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Mike Stenhouse on with DePetro on Marijuana’s Effects on Business

Related to a brief that the RI Center for Freedom & Prosperity released this week concerning the complications that legalizing marijuana would create for Rhode Island businesses, RI Center for Freedom & Prosperity CEO Mike Stenhouse appeared on John DePetro’s WADK 1540 AM radio show. Also: a new baseball stadium and sales tax.

Click full post for audio.

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Building in a Structural Surplus

Over in Tiverton, the school department is considering campaigning for an alternate budget that would add to its structural surplus.  I look at the history over on Tiverton Fact Check:

The prospect of that campaign reminds me of spring 2015.  That year, a budget petition that I put forward reduced the school’s increase by about $126,000.  (The school budget still went up more than that, but not with local taxes.)  The school committee voted to cancel plans for all-day kindergarten.

Ultimately, they reversed that decision after weeks of advocacy on my part and that of affected parents.  How much would you guess their budget came up short at the end of the year?  It didn’t.  In fact, the school department had $1,130,867 left over, a surplus, bringing its reserves to $3,454,163.  If my budget petition had lost (or if all-day kindergarten had actually been cancelled), the surplus would have been around $1,257,208 for a total of about $3,580,504.

The most important phrase in Rhode Island public school budgeting is “maintenance of effort.”

Continue reading on Tiverton Fact Check.

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PawSox and the Way Rhode Island Doesn’t Work

Reading up on the matter of the Pawtucket Red Sox and their search for a better stadium, as well as on the new Rhode Island Senate President Dominick Ruggerio (D, North Providence), something jumped out at me.  Here’s Ethan Shorey reporting on Ruggerio’s elevation to president in The Valley Breeze:

Given the fact that Providence and North Providence have two of the highest car tax rates in the state, Ruggerio said one of his top priorities is reducing or eliminating the state’s car tax.

As we all know, the person who made elimination of the car tax a major issue this year was Speaker of the House Nicholas Mattiello (D, Cranston), who — it needn’t be said — has a lot of influence over whether Ruggerio is able to move his own priorities.

Now here’s Patrick Anderson reporting in the Providence Journal on Ruggerio’s support for public funding of some sort of major project benefiting the PawSox:

Ruggerio said [Pawtucket Red Sox Chairman Larry] Lucchino did not present him with a specific request for state funds or identify a stadium site. He said those specifics are being negotiated with representatives of Gov. Gina Raimondo’s administration.

Doesn’t it seem like these multi-million-dollar matters are ultimately decided by a handful of politicians, each of whom has a self-interested agenda….

  • Mattiello to make his House seat more secure
  • Raimondo to pave the way for reelection and moving up in national politics
  • Ruggerio for some other reason, perhaps benefiting the labor union for which he works

… and basically negotiating for those reasons how they should distribute other people’s money?

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A 3.0% Sales Tax Is A Question of Fairness

As taxpayers continue to be asked to fund generous corporate subsidy programs, lawmakers are now dueling over two new spending ideas, reimbursing localities to phase-out the car tax and public funding for free college tuition, each of which would likely further raise taxes and fees on Rhode Islanders. But would these programs make Rhode Island a better state? Or would the more innovative and bold policy concept of cutting the state sales tax help families become more self-sufficient?

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Sales Tax Talk on Matt Allen

I was on Matt Allen’s 630AM/99.7FM show on Thursday to talk about the possibility and fairness of lowering the Rhode Island’s sales tax to 3.0%, as proposed and researched by the RI Center for Freedom & Prosperity:

Let me know how well I did covering up a strange burning sensation in my throat and some mute-button coughing.

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Will RI Be Beaten to the Sales Tax Reduction Punch?

Uh-oh, Rhode Island.  Maybe we should get on the ball and move along a big sales tax reduction.  Here’s what’s happening in Massachusetts:

There may be a major tax cut competing with the significant tax increase that’s already being prepared for the 2018 ballot in Massachusetts. …

A poll conducted for the retailers association in November by Princeton Research Associates reminded respondents that the so-called millionaire’s tax may be headed for next year’s ballot. Seventy-nine percent of those respondents said they support reducing the sales tax to about 4 percent or 4.5 percent to make the tax system fairer and to support local retailers. In the poll, 66 percent said they believe the “proper sales tax range” for Massachusetts would between 4 percent and 4.5 percent.

Let’s get down to 3% this year and watch our economy boom.  I’ll even let Governor Raimondo take some of the credit.  (Some.)

