One Bad Tax Plan Shouldn’t be Replaced by Another
The ProJo reports that there is a bill in the RI House proposing an alternative to Governor Chafee’s 6%/1% “lower and broaden” tax policy. Let’s call it “promise to lower and broaden”:
The bill, cosponsored by Representatives Brian Newberry, R-North Smithfield, Samuel Azzinaro, D-Westerly, Scott Slater, D-Providence, and Peter Palumbo, D-Cranston, would also add the equivalent of a dorm tax on the rental charges for student and teacher housing at the state’s educational institutions.
The way the bill is drafted, many of these exemptions would go away as soon as the bill passed, but the sales-tax rate would remain at 7 percent until July 1, 2012, Monica S. Staaf, legal counsel for the Rhode Island Association of Realtors, told the House committee.
She’s entirely correct. According to the revised text offered in H5740 (PDF):
provided, further, that for the period commencing July 1, 2012, the tax is six percent (6%); and provided, further, that for the period commencing July 1, 2013, the tax rate is five percent (5%); and provided, further, that for the period commencing July 1, 2014, the tax rate is four percent (4%); and provided, further, that for the period commencing July 1, 2015, the tax rate is three percent (3%).
Let’s say, come May 2012, it’s realized that the tax revenue just isn’t coming in and before you know it, the reduction plan is “frozen” until such time as it is decided that the state can “afford” to implement it. Could never happen, right? The basic rule being that promised tax cuts are ephemeral while temporary tax hikes are permanent. Regardless, both ideas result in more taxation, not less, thanks to the “broadening.” These aren’t so-called revenue neutral plans, after all. They’re meant to raise”revenue” instead of shrink government spending.