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Sales Tax and Another Threatened Lawsuit Against Money-Grabbing Government

Is it me or are the policies the Rhode Island General Assembly is implementing sparking more lawsuits, lately, indicating a desperation to find new ways to squeeze money out of a strangling economy? Here’s the latest:

The new rules order online retailers with no physical presence in the state to collect the state’s 7-percent sales tax on purchases by Rhode Island buyers or mail those buyers a letter notifying them that they owe the equivalent use tax on the items. Buyers already owe use tax on purchases made from out-of-state sellers, including websites, but very few actually pay it at the end of the year.

NetChoice, an e-commerce trade group that’s challenged online sales tax policies in states across the country — including a current lawsuit against Massachusetts — is urging senators to reject the sales tax provisions in the Rhode Island budget, which they call “privacy invading,” costly and unfair.

“Don’t pass this law,” said Carl Szabo, senior policy counsel at Washington, D.C.-based NetChoice. “It is hard to understand what the purpose of it is except for the perception that the Internet is hurting Main Street. Now Amazon, Walmart and most of the top 20 online retailers collect and remit sales tax for Rhode Island.”

NetChoice is coming off a victory on Wednesday when Massachusetts Gov. Charlie Baker, responding to the lawsuit, abruptly canceled plans to begin collecting sales tax on Internet purchases from out-of-state retailers.

The next question is who is going to sue over the fact that Rhode Island will effectively be double-taxing the thousands and thousands of Rhode Islanders who pay the minimum use tax on their income tax returns even though they’ve already paid sales tax on all of their online purchases?

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Huge Generator: RIDOT Recommended The Engineering Firm That Missed Five Bridges

You may have seen the huge, yellow tarp-covered generator that has been parked on the side of Route 95 north just past Route 4. It’s been the cause of lots of rubber-necking. Then came the news a couple of days ago that it had been pulled over by RIDOT while traveling and ordered not to advance because it is very heavy – 560,000 pounds.

John Tassoni, speaking for the company that is moving the generator, was on the WPRO Morning News with Gene Valicenti this morning. And he shared some eye-opening information about how the generator came to be side-lined.

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Budget Season: Opportunity for Articulating a Vision for Rhode Island

Every year, this time of year, the budget for the State of Rhode Island comes out and, accompanied with surrounding legislation (much of it premised, one can infer, on quid pro quo for budget votes) shows the vision of the insiders who run our state.  Every year, life in Rhode Island becomes more restrictive, business becomes harder, government budgets go up.

Earlier in this legislative season, the RI Center for Freedom & Prosperity put out a pair of “Hey, Dude!” radio ads illustrating the point from the perspective of somebody who wants more freebies and somebody who sees the opportunities inherent in a society out from under government’s thumb.

For a little fun, here’s a pair that I’ve put together.

Open post for audio.

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Legislation Holds Mobility Over the Heads of the Poor for Municipal Bucks

I’ve been very critical of Mike Araujo and his rhetoric on this site, but he is absolutely correct to object to this bill:

Tuesday night, the House Finance Committee passed a bill (H-6213A) that seeks to expand the denial of vehicle registration to individuals who may have outstanding unpaid interest or penalties on fines owed to a city or town, rather than only revoking it for the amount of the fines themselves owed to the municipality.

Legislation like this, making it easier for people to lose their licenses or registration based on financial debts, has been criticized all over the country for its problematic and counterproductive effects on poor Americans. Driving without a registered vehicle leads to substantial penalties or even a revoked license, which simply worsens the person’s financial issues and hardships. This in itself is challenging since the restrictions would deny the person the ability to drive to work, school, or any other related activity making them less able to meet their monetary obligations.

As an indication of how thoroughly aggressive the legislation is, even in the small details, consider this:  Right now, the legislation requires the city or town to pay the DMV $5 in order to request a registration denial, and that fee “may” be added to the total due from the driver.  This bill waives the up-front payment and says that the $5 “shall” be added to the total.

Where is the public interest in all of this, beyond wanting more money for profligate government?  People need to be mobile to have a shot in the modern world and making it more difficult for them to get right with the regulations for mobility undeniably makes it more likely that they will continue struggling and probably remain dependent on government.

The legislation’s primary sponsor is progressive Democrat Christopher Blazejewski of Providence, who apparently submitted it at the request of the city, but who, in doing so, proved that government always comes first for people in government.  Keeping others dependent on government isn’t exactly contrary to that goal.

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Not Just Spending, but That Upon Which It Is Spent

Reading about Illinois’s budget problems a little earlier today, an association nagged at the corner of my mind, and I remembered something from Table 5 of the National Association of State Budget Officers (NASBO) report comparing the states.  Specifically, in fiscal year 2015, Illinois was near the top of the list when it came to the percentage of its budget spent on “other” expenditures — that is, things other than elementary & secondary education, higher education, public assistance, Medicaid, corrections, and transportation.

