latest regional development in the disbursement of illegal alien children from the southern border, drawn to the United States in part due to a dramatic drop in deportation of other such children over the last five+ years, is that the state of Connecticut has declined a request by the federal government to house children in the Southbury Training School.

This morning, I called Governor Chafee’s office and urged him, via a staff member, not to accept illegal alien children into the state. I was given a response that it turns out had also been given to WPRO and which Bill Haberman and John Depetro had read on the air. It was, simply,

No federal entity has reached out to the State of Rhode Island requesting assistance with housing undocumented immigrants.

My follow up question for the gentleman on Governor Chafee’s staff whom I spoke to, to preclude confusion over terms, was “or refugees” and he agreed that the statement also applied to “refugees”.

But the Governor’s statement, specific and brief as it is, leaves a couple of large loopholes. No “federal” entity has reached out to the state. Have any other entities or individuals done so? If not to request assistance with “housing” undocumented immigrants, how about “temporarily sheltering” them?

It is not pleasant to have to parse the words of one of our elected officials this way but the narrowness of the statement compels us to do so.

Much as we sympathize deeply with the plight of these children, there are huge ramifications, budgetarily and public health-wise, to any state accepting dozens or hundreds, much less thousands, of illegal alien children, even if – especially if! – it is framed as a temporary situation. It is to be hoped that Governor Chafee will act accordingly and not out of a completely misguided sense of compassion.

Illegal Aliens and RI Social Programs: Qualifying Documentation Ranges from Strong to Alarmingly Weak

… In response to an inquiry from Ocean State Current-Anchor Rising, the Executive Office of Health and Human Services sent over several documents. One of those listed all of the documents that an applicant for social services can submit to verify citizenship qualification for those benefits.

Rhode Island Fix a Philosophical Shift; Contra Renn, Part 5 of 6

Part 5 of a response to Aaron Renn: What kills the entrepreneurial spirit in Rhode Island?

Rhode Island Fix a Philosophical Shift; Contra Renn, Part 3 of 6

Countering Aaron Renn’s central planning in Rhode Island. Part 3: What’s unemployment insurance have to do with the price of gasoline in Seekonk?

From 8,143 Deportations to 1,669 – Another Way the President Precipitated This Flood of UAC’s (Unaccompanied Alien Children)

Justin describes the situation on the southern border and how those children have become “political chips”.

Let’s add deportation figures, supplied by the Los Angeles Times.

The number of immigrants under 18 who were deported or turned away at ports of entry fell from 8,143 in 2008, the last year of the George W. Bush administration, to 1,669 last year, according to Immigration and Customs Enforcement data released under a Freedom of Information Act request.

This portrait of alarming (and deliberate?) inaction become even more acute when considered in the context of rapidly rising arrivals.

According to the Border Patrol, unaccompanied children apprehensions increased from 16,067 in fiscal year (FY) 2011 to 24,481 in FY 2012 and 38,833 in FY 2013.

President Obama has used this crisis to call on Congress to

fix our immigration system once and for all

a fix that the President clearly envisions as some variation of amnesty.

But an enormous question is posed by this “fix”. How would it do anything other than exacerbate the problem of illegal immigrants – of all ages – coming here uninvited? Accordingly, how could it possibly be called a fix?

Arthur Norwalk: No Stops for Voter Approval on Providence Streetcar

The proposed Providence Streetcar (a proposal that never seems to go away) is a case study in the problematic funding, planning, and daydreaming that characterizes government projects in Rhode Island.

Speaker Mattiello at the Rhode Island Taxpayers Summer Meeting, Part 1

A retro-liveblog of remarks made by Speaker of the Rhode Island House of Representatives Nicholas Mattiello, at this Saturday’s summer meeting of the Rhode Island Taxpayers organization. The areas the Speaker touches on include education, the gas-tax, reducing regulations in RI, and some general ideas about what governing means and how it should be done.

I-195 Developer Feedback… Somehow Not a Reason for Panic Among Elected Officials

This article in yesterday’s Providence Journal, by Kate Bramson, is emblematic of  Rhode Island’s current predicament and enlightening with regard to the reasons and the potential solutions:

Commercial real-estate developer Richard Miller, of The Pegasus Group, visited Rhode Island in 2011 and again this spring; he liked what he saw enough to pick a potential parcel on the western side of the river near Chestnut Street.

But in the end, his team chose not to submit a proposal to the Route 195 Redevelopment District Commission, which controls about 40 acres in the heart of the city, 20 of which are available for development.

Miller says Pegasus was put off by the city’s real-estate tax rate, car taxes and the idea that if they seek a lower commercial tax rate on the now-vacant land, they must negotiate with the city and hope for the best. Meanwhile, they’d be spending money on architects, renderings of proposed buildings and other costs, not knowing if it would be worth their while.

