Why Don’t They See This?
In a press release announcing his nomination for Director of the Department of Administration, Governor Carcieri says of Gary Sasse that he has “more than 30 years of experience in crafting and analyzing sound fiscal policies and sustainability for government programs,” but I’ll risk exposing my ignorance to scratch my head at the proposal taking shape in Sasse’s tax panel:
The changes, if adopted, would have far-reaching effects on thousands of taxpayers.
Middle-income taxpayers would generally pay more, while lower-income taxpayers and some higher-income taxpayers would generally pay less. …
Broadly speaking, people with $30,000 or less in AGI would wind up paying less in tax than they do under the current system.
People with between $30,000 and $110,000 in AGI would end up paying more.
Most people with AGI above $110,000 would end up paying less. But those with the very highest incomes, above $5 million each in AGI, would pay more.
That “middle-income taxpayer” group describes pretty precisely the range of households from which Rhode Island is losing population every year, and such folks are crucial to economic recovery and growth. The rich have money to invest, yes, but they’re not the ones who’ll put in 80-hour workweeks to keep industries developing. What Rhode Island needs is to match the investment-ready dollars with people who can use them — people in the middle-income group who need reassurance that their efforts will bring them closer to six-figure salaries.
That makes these suggestions downright pernicious:
… taxpayers would no longer be able to obtain a state tax benefit by making a separate list of their deductions, a process known as itemizing. …
Under the plan, favorable treatment would be eliminated and capital gains would be treated as ordinary income, the same as wages, for example.
As far as tax rate is concerned, the thousands of dollars that I’ve invested in tools each of the last four years are of little concern. In terms of both investments and income, the big-nose/big-toes tax regime draining the middle for the benefit of the edges would pound yet another nail in Rhode Island’s chance for innovation and accelerated growth.
How is it that such apparently qualified panelists can miss this perspective?