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Rage Against the Keeping of the Tax

The RI Center for Freedom & Prosperity has published a brief of mine noting ways in which the state’s sales tax is unfair — and increasingly so:

In summary, Rhode Island’s sales tax — the highest in New England and 30th out of 50 in the country — was first implemented to solve a problem that it did not solve, has been increased with the promise of reductions that never happened, and is leading to a stealth double tax.

Some of the points are cute, like noting complaints about municipal budget problems to create the sales tax in the middle of the last century. Some of them are well known, like the “temporary” increase that never went away after the banking crisis.

But the point that would outrage a community that wasn’t either bought off or beat down is that the state government is slipping into online sales taxes without lowering the rate as promised or even eliminating the minimum “use tax,” which is premised in part on capturing online sales that weren’t taxed.  If you buy anything on Amazon this year and don’t itemize the “use tax” section when you fill out your income tax forms next year, you’ll essentially be paying taxes twice on your online purchases.

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Correlation of Business Friendliness and Voting Habits

Readers may already have come across Fayetteville State University Accounting Professor Robert McGee’s new ranking of states for business friendliness:

This study is the first annual McGee Report on the best and worst states for business. The fifty states are ranked based on the extent to which they facilitate business creation and expansion. This study incorporated the data collected from five other studies, which included the examination of hundreds of variables. Utah was found to be the most business friendly state; California was least business friendly. States that voted Republican in the 2016 presidential election tended to be more business friendly than states that voted Democratic.

Rhode Island, if you couldn’t guess, is in the bottom five — 46th, to be specific.

Pepperdine University School of Law Tax Professor Paul Caron emphasizes just how much voting habits tend to correlate with business friendliness:

The Best And Worst States For Business: 90% Of The Top 10 Voted For Trump; 80% Of The Bottom 10 Voted For Clinton

Of course, how one looks at these results will depend a great deal on how one looks at the world.  Some would (correctly) note that business friendliness is not the only important measure of a region and point out the advantages of California and the Northeast, where most of the bottom states are located.  Others would (even more correctly) argue that the biggest advantages of those regions have nothing to do with their style of governance and that business unfriendliness correlates with general suppression of people and, especially, their ability to improve their plight.

The epithet I used to hear a lot about Rhode Island was that it’s a playground for the rich.  Business unfriendliness tends to indicate that that’s still the case.

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The “Real” News About Healthcare Reform

The Providence Journal and Rhode Island progressives are doing a disservice to the people of our state by advancing a biased and non-realistic perspective on the federal healthcare reform debate.

There are few issues that are more personal or important than planning for the care that can preserve the health of ourselves and our families. But what governmental approach best helps us accomplish this?

Currently, our state is following the federal Obamacare approach of seeking to insure more people with government-run Medicaid or with a one-size-fits-all government-mandated private insurance plan. This approach is in a death-spiral.

Continue reading at Rhode Island Center for Freedom and Prosperity.

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Local Taxes Set Us Back to the Future

I heard somebody say, recently that Tiverton is trying to run its town on a 1988 budget, so naturally I figured I’d take a look at the numbers:

It would be more true to say that in 2016 we paid 2044 taxes, because that’s when the average inflation rate of the last three decades would have brought the 1990 levy up to $37.8 million.  If remembering 1988 makes you feel old, how young does imagining 2044 make you feel? …

One detail makes the chart much more shocking: We’re being asked to pay our 2044-level taxes with 1990 income, or pretty close.  From 1990 to 2015, median household income in Tiverton increased about 2.8% per year, versus about 2.4% annual inflation, even factoring in population growth.  If Tiverton households’ income had grown as much as their town taxes, the median would have gone from $36,170 in 1990 to $124,295 in 2015.  The actual number was $71,901.

My general sense, statewide, is that Tiverton’s taxes are on the extreme end, but that most cities and towns have had a similar story, with taxes increasing well beyond inflation while income just barely kept pace with the cost of living.

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Subsidized Wind Fights for No Taxes

Although it is unfortunately not online, a March 8 Newport Daily News story by Marcia Pobzeznik raises an interesting controversy involving a wind turbine in Tiverton.  Like all green energy installations, the turbine is heavily subsidized, and it is arguably more so, in this case, because it is part of the affordable housing development at Sandywoods Farm.  That hasn’t made the owners shy about wanting to skirt their tax bill.