Read the whole thing.  In keeping with much of what we write, on this site, Rhode Island is designed as a tell-people-what-to-do, insider-driven state.  Taxes are high; regulations are crushing; but everything can be waived or compensated if you know the right people.  The only way it makes sense to invest in that environment is if you’ve already made the investments of time and money to gain the right kind of influence.

Recent scandals and controversies really bring this fact into public view, whether we’re talking about the 38 Studios debacle, the Superman Building lobbying, or the unique interests of “business community” organizations that take bizarre positions on issues related to their constituencies.  Outside investors are not going to want to invest in a state that puts them at such a disadvantage, and Rhode Island is driving out the non-connected locals who may have made up for some of that deficit in the past.

That’s another — maybe more insidious — way in which Rhode Island simply doesn’t have the size or demographics to continue the approach to policy that has, as Aaron Renn recently argued, defined the state for way too long.  The solution is ever more clearly simply to reduce the burdens and insider deals, not to continue pursuing “economic development” that gives insiders a strong hand in deciding what can be done, when, and where.

Budget Growth and Household Income

Working with the federal government, the state government of Rhode Island has managed to keep its budget growing more quickly than inflation. The people of Rhode Island, however, have not been so lucky.

Rhode Island’s Underlying Problems and Fixes

Aaron Renn’s explanation for Rhode Island’s current condition has some worthwhile insights, but when he reaches for conclusions, he falls into the technocratic rut.

Media Bias in the East Bay

For a little bit of light late-night blogging, I can’t resist turning to the newspaper that transformed a letter to the editor about something I tweeted into a news story and a campaign-season scandal in 2012.

Last month, when Tiverton’s financial town referendum (FTR) voted by nearly two to one in support of the budget that I’d submitted for a zero percent tax levy increase, two of the three local newspapers — the Fall River Herald and the Newport Daily News — called me for comment, as they’d both done at earlier stages in the process.  The Sakonnet Times never did.  (Although reporter William Rupp did fairly summarize a hearing on the budgets.)

On the night of the vote, Sakonnet Times reporter Tom Killin Dalglish didn’t put any faces on the budgets, but disappointment about the results practically seeps from the paragraphs. Consider:

State tax cap legislation allowed for up to a 4% increase, and the budget committee’s proposal was well under that.

Instead, voters gave their approval to an alternative budget put forth by a group of petitioners that called for a zero percent tax increase for FY 15. …

Voter turnout was small. Just 18% of the over 11,000 registered voters in town actually went to the polls. Of those, 1,234 voted for the petitioner’s zero-percent-increase budget, while 698 voters voted for the budget committee proposal.

The punchline, though, came when the tax assessor announced (as I told everybody to expect) that the the tax rate is actually dropping a little.  Based on Dalglish’s article and the accompanying photograph, you’d think the assessor is to credit, as “Tiverton taxpayers will catch a break when tax bills are mailed out a week or so from now.”

The heroes of the FTR were the 1,234 voters who supported the 0% petition, followed by the folks who put in hours of volunteer time walking around handing out cards and distributing signs.  I just did some math, argued with some people, and played with some paint and stencils.

That said, the differing enthusiasm of the Sakonnet Times when it comes to mentioning my name in a bad context versus a potentially positive one is quite a lesson in media bias.

Tax Foundation & RI-STAMP on Tax Reform Differences

Tax Foundation rankings and RI-STAMP projections show that the RI House’s budget might game some rankings a little, but legislators still aren’t willing to make substantive changes to improve the lives of workaday Rhode Islanders.

The Lesson of the Tolls, Maybe

There’s still time for surprises before the General Assembly ends its session, probably within a couple of weeks, but it looks like I was wrong to conclude that the toll on the Sakonnet River Bridge would not be removed, and that the legislative push for alternative transportation funding was in large part a “distraction dance” to make it seem as if the legislators from the East Bay were doing everything they could in that futile cause.  So what went wrong?  Or rather, what went right that made me wrong?

One obvious factor is that the East Bay representatives got lucky inasmuch as a surprise change of leadership gave them negotiating power during the campaign for speaker.  I’ve been saying all along that the legislators had to become single-issue voters, pledging not to support any legislation by any peers who would not support ending the tolls.  When Nicholas Mattiello became rapidly interested in the single issue of his own election to the chair at the front of the House chamber, support for that one proposal became as politically valuable as a session full of “nay” votes.

Another thing that the change in leadership did was to paint a line between the vote to implement the toll and the vote to remove it.  Even though Mattiello was a lead proponent of the toll on the night that it passed, he was so as the majority leader under Speaker Gordon Fox.  Because the membership of the General Assembly is pretty much the same as it was, that line is hardly a barrier, but it makes a political difference when the public learns that the state government spent nearly $5 million to set up the toll and, by halting it, will only have collected about $700,000 and that there’s potentially another million due as a termination fee to the company with which the state contracted.

