Two Post Facto Responses on Felner's Behalf

This episode of Newsmakers makes me wish I'd been there... or had had a means of communicating suggestions to Bill Felkner of the Ocean State Policy Research Institute:

Newsmakers 1/28: Stokes, Felkner, Sgouros: wpri.com

For one thing, in attempting to present the other side, Tom Sgouros (whom Tim White bills as a "progressive economist") holds on to the precise representations of the data as if holding on to the tail of a magic newt. Unfortunately, Sgouros, himself, is not precise:

What the IRS reports is how many people moved and what they earned in the places where they lived after they've moved.

Actually, the adjusted gross income data measures that money claimed on the tax returns of people filing outside of Rhode Island who, the previous year, had filed their federal returns from within Rhode Island (or vice versa for those who moved here). In other words, pretty much by definition, some of that income was earned in Rhode Island; for taxpayers who moved after the tax year for which they're filing (between New Year's day and tax day), all of the money claimed was earned in Rhode Island, or at least while Rhode Island residents.

Alone, that doesn't answer Sgouros's objection that migrants aren't necessarily taking their jobs with them. It does, however, emphasize the lack of parity between those coming to Rhode Island and those leaving. Put directly, it shouldn't be a comfort that people who want to make more money have to leave the state, even if they leave their lower-paying jobs behind.

Another point, which panelist Arline Violet considers to be a "fatal flaw" in OSPRI's report, derives from the Poverty Institute's response to it: namely, that, whatever the relative incomes, if those leaving are replaced by people arriving, then their property taxes are covered, because somebody buys their houses. But the fact is that, on a net basis, Rhode Island isn't importing taxpayers at the same rate as it's exporting them. More importantly for this discussion, though, is that property taxes aren't the only revenue that Rhode Island governments extract from Rhode Island residents.

According to the Rhode Island Public Expenditures Council, about 22% of tax revenues to state and local governments, in Rhode Island, come from individual income taxes. Moreover, if the question is the effect of shifting demographics, Violet and the Poverty Institute's point isn't a "fatal flaw," it's irrelevant. People who make more money pay more in income taxes; that they pay the same amount in property taxes (presumably) doesn't change that fact.

Indeed, if they make more money, one can assume that they're more likely to improve upon their properties or build new houses (increasing value and therefore taxes) and to spend more in discretionary income (increasing economic activity and sales taxes).