The Highest Taxed Communities for 2016 in RI
Monday, April 04, 2016
The onset of spring in Rhode Island means budget season is here.
For municipal taxpayers, that often means tax increases to cover the increasing costs of local government. And according to a GoLocal review of state and local data, tax rates tend to hit those communities hardest that can least afford them in Rhode Island.
SLIDES: See the Highest Taxed Communities in RI for 2016 BELOW
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLAST“I am very concerned about high property taxes, which I'm quite familiar with here in Providence, particularly because they are a largely regressive tax since they hit folks with lower incomes proportionately harder,” said Aaron Regunberg, a Democrat state representative (District 4).
The data validates Regunberg’s point. The state’s municipalities with the lowest income levels, namely, the urban areas, tend to shoulder the steepest tax burden in the state.
Poorest Hit Hardest
To compare the tax burden among municipalities, GoLocalProv compared what the taxes would be on an average single family home and a 2010 Honda Accord—one of the most popular cars, in each community. That total was then weighed against the municipality’s median household income to calculate the tax burden’s affordability.
With respect to the combination of owner occupied residential taxes and car taxes, Providence isn’t the community whose residents shoulder the largest tax burden. That distinction goes to Central Falls. After calculating what the (owner occupied) household would pay in residential taxes and car taxes, (while applying the town’s homestead exemption), a household would end up paying roughly 20 percent of their income towards local taxes. That’s largely because the median household income is lowest in the state. The median household income is just $28,842. Their total tax bill would be $5,966.
For example, the more affluent town of East Greenwich has a relatively similar tax bill. The combined bill for a median single family home and a 2010 Honda Accord there would total $5,414. That means the tax bill would be roughly 9 percent lower than Central Falls. But the total percentage of the median household income ($92,727) going to taxes would be just 5.8 percent.
Facts and Figures
The median community, the community that lies directly in the middle of the state’s list of 39 cities and towns with respect to tax burden, is Scituate, which pays 5.6 percent of its median household income to local taxes. There, the combination of the state’s median valued home and 2010 model Honda Accord would cost a taxpayer a combined $4,542.16. Scituate’s median household income is $80,802.
Fortunately, for some local taxpayers, this year is an election year. That means officials who are going to face the voters on the campaign trail are going to be hesitant to raise taxes. For instance, Cranston City Council President John Lanni recently told GoLocal that he’s not expecting a tax increase since that city’s Mayor, Republican Allan Fung, is facing a spirited challenge from local Democratic Party Chairman Michael Sepe.
“By hook or by crook, there isn’t going to be a tax increase,” said Lanni.
But that’s not the case everywhere.
Taxes Rising?
The city of Providence, which ranked fourth on the list of highest tax burden, with 13.2 percent of the average family’s income going to local taxes, doesn’t have municipal elections this year. That, coupled with the city’s budget woes and cumulative deficit, leads many political observers to believe the city will raise its tax levy and demand more money from its taxpayers this year than last.
“The city needs additional revenue, however city officials need to eliminate nonessential spending as a necessary first step,” said Providence Councilman David Salvatore.
Salvatore said he would be willing to support a tax increase -- if it was paired with spending cuts.
“If Providence officials are serious about remedying the city’s finances, sound policy decisions such as eliminating the cumulative deficit must be a priority when asking taxpayers for more money,” said Salvatore. “Before we ask taxpayers to sacrifice more of their hard-earned dollars, Providence officials must least by example and make decisions that require political courage.”
Renters Hit Hardest in Providence
Keith Fernandes, who is the President of the Providence Apartment Association, is also looking for courage. He said he’s looking for officials with the courage to treat renters as fairly as homeowners.
Fernandes argued that in Providence, it’s unfair to calculate strictly what property owners pay in taxes. That’s because there are two tax rates in the city. Owner occupied properties pay $19.25 per thousand dollars of value, whereas non-owner occupied properties pay a rate of $33.75 per thousand.
“If you put two identical houses next to one another and one is owner occupied and the other isn’t, the one that isn’t is paying about 75 percent more than the owner-occupied house,” said Fernandes.
“That tax differential is among the highest in the nation.”
That, Fernandes said, just causes homeowners to pass on the tax burden to the renters. That means renters are paying an unfair share of the Providence tax burden, he said.
Poor State Level Decisions
In any event, Regunberg blames the General Assembly for the high property taxes throughout Rhode Island.
