Plans to Plan to Favor
Charles Bakst has been peddling his curmudgeonly wares ’round these parts for much longer than I have, but at the risk of later being proven wrong, it seems to me that he’s either not very observant or is in on the game:
The governor expressed the fear that legislators will backtrack on tax changes in recent years that critics say benefit the rich but which he prefers to characterize as encouraging decision-makers to do business here.
“We need to continue to position ourselves competitively from a tax standpoint with our neighbors,” he said.
I asked what makes him worry that the Assembly actually will raise taxes.
“I hear rumblings,” he said.
I don’t know where the walls get their information. For example, this past Wednesday, two top House Democrats, Majority Leader Gordon Fox and Finance Chairman Steve Costantino, inveighed against any broad-based tax increase that would hurt job development.
Mr. Bakst is, well, selectively credulous. At the very least, an observant columnist ought to have noticed the specificity of language, including such words as “plan,” “favor,” “broad-based,” and even “tax increase.” In a Moneyline column from the thirteenth that is for some reason not online, Neil Downing quotes House Finance Committee head Steven Costantino explaining not intentions, but a conundrum: “If we raise taxes, we risk putting further drag on our economy; if we keep cutting jobs and services, then the people who need them most suffer. Either way, Rhode Island loses.” Downing moves on to House Majority Leader Gordon Fox: “We are not favoring any increases in broad-based taxes at this point.” From whence the columnists’ confidence with respect to taxes?
Downing was sufficiently curious, at least, to pursue some specificity:
- Income tax: Do Democratic leaders favor increases in the state personal income tax? No.
- Capital-gains tax: No changes planned. Fox acknowledged that “there is some discussion” about the state’s capital-gains tax. In other words, it’s on the table. But he said his preference would be to keep the capital gains tax rates at their current levels.
- Sales tax: No increases planned here, either, although neither Fox nor Costantino would rule out entertaining proposals to change the sales-tax structure — maybe by increasing the sorts of things that are subject to the tax, while lowering the overall sales-tax rate. …
- Corporate income tax: No increases planned for either the state corporate income tax or the state’s franchise tax, Fox and Costantino said. On a recent visit to General Dynamics, Costantino said he got the impression that business wants “predictability” when it comes to taxation, an idea he favors. However, Costantino said that there are some “theoretical things” that legislators are looking at. One plan being kicked around could lower the top corporate income-tax rate while eliminating a number of corporate income-tax credits. Such a proposal would be intended as revenue-neutral, he said. But Costantino stressed that it’s only an idea, only in the discussion stages.
- Death tax: Neither Fox nor Costantino plan any changes to the Rhode Island estate tax, also known as the death tax.
That’s quite a bit of talk about what legislators “favor” and “plan,” but I (for one) can’t shake the feeling that they’ve some unacknowledged plans to plan to favor tax increases — defined generally as measures designed to take more money out of our bank accounts and filter it through the state government. Contributing to that unshakable impression has been coverage of the race to replace the late Rep. Paul Crowley of Newport. Responding (generally) to Republican candidate Stephen Coaty’s remark that we “need a top-to-bottom review of all state spending,” Democrat J. Clement Cicilline quipped, “It’s both a spending problem and a revenue problem. If you cut $450 million from the state budget, I don’t know if you’d be able to have the state open on Tuesdays and Thursdays.”
Cicilline sings a familiar refrain:
“It’s not just a spending problem, it’s a revenue problem, too,” he says. “I agree you have to look at spending.”
He thinks every state department should be mandated to develop a strategic plan to measure its success and better determine its funding needs. He also favors multi-year budgeting instead of year-to-year spending plans.
“I think we have to look at where we’ve given away the store and where we need to reel things in,” he says.
BUT NEW REVENUES must also be explored, he says. He wants to study expanding the sales tax to items that are now tax-free, including expensive clothing and country club dues.
“I’m of the mind that if someone can pay $400 for a pair of shoes, they can afford a tax,” he says. “I’m trying to find ways [to address the deficit]. I’m trying to be honest and forthright about it and not just say slash and burn.” …
“We probably have different ideas about what’s important in terms of services and government,” he says. “We start hammering and … we’re going to cut some of these services that are available to individuals with disabilities. You end up undermining the quality of life for these individuals.
“You have to think about where you are going with this knife,” he said. “It really could significantly hurt people. And you could hurt [the state] financially. He doesn’t know the consequences of what he is saying. He makes statements without knowing the depth and breadth of the consequences.”
Rather than weakly retreating to an acknowledgment that “maybe we can’t find $450 million to cut” and a stylistic critique that “we don’t start (the process) by saying we’ve got to raise taxes,” Mr. Coaty should ask about the quality of life of family’s like mine, which is barely getting by with some amenities and rapidly approaching the day when the money will run out. To the extent that Rhode Island’s problem is one of “revenue” (I prefer “spoils”), the solution is to attract more payers (by making this a more attractive place to pay to live and work), rather than continuing to attract takers and seeking innovative new ways to shake down those productive citizens who’ve been too slow (or poor) to flee.
But to anybody who listens, the latter approach appears to be what the Democrats who run the state plan to plan to take. Stumping for Cicilline in a letter to the Newport Daily News, Senate Majority Leader Teresa Paiva Weed writes:
The state is facing a challenging budget, and Newport deserves a representative who is experienced and with a record of proven commitment to our community. … [Cicilline] has demonstrated his effective representation of Newport by working toward additional revenue for Newport, including the cruise ship tax and additional PILOT funds, which helped even the burden of property taxes.
By “helped even the burden of property taxes,” Paiva-Weed means that the Payment in Lieu of Taxes (PILOT) program shifts some state tax revenue to municipalities in which nonprofit organizations such as hospitals and universities are using space that would otherwise generate property taxes. In that respect, “Bud” Cicilline — who is president and CEO of the nonprofit Newport Community Mental Health Center — is nicely representative of the fundamental source of inertia in Rhode Island: Too many citizens are either insiders, on the teat (whether as public union members or as recipients of state benefits), or just too plain ol’ rich feel the pinch.
Too many others (with some local columnists coming to mind) are simply too wedded to partisan ideology to fight for anybody but approved groups… or to notice when the state’s aristocrats are laying groundwork for a declaration that they “have no choice” but to step a little harder on the heads of residents who are already drowning in the byproduct other groups’ malfeasance and greed.