Another error I apparently made was in overestimating how much legislators from other parts of the state would care about a plan that raises gas taxes and various automobile fees on their constituents.  With the toll a done deal and only the local senators and representatives able to be reached by the affected voters, I didn’t expect all of the rest to agree to more nickle-and-diming of their constituents during an election year.

In that regard, it appears that my massive cynicism was still not enough, at least when it comes to the degree to which legislators really do see their neighbors as an endless source of funds.

10 News Conference Wingmen, Episode 34 (General Assembly Budget)

Justin and Bob Plain discuss the General Assembly’s budget and whether all money in a society belongs to the government, so that letting people keep it is the same as giving it away.

State Government Tightening the Screws: Goes After the Use Tax

Before one even gets to the tax-increasing provisions associated with eliminating the Sakonnet River Bridge toll, one comes upon this surprising gem in budget article 12.  It was in the governor’s original proposal, but I haven’t seen anybody comment on it.

When reporting the amount of use tax obligation on the Rhode Island personal income return, the taxpayer shall list either the actual amount (from books, records, and other sources), or an amount using a lookup table established by the tax administrator.

Many Rhode Islanders might not know it, but they’re supposed to figure out how much money they save on the sales tax by shopping out of state (or online or through catalogues) and pay that amount along with their income taxes.  Until now, it’s been a bit of a joke, so much so that I’ve previously suggested that if the state government really wants to make Rhode Islanders feel the encroachment on tyranny, officials should start trying to enforce the use tax.

Well, that’s what this new provision does.  You’ll either have to be able to document all of your out-of-state shopping, or you’ll have to pay 0.08% of your adjusted gross income ($8 per $10,000).  The governor’s budget projects $2.2 million in revenue from the provision.

What if you don’t shop out of state?  Wait for the audit, I guess, and somehow prove that you didn’t.


Quick addendum:

Some folks in town (a small minority, as it turned out) mocked me for reducing a relatively small property tax increase in Tiverton to zero percent increase.  But sifting through the latest version of the state budget, one gets the impression of a government trying to squeeze every possible dime out of the people who live within the borders it controls.  You’ve got another $40 or so through the now-to-be-enforced use tax.  You’ve got another $16 to register your car.  Starting next year, the gas tax will creep up with inflation.  I’m sure a closer look will find more such tax increases.

It may not seem like much to the insiders and the wealthy, but all of these costs, mounting each year and never receding, quickly begin to have a significant effect on the quality of life that most of us can enjoy.

The Progressive’s Property Tax Comeuppance

This made the rounds of conservative Web sites, yesterday — on Instapundit, for one — but it’s too telling not to share:

“I’m at the breaking point,” said Gretchen Gardner, an Austin artist who bought a 1930s bungalow in the Bouldin neighborhood just south of downtown in 1991 and has watched her property tax bill soar to $8,500 this year.

“It’s not because I don’t like paying taxes,” said Gardner, who attended both meetings. “I have voted for every park, every library, all the school improvements, for light rail, for anything that will make this city better. But now I can’t afford to live here anymore. I’ll protest my appraisal notice, but that’s not enough. Someone needs to step in and address the big picture.”

To be fair, Ms. Gardner doesn’t appear to be incensed as much about the total taxes the city is collecting; she thinks the government should have all that it wants (and maybe more)… just not from her.  That is, it appears that, in their protest, such residents are not learning a lesson, but reinforcing their ideology.  The culprit, in the article, is that the commercial property tax rate is too low.

There are no statements from advocates on the other side, so readers should expect that the article is not the whole story.  It’s possible, for example, that the zoning restrictions or other regulations often favored by the same folks who vote for every public expenditure that comes their way have constrained the commercial market in Austin, so the prices for such properties haven’t kept pace with residential prices.

It certainly wouldn’t be unusual for progressive residents to push for government projects that simultaneously increase the cost of taxes and make the area more aesthetically pleasing, which drives up the value of residential property, while also tightening the reins on commercial property. That could create a perfect storm to wallop well-meaning residents who didn’t consider the hidden costs of their votes.

The tragedy, which is easy to find in Rhode Island, is that there are a whole lot of people who either vote against all of those projects that attract the support of Ms. Gardners or don’t vote at all and who have already been steamrolled by the mounting tax bill by the time the big spenders feel the pinch.  In local parlance, around here, those taxpayers who feel the strain before the progressives are the “one percenters” who want to “destroy the community” and “hurt children.”

Len Lardaro’s Hints of Technocracy

URI economics professor Len Lardaro’s suggestions about how Rhode Island government should develop its economic policies takes a rosy view of experts and misses the critical structures of a democratic republic.