“From my perspective, this issue is absolutely connected to state-level policy decisions. Over the last decade and a half, our state has engaged in a transfer of our tax burden. We have lowered taxes that impact the wealthiest Rhode Islanders, like the income tax cut for the highest earners in 2006,” said Regunberg. “But when the voodoo economics, the myth of tax cuts for the rich that pay for themselves, did not materialize, we plugged the budget hole by cutting state funding to cities and towns, which has added to the property tax burden in cities like Providence.”
Regunberg credits legislative leadership for restoring some municipal aid last year, but said more needs to be done going forward.
“I do want to give credit to our current leadership, which has started reversing that trend in municipal aid, for which they deserve recognition. But we're still not close to where we were, which is why I have introduced legislation the last two years that would reverse those income tax cuts for the wealthy and direct that revenue to local school and municipal aid, thereby significantly lowering our property tax burden,” he said.
An Opposing View
Justin Katz, the Ocean State Policy Research Group’s Research Director, disagrees. To Katz’s mind, it’s excessive government spending that’s to blame for the property and car tax woes of Rhode Island. He took aim at organized labor’s influence on local government.
“The Center believes that Rhode Island's high taxes are a symptom of a comprehensive failure of our approach to government. The solution is therefore a comprehensive rethinking of how Rhode Island operates,” said Katz. “One aspect that is central to the property tax question has to do with labor union influence and various regulations and mandates that drive up the cost of labor. We'll be taking a specific, close look at those numbers within the next year, but we can already say that Rhode Island forces itself to pay a premium for insider, special-interest work.”
How do the taxes in your community compare to other cities and towns in Rhode Island?
GoLocalProv has ranked communities from the least to the highest taxed on the basis of their tax rates, using data from the state Division of Municipal Finance. The below slides list what the taxes would cost on a home and vehicle in each particular community.
For residential taxes, this calculation is based on the current statewide median price for a single family home, which is $217,300 according to the latest figures. Homestead exemptions are factored in using the latest available figures. For motor vehicles, the example used is a 2010 Honda Accord, valued at the maximum retail price of $13,200. The total cost of home and car taxes is then represented as a percentage of the median income for that community, offering a measure of how affordable taxes are for those residents as compared with the taxes in another city or town.
Data sources: the Rhode Island Division of Municipal Finance, the Rhode Island Association of Realtors, the Rhode Island League of Cities and Towns, the National Automobile Dealers Association, and the U.S. Census Bureau.
Related Slideshow: The Highest Taxed Communities for 2016
Related Articles
- The Highest Taxed Communities for 2015 in RI
- The Highest Taxed Communities for 2014
- PODCAST: The Highest Taxed Communities for 2014
- GoLocal on WHJJ: The Highest Taxed Communities of 2013
- New for 2012—The Highest Taxed Communities
- The Highest Taxed Communities for 2013
- The Highest Taxed Fire Districts in RI
- See the List - The Highest Taxed Communities in RI
- See the List - The Highest Taxed Communities in RI
- The Highest Car Taxes in RI for 2013
- LISTEN: Highest Car Taxes in RI
- Should Taveras Increase Providence Property Taxes Or Make More Cuts?
- New Legislation Would Raise Taxes On Some Low-Income Housing in RI
- Arthur Schaper: Rhode Island General Assembly: Lower My Taxes!
- NEW: Whitehouse Backs Plan to Increase Social Security Taxes
- Sam Zurier: Restoring Balance To Providence’s Taxes
- Chafee Says No New Taxes in FY2014 Budget
- Smart Benefits: More Taxes, Less Pay
- State Report: The House Makes History, Taxes & Housing On The Rise
- RI State Report: Bad News for Moreau, Plastic Bags and Sales Taxes
- Sasse: Vote Questions If Higher Taxes Result In Better Schools
- The Biggest + Smallest Local Taxes Increases in RI
- Smart Benefits: File 2014 Taxes—or Risk Losing Subsidy
- Boston Red Sox Pay Millions in Property Taxes to Boston for Fenway Park
- CVS Pays Among the Highest Corporate Taxes in US
- Undocumented Immigrants Pay $33.4 Million in RI Taxes, Says Report
- New Study: RI Ranks 5th Worst For Taxes on the Poor
- RI Ranks 6th Worst on Business Taxes for 2015
- Chafee’s Budget: Taxes
- State Report: $61M in Earmarks for Roads + Taxes on Guns and Ammo
- NEW: Block, Fung Spar Over Taxes, Ohio
- The Scoop: Fung’s Plan to Reform Taxes, Gorbea Adds to Campaign Team, and More
- Cranston Taxes Rose 6 Percent in 6 Years Under Fung
