State Tax Debate Heats Up
Thursday, June 16, 2011
As the Rhode Island House prepares to release its proposed budget at the end of this week, groups on both sides of the debate over whether to raise taxes are making a renewed push to make their voices heard at the Statehouse.
Yesterday, the Rhode Island Public Expenditure Council issued a statement saying that it supported the concept behind Governor Lincoln Chafee’s sales tax changes—lowering the overall rate and expanding the base. RIPEC Executive Director John Simmons told GoLocalProv that the current system dates back to the 1950s and does not account for the role that services play in the state economy.
However, Simmons said RIPEC does not support any changes to the sales tax which would increase revenue to the state—which Chafee’s plan would do to the tune of $165 million. Instead, Simmons said any changes should be “revenue neutral.”
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLAST“It is also RIPEC’s view that modifications to the state’s tax system should not be made for the sole purpose of generating additional revenue,” RIPEC said in a statement released yesterday. “Any changes to the sales tax system should enhance the overall competitive position of the state and create a more balanced and equitable system. The discussion about how best to move the state’s tax policy into the 21st century should be driven by policy – not the need for revenue.”
Ocean State Action: Flip tax rates for richest and poorest
Nearly the exact opposite view is being pushed by Ocean State Action, which is calling for higher taxes as the solution to the state’s revenue problems. In a recent report the group released with a national group, United for a Fair Economy, Ocean State Action said there is a simple way to fix the state’s budget woes: flipping the income tax rates so that the rates currently paid by those earning the least would now be paid by those earning the most, and vice versa.
For example, under the current tax structure, someone earning less than $17,000 pays 11.9 percent of their income to taxes while a person making $85,000 or more pays at a rate of 7.5 percent, according to the study. Ocean State Action is calling for the state to flip those rates, so the higher-income taxpayers owes at the 11.9 percent rate.
The move would generate an additional $1.4 billion in revenue, an increase of 29.3 percent—more than enough to cover a $300-million-plus shortfall.
Tax policies ‘starving state’ of much needed revenue
“Years of misguided tax policies that benefit the wealthiest Rhode Islanders have starved our state of much needed revenue for education, health care for children, and public safety. The state has passed the buck cities and towns who have been forced to raise property taxes leaving working Rhode Islanders feeling both under-served and overtaxed,” said Kate Brock, Executive Director of Ocean State Action.
She added: “Rhode Island legislators should use this year's budget process and take immediate action to fix our upside down tax structure, and they should start by ending tax breaks for the wealthy and reinvesting in property tax relief.”
Brock remained hopeful that the General Assembly might be open to the proposal. “At the end of the day its about taking a responsible approach to our tax and budget process,” Brock said. “Only time will tell if our elected officials have the courage to make our tax structure more just and fair.”
Simmons said RIPEC opposes any major reversal of the income tax reforms passed last year. He said those did not take effect until this year and will not show up on tax returns until next year. He said the state should at least wait until then before scrapping the changes. “We should do it for the whole year to see the impact of it,” Simmons said.
But Brock said the state doesn’t need to wait for a year to realize that the state’ income tax structure is “inherently regressive” and unfair. “Time does not change the fact that the poorer you are in Rhode Island the higher percentage of your income you pay in taxes. As a state we should not only be looking to raise revenue, but we should be doing it in the fairest way possible,” she said.
If you valued this article, please LIKE GoLocalProv.com on Facebook by clicking HERE.
Related Articles
- BREAKING NEWS: State Approves $1.6M Tax Break for Hasbro
- Candidates Shocked Schilling Could Get Tax Credit Too
- BREAKING NEWS: Taveras Proposes Tax Increases
- Candidates Split Over Taxes at Chamber of Commerce Forum
- A LIVELY EXPERIMENT April 14, 2011 Taxes and Pension Costs
- BREAKING NEWS: Vast Majority of RI Opposes Some Chafee Taxes
- Chafee Defends Obama on Tax Cuts
- A LIVELY EXPERIMENT April 14, 2011 The Governor’s Budget and Proposed Sales Tax
- Bill to Prevent Lost Revenue from Tax Credits
- Chafee Is ‘Apocalypse Now’ for Taxpayers
- Bills Would Increase Accountability for Tax Credits
- Chafee Not Backing Down on Sales Tax Proposal
- Are you angry yet? Tax silly season at the State House
- Business Groups Say Chafee Taxes a Job-Killer
- Chafee Tax Critics Don’t Have Realistic Alternatives
- As Tax Credit Expires, Housing Prices Fall
- Campaign Update - Democratic Party Calls on King to Pay Back Taxes to Florida
- Chafee’s Budget: $176 Million in Tax Increases
- BREAKING NEWS: Newspapers Lead Uprising Against Chafee Tax Plan
- Candidate: Raising Taxes Is Not an Option