The states higher than Illinois seem generally to have unique circumstances (Wyoming, Oregon, Alaska, and Hawaii), and with 43.7% of the budget going to “other” expenditures, Illinois is way up there.  What’s apt to catch a Rhode Islander’s attention is that our state is only two ranks behind Illinois (after Nevada), with 42.1%.

That, if you’re wondering, is the highest in New England.  The percentages across New England are interesting, particularly in the degree to which they scuttle some clichés.

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Two conspicuous myth busters are Massachusetts’s relatively low spending on education and Rhode Island’s relatively high spending on higher education.  Also conspicuous is Rhode Island’s low spending on transportation.

Overall, though, notice that, with the exception of higher education, Rhode Island is typically in the bottom tier for all categories, to the benefit of “other.”

What is this “other”?  And why do we need so much of it?

Of course, we need to keep in mind that these percentages might be a little misleading, inasmuch as the amount of total spending will make a big difference.  Nonetheless, the results are interesting.

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The Bubble Begets Tone-Deafness on Eternal Contracts

So, the teachers unions’ annual attempt to give themselves even more leverage in negotiations by making their contracts eternal is back in the mix.  The lobbying by union employees and donations to politicians are ultimately taxpayer funded, so this bill probably won’t go away until it passes someday.

What’s notable, this time around, is that the bill accompanies a labor dispute in Warwick, leading to this telling point from Warwick Teachers Union President Darlene Netcoh:

Netcoh said the bill “levels the playing field between employers and employees.”

Referring to [Warwick Schools Supt. Philip] Thornton, she added: “Would he go to work every day if he didn’t have a contract? I don’t think so.”

One wonders how it could have escaped Netcoh’s attention that plenty of Rhode Islanders go to work every day without contracts.  See, it’s called “a mutually beneficial transaction.”  The employer has work that has to be done, and the employee has a need to earn income.  If a contract makes sense in a particular circumstance, then the parties draw one up and abide by it; otherwise, the contract is essentially a casual, even verbal, agreement to do work and to pay for work that’s done.

In government, though, it’s not about that mutually beneficial transaction, in part because nobody’s spending their own money.  Contracts for government employees are fundamentally agreements about how much one party will take from taxpayers and transfer to the other party, and so they’ve become a mechanism for labor unions to get politicians to lock taxpayers into expenses.

This eternal contract legislation is about ensuring that taxpayers are locked in to the promises of elected officials (often elected with the help of the employees) to an even greater degree.

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Rhode Islanders Are Voting With Their Feet

Perhaps nothing is more telling about whether Americans see a state as providing sufficient opportunities for prosperity and a better quality of life than whether or not they are flocking to or fleeing from its borders. No other measure paints a more realistic picture of whether or not a particular state is an ideal place to raise a family or build a career than how people “vote with their feet.”

At the Center, we know that that the high levels of taxation and over-regulation imposed in the ever-growing state budget is the main culprit in causing Rhode Island’s stagnant performance.

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The Other Side in Battling Climates

RI Center for Freedom & Prosperity CEO Mike Stenhouse appeared on Dan Yorke State of Mind this week to talk about the Center’s Family Prosperity Index (FPI) release, but inasmuch as he followed a segment criticizing President Trump’s decision to withdraw from the Paris climate change accords, he tied the two together thus:

The one thing that’s missing from all [your previous guests’] discussions you heard was how this impacts real people and real families.  There’s this mythical — I don’t think the professor can prove that there’s “catastrophic” climate change coming — there’s this mythical problem we’ve created of this catastrophe.  Maybe the temperatures are rising, but is it a catastrophe?

What we do know is that it drives all these crazy energy policies, like the carbon tax, like energy mandates, that are driving up energy rates on families and businesses, that are driving people out of this state.  Do you know that in those 12-year periods, we’ve lost the equivalent of 11 cities and towns worth of people to net migration loss.

The costs of energy and other taxes and regulations are so high on businesses and families that they’re fleeing our state.  Eighty thousand people.  That’s 11 of our smaller cities and towns gone.

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Maybe We Should Worry More About the Effects of Family-Climate Change

The other day, I posted a chart showing how net domestic migration loss — that is, the number of people leaving Rhode Island for other states beyond those who moved the other way — equated with a loss of the full populations of 11 towns.  RI Center for Freedom & Prosperity CEO Mike Stenhouse wanted another way to visualize the loss, and we came up with this:

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We hear all sorts of fears about how climate change will affect the lives of Rhode Islanders at some unspecified point in the future.  Yet, clearly, the change in the state’s climate for business and for families is already having a detrimental effect.  Why do our elected leaders seem more concerned about speculative harm in the future than the observable change in our social landscape occurring right now?

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Don’t Forget Benefits When Considering the Cost of New Employees

Catching up on my podcast file on the way home from dropping children off at school, I listened to RI House Minority Leader Patricia Morgan talking to Tara Granahan on WPRO last Wednesday.  Among various topics, they discussed my estimate of net new hires under the Raimondo Administration, emphasizing the $30 million cost in salaries.

