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The Highest Taxed Communities for 2013

Friday, November 09, 2012

 

Property taxes continue to rise across Rhode Island, increasing in approximately two thirds of the cities and towns over the last year, according to new state data showing the local rates for fiscal year 2013.

Some of the most dramatic increases are in urban communities facing financial distress. They also happen to be the places where taxpayers can least afford the hikes.

In Woonsocket, the residential rate was hiked by $7.16 per one thousand in assessed values. The second highest increase was in Pawtucket, where the residential rate is now $5.28 higher. Other communities where the rate went up by more than a dollar were Tiverton, Cranston, Foster, East Greenwich, and Middletown. (See below table for the complete list of all the new rates by community.)

Poorer, urban communities are highest taxed

When the tax rate data is adjusted to take into account the wealth of property and the median per capita income, the highest taxed communities in Rhode Island are: Providence, Central Falls, Woonsocket, Pawtucket, and North Providence. Rounding out the top ten are Cranston, Johnston, and Warwick.

“The chart shows there is a continuing pattern in the state where the higher residential property tax burdens are occurring in the communities that can least afford them,” said Donna Perry, the executive director of the Rhode Island Statewide Coalition. “The urban core communities, including Providence, Pawtucket, Cranston, East Providence, and Johnston, are carrying budget deficits, are seeing the higher number of struggling businesses, tend to have the less desirable school systems, yet they are carrying the greater residential tax burdens.

“There’s no positive trends here I’m afraid,” she added.

Just nine communities saw no increase in their taxes.

And four communities saw modest decreases in at least one of their four local tax rates: North Smithfield, Glocester, Warren, and South Kingstown.

Comparing communities

Taxpayers who want to compare the tax burdens between communities can’t simply compare tax rates from one city or town to another, according to Tom Sgouros, a progressive blogger and former candidate for state Treasurer.

“Raw tax rates don’t tell the real story,” Sgouros said. “The real story is that the cities are getting the shaft from the state, and it shows up in the equalized numbers defined in state law. Providence, Woonsocket, Central Falls, and Pawtucket have the highest taxes in the state according to their ability to pay—as much or more than twice the state average—and the legislature has only made the problem worse by cutting state aid and increasing their reliance on the property tax.”

The most meaningful measure of what communities are the highest taxed, Sgouros said, are their “tax capacities” and their “tax efforts.” The tax capacity measures the ability of a community to pay taxes and takes into account the total amount of property and median per capita income. By definition, cities and towns that are wealthier have a higher tax capacity.

The tax effort is how much of that capacity is being tapped by local officials. Those cities and towns that rank higher in terms of “tax effort” are higher taxed than those that rank lower. (See below table.)

Overall, 15 cities and towns are taxing above capacity. Those communities topping the list are within the urban core of the state.

“Property taxes are part of the reason that we have a regressive tax structure that asks low and moderate income Rhode Islanders to contribute more of their income to public services than higher income [Rhode Islanders],” said Kate Brewster, the executive director of the Economic Progress Institute, formerly the Poverty Institute.

She noted that nationally Rhode Island ranks as having the fifth highest property tax burden.

“The property tax conundrum is significant and it seems to be a problem in the northeast,” Brewster said. She noted that state public policy makers have yet to develop an alternative to property taxes that is not regressive.

Uncertain outlook for taxes

One year ago, the outlook for property taxes was uncertain. Taxpayer advocates expressed deep concern that local payers would take a big hit in their rates should the General Assembly fail to pass pension reform. Absent reform, an estimated total of 93 million more would have been owed in local pension contributions.

Pension reform ended up passing, perhaps avoiding the sharp increases that worried taxpayer advocates. However, the state has yet to tackle the other half of public retiree obligations: unfunded liabilities in retiree health care.

As it now stands, the tax burden is too onerous for many taxpayers, Perry said.

“Rhode Island has a critical dilemma where the local tax burden does not match the average city or town resident’s ability to pay it, yet budgets remain bloated, the quality of services keeps diminishing, and the employee retirement burden just keeps piling up,” Perry said. “It seems the goal to bring about more affordable communities in the state continues to move farther and farther out of reach.”

In the wake of this week’s elections, she expressed doubt that there would be much of an appetite in the Rhode Island General Assembly to pass reforms that will benefit local property taxpayers.

“The 2012 election season saw some good reformer styled legislators from both parties ‘taken out,’ generally by union interests who are intent on silencing those who advocate for pension reform, both statewide or in local municipal plans,” Perry said. “The loss of certain Republicans and some centrist Democrats jeopardizes the chances for getting additional needed reforms through in the months to come.”

EXTRA: Understanding the data

Immediately below is one table showing all four rates—residential, commercial, personal, and motor vehicle—for each of the 39 cities and towns in Rhode Island. Next to each rate is a column showing the change, negative or positive, from fiscal year 2012 to fiscal year 2013.

The communities are ranked from most to least taxed, based on a simple sum of all four tax rates. The ranking offers a very rough measure of which communities are the most taxed.

The most meaningful comparison, however, is one that takes into account income and the amount of property in each community. Data that adjusts for those factors is provided in the middle table. The ability to pay is technically known as the “tax capacity.” How much is sought in taxes is the “tax effort.” Both figures are calculated on a per capita basis.

The last two tables break out data from the first table, showing a raw ranking by residential and commercial tax rates for 2013.

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Comments:

RHODE ISLANDERS WANT TO BE TAXED. THEY ELECTED A GOVERNOR WHO SAID HE WOULD RAISE TAXES, AND LATER DID!!!

RHODE ISLAND HAS ALWAYS BEEN A HIGHLY TAXED STATE. WE RE-ELECT THE SAME MORONIC POLITICIANS EVERY TIME, SO THEY CAN KEEP RAISING OUR TAXES.

