June 1, 2010
While Your Eye Is on the Tax Cutting Hand
Something just isn't adding up with the news out of the General Assembly about this supposed "tax overhaul." According to some details explained by Neil Downing, it looks like all taxpayers would make out pretty well under the Senate's version, although the rich and the single appear to get the best deal, relatively speaking. Those on the lower end of the scale would appear to do pretty well, also, with only middle-income families facing a question mark. The one possible trick toward which Downing points is that the flat tax would disappear, and although the new top bracket would equal the current flat tax, those expecting it to drop to 5.5% for next year would be disappointed.
The peculiarity — as distinct from the vague sense that something isn't right — emerges with a subsequent article:
But the plan cannot be approved as it stands because it would result in lower state tax revenue, forcing the state's budget out of balance, a top negotiator said. ...But the plan would also implement other provisions to reduce taxes. As a consequence, overall, 61 percent of taxpayers would see a tax decrease, 18 percent a tax increase and 21 percent no change, according to Senate fiscal office figures.
But the plan would also reduce state tax revenues by about $11.5 million for the fiscal year that ends June 30, 2011 (and more in later years), Senate fiscal office figures show.
The key question is who the 18% seeing a tax increase would be, especially in light of the fact that they'd be taking the burden of 61%. The curious question is why such a big deal is being made of an $11.5 million shortfall. Personally, I'd like to see government revenue decreased by many times that amount, but if the goal is to pass something revenue neutral right away, it shouldn't be difficult to make that up.
Perhaps my RI-skepticism is too finely tuned, but if we see another General Assembly session come and go, in the next few weeks, without fruits from all of this hype, I'll be inclined to wonder what they were actually trying to distract us from. (Apart, of course, from the mountain collapsing beneath our feet.)
That's what I was trying to figure out as well from the ProJo article. It seemed like they were cutting everyone's taxes (which sounds great to me) but then how do you pay the bills? We have costs increasing, but they're going to cut their revenues? I guess it's exactly what some of us have been advocating, but it does just seem odd that this General Assembly would actually do such a thing.
Although, in an anti-incumbent election year, they're going to pull out all the stops, even if it means they're screwed in '11, which is...NOT an election year!!