Here’s the package of tax-increases proposed by the “Campaign for Rhode Island Priorities” for closing the state budget deficit…
- Stop the elimination of the 5% capital gains tax scheduled for 2008. Massachusetts, which eliminated its own capital gains tax suffered so badly, and fell so far behind in meeting the needs of its people, it rescinded the law and now tax long-term gains at 5.3%.
- Close abusive corporate tax loopholes.
- Broaden the sales tax to reflect our changed economy by taxing selected services such as golf, marina and fitness memberships.
- Eliminate sales tax exemptions for luxury items like private aircraft.
- Freeze the alternative flat tax – an entitlement benefiting only 13,119 of the wealthiest Rhode Islanders. When fully phased in, the flat tax will cost Rhode Island as much as $73 million!
- Place a moratorium on ‘06 tax legislation that artificially limits the ability of cities and towns to meet their own needs – in the face of stagnant state support to cities and towns for education
- Impose a tax on the capital gains from short-term land sales. This legislation exempts owner-occupied homes but targets short-term investors that flip properties for large profits, driving property rates and rents out of reach for many Rhode Islanders.
- Implement ‘06 legislation that sets up a state office of revenue policy analysis.
Some comments, in no particular order…
- The overall philosophy of proposing nothing but tax-increases to balance the budget is flawed. It says Rhode Island taxpayers should accept paying more to receive the same failing education system and social welfare programs they always have. RI has already fallen behind in “meeting the needs of its people”. Pouring money into the same fiscally irresponsible and failing programs won’t fix the problem.
- The description of Governor Carcieri’s proposed education increases as “stagnant” tells you where the priorities of this group really are. The Governor has proposed a 3% increase in education aid to all cities and towns. That’s only stagnant if you believe that the smaller cities and towns should be slow-bled of their resources, so that the urban core can get a bigger percentage of state subsidies each year.
- On a related note, the call to lift the local property tax caps is code for demanding that the smaller cities and towns raise their property taxes so that more state money generated from sales and incomes taxes will be available for transfer to the urban core. Someone remind me what the towns get out of this deal?
- I don’t know much about capital gains tax-policy, but I’m not sure there as much logic behind the capital gains tax proposals as there is visceral hostility to the concept of profit. I’m assuming the short-term land sales tax would apply to cases where someone buys a property, improves it value, and then sells it without ever moving in. Isn’t that a good thing, in terms of the property-tax revenue from the improved property eventually captured by the city or town — and in terms of the quality of life in the neighborhood where the property is improved? Isn’t CRIP basically saying they want to keep property taxes low by keeping property values low by discouraging the improvement of substandard housing? Is there anyone familiar with the ins and out of capital gains who’d like to chime in on this (and/or the long-term capital gains proposal in the CRIP plan)?
- Finally, it would be nice if CRIP could add some numbers on how much revenue they expect each of these proposals to generate.