RHODE ISLAND, YOU'VE GOTTEN WHAT YOU WANT....AND WHAT YOU DESERVE.
YOU'RE ALL IDIOTS!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Comment #1 by pearl fanch on 2012 11 09

Couldn't agree with you more Pearl. I am making plans to get out of this hideous state in the not to distant future. RI sucks.

Comment #2 by Joel Hovanesian on 2012 11 09

At least 7 cities/towns have homestead exemptions. No mention of that in this article.
(East G, Prov, Johnston, Lincoln, Newport, N.Prov, and Woonsocket)

I agree. You got what you voted for. Now shut-up and pay your taxes.

Comment #3 by Chris MacWilliams on 2012 11 09

Not unlike an obese person that smokes and drinks too much, too many towns will wait for a life threatening situation to surface before doing anything. Just like Central Falls.

Comment #4 by David Beagle on 2012 11 09

Article is meaningless without assessed valuation information.

Also: "They also happen to be the places where taxpayers can at least afford the hikes." I don't think so. Maybe drop the word "at"?

Comment #5 by Charles Beckers on 2012 11 09

Are the towns that can least afford more taxes also represented by democrats that care the least whether or not the town can afford more taxes?

Comment #6 by David Beagle on 2012 11 09

All these problems in RI , the high unemployment,high taxes,poor business climate ,cities and towns on the verge of bankruptcy and which party has been in charge of all this? The democrats

I agree pearl!

Comment #7 by anthony sionni on 2012 11 09

It costs $2277.00 to rent a 20' UHAUL truck from Providence to Dallas. The same truck cost $1111.00 to go from Dallas to Providence. The people with money aren't moving here.

Comment #8 by george pratt on 2012 11 09

Chris MacWilliams - the article identifies the towns with homestead exemptions. They are bolded.

Charles Beckers - the assessed valuation information is in the calculation of tax capacity and tax efforts.

Stephen Beale

Comment #9 by Stephen Beale on 2012 11 09

Well I don't know about you all but I am going to fight for deficit reduction, expense reduction and cutting back our pension/healthcare packages for all unions (police, fire, municipal and education). And fight for better education for our kids.
I am in the top 5 towns for tax burden and that is not factoring in the millions that we are on the hook for past pensions and healthcare payments, of course the future increases are not factored in either.
Pretty much the same problem for all 39 cities/towns, so you all better show up at your local town council meetings and start making a lot of noise or guess what, you WILL be paying more for LESS. By the way, I don’t think we have a political party to blame, we have ourselves to blame if we do not represent ourselves by being involved.
Do you know your local political folks, do they know you, if not YOU are part of the problem.

Comment #10 by Gary Arnold on 2012 11 09

@Stephen Beale: And it is stated as "per capita", not "per taxpayer" or even "per wage earner". How many people ("capita") are associated with each taxpayer? Please provide a detailed explanation of the meaning of the tax capacity and tax effort calculations in relationship to the tax rate statistics cited earlier in the article. Your single paragraph is inadequate to understand these statistics and their relationship.

Comment #11 by Charles Beckers on 2012 11 09

Mr. Sgouros and Mrs. Brewster need to understand that soaking the high wage earners only drives them away. California just voted to raise the state income tax to 13.3% on income over $250,000. The cost of a uhaul is 40% less going from Dallas to L.A. Not as bad as it is here, but wait until the new tax kicks in. $250,000 is not "the rich" in California. The state is left with the very wealthy (who earn their money through capital gains) the very poor and the public unions. And that is where RI is heading.

Comment #12 by george pratt on 2012 11 09

There is absolutely no evidence that people move in response to changes in income tax that amount to a few percentage points. What people do move in response to is property taxes. This is why Rhode Island should restore income taxes on the wealthy and use the revenue to lower property taxes.

We also really need to do an unemployment insurance flat tax.

Comment #13 by Samuel Bell on 2012 11 09

Mr Bell,

Please read.

http://www.bloomberg.com/news/2012-11-07/big-texas-welcome-to-californians.html

Comment #14 by george pratt on 2012 11 09

Mr. Pratt,

As everyone knows, the exodus from California had nothing to do with top marginal tax rates. If that were true, then it would be mostly just rich people who are fleeing. California was hit especially hard in the tech crisis of the early 2000s, and its problems were exacerbated by extreme cuts in public services caused by inability to raise enough revenue.

There have been a number of detailed studies examining whether rich people actually move in response to tax changes, and it's clear that they don't. Here's a good literature review: http://www.peri.umass.edu/fileadmin/pdf/published_study/Revenue_PERI_March5.pdf

Anyway, when Rhode Island slashed the top tax rate, people started fleeing the state because it caused a fiscal crisis, with cities around the state going bankrupt.

Best,

--Sam

Comment #15 by Samuel Bell on 2012 11 09

Mr. Bell,
From the article I linked you to earlier

The attraction of lower taxes is powerful. In our detailed study of migration among states, top personal income-tax rates were one of six crucial factors that explain two-thirds of interstate population shifts. The others are right-to-work laws (versus mandatory unions), the relative growth rate of government spending, housing prices, the quality of public schools and climate. With the exception of the weather, California doesn’t rate highly on any of them.

You have your study and I have mine.

Have a good day.

Comment #16 by george pratt on 2012 11 09

why are property taxes in massachusetts so much less than ri and the income tax rates in mass and ri are about the same???

i must be missing something....

Comment #17 by jon paycheck on 2012 11 10

Because we tax alcohol and Mass doesn't.....Oh wait a minute.

Comment #18 by george pratt on 2012 11 11




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