According to Tiverton’s tax assessor, David Robert, the turbine is worth $395,000 and is taxed accordingly at $7,560 annually.  Church Community Housing Corp., the owner of the development, is arguing that the turbine should be exempt from taxation because the energy is sold at retail.  There, if I’m understanding the article correctly, is the rub:

The electricity generated by the turbine is sold to National Grid per an agreement signed on May 9, 2011. The 275-kilowatt turbine’s output would “offset some, but less than all of the projected on-site usage” of the housing development, according to the agreement that Sandywoods shared with the Tax Assessment Board of Review.

Because of the way the transaction is structured — with the turbine owner receiving a check from National Grid and being charged separately for its own energy — the lawyer for the development argues that it is, indeed, selling the energy.

One suspects that, even to the extent the general public pays attention to public policy, most people wouldn’t think it matters whether a turbine owner gets a reduction on his or her bill or just a check that offsets energy usage.  With green energy, affordable housing, and any government-subsidized activity, though, one must always assume there to be a scheme.

Just another reason to stop all subsidies.

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Don’t Want “Devastating” Cuts? Don’t Rely on Federal Government.

It seems that the special interests who rely on federal money for their income in Rhode Island (in and out of state and local government) have been working to keep stories like this in the news every week:

Potential cuts to the National Oceanic and Atmospheric Administration put forward by the Trump administration could have devastating effects in Rhode Island.

The Coastal Resources Management Council, the state agency that oversees development along the state’s 400 miles of coastline, would lose nearly 60 percent of its funding.

This is the problem with the government plantation/company state model.  When you’ve built your economy around the government’s ability to make other people pay for services that the government insists on providing, local taxpayers will move away and people in other states may decide to cut funding.  It’s a risky dead end of an economic development approach.

Our goal as a state (similar to our goal in our cities and towns) should be to react to news of changes at the federal level by expressing relief that we don’t rely on the federal government for much of anything.  That would be a state of both freedom and stability.

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First, They Give You Money; Then, They Take Your Freedom

Buried in legislation that would begin treating “sugary drinks” in Rhode Island as something akin to cigarettes or alcoholic beverages is one of the best arguments for turning down the government when it wants to give us things.  H5787 and S0452 — led by Central Falls Democrat Representative Shelby Maldonado and Pawtucket/North Providence Democrat Senator Donna Nesselbush — would create new, burdensome licensing requirements for businesses seeking to sell the evil elixirs and impose an inflation-adjusted tax on them, enforcing the law not just with fines and licensing consequences, but with a criminal charge.

Central to the rationale for the law is this language:

Medicare and Medicaid spending would be eight and one-half percent (8.5%) and eleven and eight tenths percent (11.8%) lower, respectively, in the absence of obesity-related spending.

There you go: The price of letting government pay for things, like health care, is that government then gets to tell you how to live.  This will get worse if we don’t make such politicians pay a political price of their own.

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Labor Unions, Less About Workers and More About Government

The American Interest offers what might be termed a labor thought for today if it hadn’t been sitting in my bookmarks for a week:

It’s significant that ground zero for public sector union reform is the upper-Midwest, once the capital of organized labor. Democrats try to cast such reforms as a betrayal of workers, but in a post-industrial age when half of union members are public employees whose demands for fatter benefits packages come at direct expense of the taxpayers, many voters don’t see it that way. As James Sherk noted in our pages last year, “A movement formed to defend blue-collar laborers now fights primarily to help white-collar workers expand government.”

That point cannot be sufficiently emphasized:  labor unions, overall, are now dominated by the public-sector subsegment, which has a very different model.

In the private sector, the union negotiates with management for the share of profits from sales to customers that goes to the workers.  In the public sector, the union helps elect management with whom it can conspire to take more money from taxpayers, who must either leave the area or pay up once the unions achieve political dominance, as they have in Rhode Island.  That is, in the public sector, it’s a process more resembling theft than negotiation.

Of course, one should note that the strength of unions in the private sector, such as it is, often comes with their ability to manipulate the law to force clients — mainly governments — to use union labor or to box competitors out of big markets — like government projects.  In that regard, even more of organized labor should properly be seen as existing in the public sector.

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UHIP & Prostitution? Big Government Is Not Competent Enough To Run Our Lives

The status quo in Rhode Island needs a reality check with regard to the now epic UHIP computer systems disaster. With reports of Rhode Islanders being driven to extreme measures to make up for the loss of social safety net, the insiders must realize that once again they have headed down the wrong path. Big government is incompetent to run our lives.

