November 10, 2009
A Sales Tax by Another Name
Senators Frank Maher and Leonidas Raptakis were on Matt Allen's Violent Roundtable last Friday night, and the trio spent a bit of time discussing the potential gross receipts tax. As I wrote a few weeks ago, at bottom, this scheme merely shifts the tax burden to businesses, probably to the benefit of the wealthy. Be the gimmicks what they may — even if the state eliminates the sales tax or income tax — I just don't see how shifting the tax burden thus can be a positive development for the state's business environment.
Perhaps I'm looking at it too plainly.
The senators mentioned that the plan that they've heard would exempt businesses up to $600,000, but inasmuch as "gross receipts" means total revenue before expenses, it really doesn't take much to reach that total. They also suggested that the tax would apply more broadly than the sales tax does — including to service providers of all kinds — which makes me wonder whether that isn't the underlying purpose, for some.
The truth is that I simply don't trust the General Assembly to talk about a tax increase, even with a promise of a decrease elsewhere, because I don't believe that the powers who be won't work it out in such a way as to simply take more.
"this scheme merely shifts the tax burden to businesses"
I think the Senators are on to something here. Rhode Island is too business-friendly already. We have way too many businesses with way too many help wanted ads. We need to cull the herd a bit so we can get better paying jobs in RI. Let's add taxes to those evil, wealthy businessmen in the state to show them who's boss and weed out the truly weak or startups. We don't need your stinkin' jobs or businesses in this state!
However, I do notice that the $600,000 number is probably right around or slightly above what an average pizza shop might make in a year. Probably not much of a coincidence coming from Raptakis.
Posted by: Patrick at November 10, 2009 7:26 AMI have a small business and in a good year can exceed that $600k gross receipts cut-off. I also have a Florida house. Did I mention that my business is completely business to business and largely virtual-based - I don't see customers in person very often. And how about the observation that my business revenue is almost exclusively from out of state?
Like any other proposed tax on services that aren't paid at all by my out of state competitors, this is a trigger event for me. I figure a couple of weeks in Florida and I can switch state residence by following approved steps. Not at all hard. If my work and billings originate from Florida - they could if I'm there beyond a vacation - I wouldn't even have to go that far. One of me, no big deal. How many others are there that can just as easily set up outside this county sized state? How do you sell this to larger businesses you are trying to attract in an already dismal tax climate?
The wheels go round and round. They haven't fallen off yet, but soon.
Posted by: chuckR at November 10, 2009 2:01 PMYou any of you ever wondered why the members of the GA never seem to be veru vocal in protesting rate increases by National Grid?
Every time the rates go up, the GRT goes up, i.e. the state's "take" increases.
Just think, a tax increase and the GA is held blameless.
What a scam.
""this scheme merely shifts the tax burden to businesses"
I think the Senators are on to something here. Rhode Island is too business-friendly already. We have way too many businesses with way too many help wanted ads."
... er, yes, only last week, Rhode Island made the cover of Forbes magazine:
"Ratchet It Back, Rhody! The State that's Just Too Darned Business-Friendly"