Chafee Wants to Bite Charities and the American Flag

The common wisdom is that Governor Lincoln Chafee's sales-tax scheme is dead — or rather, that at least the 1% section is. Still, something in this op-ed by a couple of YMCA officials inspired me to skim that section of the budget:

Article 26 of the budget would also remove the tax exemption for all charitable organizations and impose a 1 percent sales tax on their purchases. Together, these proposals would seriously hinder the ability of our Ys to continue to employ 2,100 staffers, serve 140,000 Rhode Islanders and provide $7 million in free, subsidized and sponsored programs every year.

Sure enough, the relevant language attempts to sink the taxman's teeth into charitable activities:

(8) Charitable, educational, and religious organizations. (i) The sale to charitable, educational and religious organizations as defined in this section and the storage use and other consumption of tangible personal property, specified digital property, and/or services as defined in § 44-18-7.3. This shall also include hospitals not operated for profit, “educational institutions” as defined in § 44-18-30(17) not operated for a profit, churches, orphanages, and other institutions or organizations operated exclusively for religious or charitable purposes, interest free loan associations not operated for profit, nonprof it organized sporting leagues and associations and bands for boys and girls under the age of nineteen (19) years, the following vocational student organizations that are state chapters of national vocational students organizations: Distributive Education Clubs of America, (DECA); Future Business Leaders of America, phi beta lambda (FBLA/PBL); Future Farmers of America (FFA); Future Homemakers of America/Home Economics Related Occupations (FHA/HERD); and Vocational Industrial Clubs of America (VICA), organized nonprofit golden age and senior citizens clubs for men and women, and parent teacher associations. Sales made to the United States government, this state and its political subdivisions are exempt from this section.

If you haven't yet done so, it's worth your time to read through the tax-increasing portion of the budget; the effect is quite startling. For example, it's one thing to read the word "flags" on a list of newly taxed items; it's another to come across this:

(21) Flags. The sale, storage, consumption, or other use in this state of United States, Rhode Island or POW-MIA flags.

The governor wants to tax you on your American flag... which leads me back to my suspicion that this 1% section is mostly political. It links the budget to Chafee's campaign promises, but it's so egregious, so magnificently objectionable, that the outrage was sure to give the General Assembly cover not only to go against the governor's plan (in the eyes of his puppeteers), but also to move forward with the new 6% tax on other new items, including services, perhaps with some of the less objectionable 1% items (involving constituencies that have less political sway) added to the list.