The Voice of Continued Decline
True to form, the Poverty Institute’s Kate Brewster notes that “two-thirds of the [state budget] gap is due to declining corporate, income- and sales-tax collections, as well as shrinking lottery revenues,” but her proposed response is not to find ways to increase the economic activity that drives such revenue. Rather, she’d simply like to jack up the rates (or broaden the shadow, in the case of the sales tax)
One needn’t dig too deeply around the foundations of her conclusions to begin to see the crack:
According to leading economists, it is better to raise taxes on high earners than to cut spending during economic downturns. The Center on Budget and Policy Priorities cites two well-respected economists — Nobel Prize winner Joseph Stiglitz, of Columbia University, and Peter Orzag, the recently announced director of the Office of Management and Budget — who during the last recession asserted that tax increases on high earners are less harmful than spending cuts. Raising taxes may result in money not saved, but cutting programs for low-income families will result in money not spent which has a more dramatic impact on the economy.
One would hope that economists making such general statements would append a long list of circumstances that must be present in order for their conclusions to obtain. If they did so, in this case, then Brewster’s printer must have run out of paper before it got to the caveats.
In a system as oppressive as Rhode Island’s, money not taxed is not merely “money saved.” It’s money spent more productively. It’s money spent creating jobs, investing in education, and improving property.
Rhode Island must prepare itself for the reality that its policies for surviving as a state will tend to drive out one group or another. What the leadership must do — now that the voters have abrogated the responsibility to make the call — is to decide whether it wants to tell the needy to seek services elsewhere or to tell the productive that they’ll have to turn their eyes to other states for opportunity. If the latter, the likes of Brewster best begin developing their excuses and spin for the continued shrinkage of state revenue.