Combining that with Monique’s post earlier about the the possibility of 100 new hires in the Raimondo budget for next year makes clear the importance of a reminder:  Employees don’t just get salaries; they get benefits, too.

For an ongoing project, I’ve estimated that state workers’ benefits are, on average, 72% of their salaries.  So, if we want to know the cost to the state of new hires in Governor Raimondo’s first two budget years, we would have to add to the $30,639,475 in new salaries another $21,953,184 in benefits.

If you don’t have a calculator handy, that’s a total of $52,592,659.

For some perspective, according to WPRI’s Ted Nesi, the final cost to taxpayers of the 38 Studios debacle was a one-time tab of $38.64 million.  That’s much less than the $52.59 million in annual employee costs from the state government’s expansion of its workforce over the past two years alone.

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One Hundred New State Jobs Would Only Perpetuate Failures & Failed Approach

Both the proven failure of a budget-centric approach and Governor Raimondo’s dismal public policy track record should give the General Assembly real pause when considering her reported request for one hundred new state hires – and other initiatives, past and prospective.

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Government That Primarily Seeks To Grow Itself

We know that that the high levels of taxation and over-regulation imposed for the sake of the state budget are the primary culprit in causing the Ocean State’s stagnant performance. Put another way, overspending by a government that primarily seeks to perpetuate and grow itself, actually works against the best-interests of the very people it is supposed to be serving. Instead of seeking to grow prosperity, government seeks to grow itself.

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A Market for Flight Could Be a Market for Everything

Here’s an interesting tidbit from a Providence Journal article in which Carol Kozma attempts to answer the question, “Why are airlines growing more interested in T.F. Green?”:

Location, location, location. It’s not only good for real estate, but also for airlines.

T.F. Green is “an access point for a huge part of the Northeastern U.S.,” said Boyd, an industry analyst based in Colorado.

Sixty-four percent of New Englanders live within 75 miles of Green, according to the Rhode Island Airport Corporation.

Roughly speaking, a circle around Warwick with a radius of 75 miles catches Boston, Worcester, the beginnings of the cape, and much of Connecticut, nearly to Hartford.

Naturally, what this brings first to my mind is how big of a market is within a short drive of Rhode Island if the state were to dramatically reduce or eliminate its sales tax.  More than half of all New Englanders probably live within an hour’s drive of the Ocean State.  Extending a low (or no) sales tax to that customer base, especially with ready access (and expanding) to every form of transportation, from sea to sky to road to rail, would create huge incentive for businesses to consider Rhode Island — even without taxpayer subsidies.

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The Budget: The Progressive Approach

Despite the false hopes expressed by lawmakers based solely on a reduced unemployment rate, Rhode Island families are hurting. The Ocean State suffers under the worst business climate, and 48th rank on our Center’s Job’s & Opportunity Index. Furthermore, Rhode Island was the only state in New England to see its labor force decline in size in recent years, as hundreds of thousands of people have chosen to leave our state since 2004. This is not a recovery.

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General Assembly Must Step In – Tolls Have Taken A Dangerous Turn

Below is a statement that StopTollsRI.com (for which I am spokesperson) placed on its Facebook page last night. The R.I. Trucking Association and the American Trucking Association have announced that they would wait until all 30+ toll gantries were installed before they would challenge the legality of truck tolls in court. This alarming development first came to light Thursday night in testimony before House Finance. See Mike Collins’ testimony starting at approximately minute 1:52:40.

Tolls have taken a dangerous turn for Rhode Island residents and taxpayers. It is now imperative that state legislators and General Assembly leadership step in for the good of the state and end the truck toll program.

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Why Did RIDOT Replace the Bridge? Because It’s There.

So, we had no choice but to implement a new series of tolls on trucks under Democrat Governor Gina Raimondo’s RhodeWorks program because the state doesn’t have any spare money and we don’t have time to spare before roads and bridges crumble dangerously.  Right?

If that’s the story, this is difficult to understand:

Rhode Island Trucking Association President Chris Maxwell is calling for the immediate formation of an independent oversight committee to review bridge inspection information related to project selection under the RhodeWorks truck-only tolling plan.  …

The bridge is located on Interstate 95 in the area of the Thurbers Avenue curve. It is a 50-foot overpass that will undergo superstructure replacement at a cost of $5.7 million dollars.

“The Oxford Street Bridge has a 72% sufficiency rating which means it’s in very good shape. We have very serious concerns as to why RIDOT selected this location to spend our industry’s toll money and our taxpayer’s limited funds to essentially replace a structure that is in good condition while other bridges in our state are crumbling,” said Maxwell.

Like Tara Granahan, I’m not sure I understand why the state would have to replace the bridge in order to put toll gantries on it, which is the scheme that Maxwell alleges.  Still, if there isn’t some ulterior motive, it ought to be a relatively simple matter for the Dept. of Transportation to clarify its reasoning, no?

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