July 10, 2007
RI Has 7th Highest Taxes in U.S.
By now, this is low-hanging fruit. But duty impels us to prescribe the ProJo's Neil Downing report on a new RIPEC report- "How Rhode Island Compares":
Rhode Island has one of the nation's highest tax burdens - and a big reason for that is local property taxes, a new study shows.Surprised?Based on the overall state-and-local tax burden, Rhode Island ranks seventh highest nationwide, the study says.
When it comes to property taxes, Rhode Island's comparative tax burden is even higher, ranking the state sixth nationwide, the study shows.
The findings are part of a study to be formally issued todaycq by the Rhode Island Public Expenditure Council (RIPEC), a business-backed public policy group which monitors the state's finances.
The annual report - "How Rhode Island Compares" - shows that Rhode Island's overall state-and-local tax burden has increased in the last 10 years, while that of its two neighboring states - Connecticut and Massachusetts - has improved, said Gary S. Sasse, RIPEC's executive director. For example:
In 1995, Rhode Island had the 14th highest tax burden; now it has the 7th highest.
In 1995, Massachusetts ranked 23rd; now it's ranked 34th.
In 1995, Connecticut ranked 7th; now it ranks 11th.
In other words, Rhode Island's state-and-local tax burden has grown in the past decade, while the tax burden in Connecticut and Massachusetts has declined.
"Rhode Island is going in the opposite direction'' compared with its two neighboring states, Sasse said. "Our neighbors are doing better in making their state more tax-competitive,'' he said.
For every $1,000 of personal income, state and local governments in Rhode Island collect about $123 in taxes, while Connecticut collects about $119, and Massachusetts about $107, the study shows.
There's an implication here that I can't quite buy:
The story says "a big reason for" our high tax burden is our high local property taxes. It is true RIPEC ranks RI 21st in income taxes and 6th in property taxes, but a big reason for that is that we're 47th in the percentage of educational support provided by the state. If RI behaved like other states and the state provided more education funding, our income tax rank would go up, and our property tax rank would go down.
It's our state education policy, at least in part, that makes our property taxes so high. Of course, that just got even worse this year.
Posted by: Thomas at July 10, 2007 11:07 AMIf RI behaved like other states and the state provided more education funding, our income tax rank would go up, and our property tax rank would go down....and our overall ranking would stay exactly the same. So where's the gain?
The arguments being made in the legislature for supposededly "reducing the property tax burdern" are nothing more than part of a scheme to allow the urban communities to grab more money away from smaller communities.
That's why Mayor McKee and the small-city/large town mayors are working to come up with an alternative.
Posted by: Andrew at July 10, 2007 11:24 AMLet's not leave out that, while we have the 7th highest taxes in the nation we get a royally crappy return on that investment.
Posted by: Greg at July 10, 2007 11:52 AMHi Andrew,
I wasn't saying that there would be an overall gain.
I was only pointing out that that people may read the report and say "oh, the problem is property taxes, so let's cut those", when the high levels of property tax is itself a consequence of the state underfunding education.
As for the argument that the urbans are grabbing more money from smaller communities, I hear this assertion all the time, but I would very much like to see an economic analysis that show that it's true and shows its extent. That analysis would have to include not only state education dollars flowing to communities, but also where that money comes from. I would like to know not only how much state money Cumberland gets per student vs. Providence, but also how much of the tax income that produces that money flows from jobs in Cumberland vs. Providence.
My own view is that Cumberland and Warwick themselves are a lot worse off down the road if Providence, Central Falls and Woonsocket schools fail, so they have an interest in preventing that, whether the relative burdens are "fair' or not.
I think , too, that "fairness" is an not-so-simple question here, given that Providence is already taxing property at >$30/$1K (higher than anywhere else) AND the city has been much more responsible fiscally in recent years.
Still, I wish someone would do the complete analysis, so we could have the debate about fairness with some solid facts, rather than bald assertions.
Property taxes aren't a cause of the state's high tax burden, it's a symptom. The cause is overspending. The actual form that the high tax burden takes is inconsequential. If it weren't high property taxes it would be high(er) sales taxes or income taxes.
Thomas, Thomas... I know that school funding is a hobby horse of yours and I even agree that it should be shifted to the state, but it isn't an answer to everything. Your response is like a person who, when shown that many high school students are skipping school to play video games, responds "that's not good, they should be reading." True enough, but I think you miss the larger point.
Posted by: Mario at July 10, 2007 2:53 PMHi Mario,
I'm not sure that the form of the tax is irrelevant. Property taxes, are pretty regressive, though maybe not as bad as sales taxes. I see retired people on fixed incomes getting hit hard by them. But the main problem with them for me is that they make the quality of educational opportunity depend too much on the accident of where your parents live. But I see we already agree that it should be shifted more to the state...
Education may not be "the answer to everything", but I think it's the one critical factor in the future success or failure of our state, both socially and economically. Right now we're failing and this year's budget pushed us further down that road. I think we should all be scared to death about this, much more than about higher taxes, anyway.
I'm not sure I get your analogy, though. What is the "larger point" that I'm missing?
Posted by: Thomas at July 10, 2007 3:16 PM