Governor Battles “Soak the Rich” on Newsmakers
Governor Carcieri’s appearance on this weekend’s Newsmakers is already online. He certainly makes me a lot less self-conscious about talking with my hands on television. Performances aside, Ian Donnis was responsible for an interesting exchange:
Ian Donnis: Governor, wealthy Rhode Islanders have received tax cuts over the last ten years, so how do you respond to those critics who say that it’s unfair that middle class Rhode Islanders are paying a bigger share of the tax burden?
Governor Carcieri: They’re not. Middle class Rhode Islanders actually are relatively low taxed. I mean, I’m not in favor of taxes, and I would like to reduce them for everybody, but if you compare the taxes that our citizens pay in the middle income with nearby Massachusetts, they’re lower — income taxes.
Ian: But if the affluent residents are paying less, doesn’t that raise the burden on other Rhode Islanders?
Carcieri: We’ve been actually bringing the costs down. We’ve been reducing the cost of government, if you will. That’s my point. We’ve taken eighteen hundred people out of the workforce. The annualized savings, when you take benefits and that, it’s almost $200 million a year, Ian. You can’t tax people. What do they do? They leave. That’s our basic problem — what I said at the beginning. We’re driving away businesses; we’re driving away people that have been successful. That’s not smart economic policy. We ought to be welcoming them here and figuring out ways.
For some perspective from the House Revenues Tax Facts report (PDF), here’s the change in tax liability — the amount of money from 2005 to 2006 to which the state government laid claim — for each income group:
|2005 ($)||2006 ($)||% change|
Clearly, by this measure, “tax cuts for the rich” have not shifted any burden toward the middle class. Of course, as I pointed out the other day, tax credits actually shift ultimate tax payments into negative growth. But who benefits? Well, here’s the same table with each group’s % of the total income tax burden:
|2005 (%)||2006 (%)||% change|
So, contrary to Ian’s logical progression, taxing the rich less has not raised the burden on other residents. In fact, excluding the credits — which are given, in a sense, for spending money on things on which the government would like people to spend money — the actual tax value of the top tier went up. The reason is clear: The over $200,000 group saw an increase of overall adjusted gross income (AGI) of 14.38%, but the average AGI of such households increased by only 5.63%, which means that the number of households in this category, paying at the upper tax rate, increased — 8.29% by the numbers.