We Don’t Have a Tax Revenue Problem
The usual suspects are out complaining about Governor Carcieri’s proposed budget cuts:
Even without details, Kate Brewster, executive director of Rhode Island College’s Poverty Institute, said the outcome is predictable and “slashing public services while not addressing the tens of millions of dollars that are being lost to some of the recently enacted tax cuts and tax credit programs is really not fair to the average Rhode Island taxpayer … Capital gains tax cuts, personal income tax cuts, movie picture tax-cuts. We have to ask ourselves whether these are affordable.”
Ah yes, the money that is “lost” to tax cuts. That means we’re not getting as much tax revenue as before, right? Well, let’s see.
For clarity, I’ll break them out by category. First, let’s see how much less Rhode Island businesses are paying in taxes:
Business tax revenue dipped in 2002 (after 9/11) but had rebounded by 2003/2004. However, it is predicted to dip in 2008, from $376.4 million to $354.9 million. I guess it is around $20 million less…but that certainly bucks the trend that has resulted in about a 50% increase in business tax revenue from 2001 to 2008.
Well, how about Rhode Island taxpayers?
Same sort of trend as the Business tax revenue, though there is no projected “dip” in 2008.
Income tax revenue has continued to climb, increasing by about 30% since 2001. The same trend and percent increase is also true for “other” tax revenue, which climbed from 2001-2005 but have leveled off since then (and that’s fine by me!).
Basically, tax revenue from all sources hasn’t gone down (though it will remain essentially the same in both 2007 and 2008). Between 2001 and 2008, it has increased from $2,011.9 to $2,543.6 million (about 26%), but increases in government expenditures have easily outpaced these revenue increases.
In short, expenditures have gone from $4,839.2 to $7,017 million (about 45%) over the same period.
The horse has been flayed and it’s bones turned into meal….but for the millionth time: it’s spending, not revenue that is the problem.
All data obtained from the RI State Budget Office web site. Figures for 2001-2005 are actual/audited, for 2006 are revised, for 2007 as enacted in FY budget and 2008 as proposed or projected.