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Risk Aversion in Stocks and in Politics

Here’s an interesting find from Justin LaHart in the Wall Street Journal, in a brief article titled “Why the Stock Market Doesn’t Like Republicans“:

The two economists created a model where people have a choice between being entrepreneurs and working for the government, and of voting for a political party that favors lower taxes or higher taxes. When risk aversion is low, more people want to be entrepreneurs and to vote for the low-tax party. When risk aversion is high, the opposite is true.

It is a highly simplified version of U.S. politics and economics. But the implications for stock prices are interesting. The low-tax party gets elected when risk aversion is low, and then if risk aversion merely returns to the mean, stocks suffer. For the high-tax party, the opposite is true.

The next question, obviously, is what causes these changes in sentiment, because the variables seem more to correlate than to cause one another.

Of course, they may have a causative relationship indirectly.  The high-tax party, for example, is likely to sense this dynamic (whether consciously recognizing it or not) and change policy in a way that makes people more risk-averse (such as regulations to make independent activity more difficulty while acclimating people to dependence on government’s socialization of risk).  Indeed, even when they promote entrepreneurialism, they strive to make it seem like something that cannot be done without the safety net of government subsidies.  (“You didn’t build that.“)

The insight has implications for advocacy, too.  Conservatives who make a theme of imminent doom under progressive rule — however accurate that theme is — may be making the public more inclined to fall for progressive promises of security.  The key, perhaps, is to make people feel secure in their families and their own ability to transcend

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Making Distinctions on Immigration

This New American Economy study of immigration has been going around:

Though it is our nation’s smallest state, Rhode Island is home to almost 140,000 immigrants. The state’s immigrants are mostly of working age and play a valuable role in both the manufacturing and software industries. They are also bolstering the housing market by buying the wave of homes coming on the market as baby boomers retire; all of these positive contributions are critical to the success of Rhode Island’s economy.

For the most part, this has been deployed as part of the mainstream effort to blur lines on immigration, proclaiming the value of immigrants generally.  That has always been a distortion of the debate; I don’t know anybody who objects to controlled immigration that takes account of the national interest and emphasizes assimilation.  The first objection people have is to illegal immigration, and the (distant) second objection is to indiscriminate legal immigration that bolsters welfare roles and puts downward pressure on low-end wages.

With respect to illegal immigrants, note that, overall, immigrants in Rhode Island pay $886.1 million in state and federal taxes, based on income of $3,500 million.  That’s 25.3%.  By contrast, illegal immigrants pay $43.7 million on income of $365.2 million, which is 12.0% — less than half the rate for all immigrants.  (The proportion for state taxes is roughly the same as taxes overall.)  Note that the numbers for legal immigrants would be substantially more positive than the presented numbers, because illegal immigrants account for 20% of them and bring the numbers down.

Those on the political Left might say that this proves that illegal immigrants should be normalized so they’ll pay more taxes, but the type of work they do is different, as is their propensity to need financial assistance.   The New American Economy study (surprise, surprise) doesn’t give information on welfare programs and other public expenditures (such as for education), but that’d probably be higher for the illegals, too.

Rhode Island should refocus immigration policy on those who contribute the most, certainly until our employment situation is no longer stagnant.

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Government Coercion by Another Means

Here’s the article I mentioned in this week’s podcast, about tax deals for corporate charity:

A bipartisan group of congressmen recently introduced a new bill intended to reinvigorate America’s poorest communities. The Investing in Opportunity Act (IOA) will allow investors to temporarily delay paying capital-gains taxes on their investments if they choose to reinvest the money into “opportunity zones” or distressed communities across the country.

The legislation was cosponsored in the Senate by Republican Tim Scott of South Carolina and Democrat Cory Booker of New Jersey, and in the House by Pat Tiberi (R-Ohio) and Ron Kind (D-Wisc.).  These congressmen report that their bill has garnered bipartisan support in both chambers, and they believe that its provisions will allow for tremendous economic growth in some of the country’s most underserved communities.

I might have misspoken in the podcast and attributed the article to the legislator.  The legislator is Tim Scott; the writer is Alexandra Desanctis. Whatever the case, this isn’t a direction in which we should go.

There’s a push among conservatives, recently, to rephrase policies in terms more amenable to the themes in which the Left has caught up the public conversation.  On one end, this is an obvious thing to do — to explain why conservative policies are the ones that will actually help individuals and families come to their full fruition.

Less obvious are policies that accomplish some of the Left’s goals (like making government central to charity), but that have potential to start to reshape thinking.  In that way, for example, taking the step suggested by Representative Scott could lead, in the future, to the additional step of questioning why government’s picking charitable causes at all.

I think this proposal goes a little too far over that line.

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