January 28, 2009

Discouraging Behavior

Justin Katz

This quotation from the Providence Journal's latest story on Gov. Carcieri's tax panel pretty well highlights the philosophical differences at play:

... under proposals involving the personal income tax, lower-income and many higher-income taxpayers would generally pay less, but middle-income taxpayers — and the state’s highest-income taxpayers — would generally pay more.

This is partly because the proposals would eliminate most tax credits; end the favorable tax treatment of profit on the sale of stock and other such assets; and prohibit a taxpayer from deducting, for state tax purposes, such items as charitable contributions, mortgage interest and local property taxes.

So the disfavored demographic in this proposed tax rearrangement would be charitably inclined homeowners investing in the state. Somehow I have a difficult time believing that this particular panel is trying to edge the state even closer to socialism, but at some point effect must subsume intention.

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Very disappointing.

Essentially a status quo plan, intended to be "revenue neutral."

We should be benchmarking against New Hampshire which, with no sales or income tax, has an unemployment rate less than one-half that of Rhode Island's.

But government in Rhode Island does not exist to serve the citizens, but to serve as an extraction mechanism to feed the voracious and insatiable appetites of the public sector unions and the poverty industry.

So rather than reign in those greedy special interests, and because there aren't enough "rich" to tax to maintain the status quo, they're going after the middle class (even more than is presently the case), for it has numbers if not so much money.

Preservation of the status quo is not what this state requires, but what it will get under the present political "leadership."

Which is why Rhode Island's future is very, very bleak.

Posted by: Tom W at January 28, 2009 12:38 PM


Should have been "rein" - sorry for the typo.

Though the public sector unions and poverty pimps do "reign" over us, now don't they?

Posted by: Tom W at January 28, 2009 12:48 PM

Check out slide 9 of the group's presentation here:

http://www.dor.ri.gov/Workgroup%20Meetings/Full%20Workgroup/Tax%20Policy%20Workgroup%20Meeting%20-%2001-20-08.ppt#310,9,Slide 9

While the plan is "revenue neutral", the income tax side shows a slight increase of $7 million from a base of nearly $1 billion. The most notable increase comes from resident filers with more than $10 million in Adjusted Gross Income.

Look at the next slide to see that there are only 27 of these filers that will pay an increase of $1.1 million each in new taxes. Now these filers need no sympathy, nor do they want any, but is it sane for us to just assume that these 27 filers will passively fork over another $30 million collectively? Think they might own second homes somewhere? Think they may be able to claim residence somewhere else?

That said, I'd suspect that the real number would be a reduced total collection from income taxes when these filers change their residence.

The simplification aspects are good in concept, but as you say Justin, they seem to misplace the priorities on the deductions side. Punishing those who itemize (mostly those with a mortgage), and have kids, by eliminating or reducing the deductibility is simply a misplaced priority.

The demographic benefitting most is the 45+ crowd who've made enough money to pay down their mortgage and whose kids have left. This is the upper middle class of today's RI and a large portion of the public sector falls in that group.

The true middle class, with household income in the $30k to $55k range, will get squeezed. Not surprisingly, this demographic was not directly represented in this effort. They rarely are. As we proceed down that Road to Serfdom, the middle class as we know disappears. What's left is the two class system of failed societies and civilizations. The "upper" class connected with the bureaucratic power structure, and everyone else earning a "living wage" of $11.84/hr.

Posted by: Roland at January 28, 2009 3:02 PM

Which is why Rhode Island's future is very, very bleak.

Posted by Tom W at January 28, 2009 12:38 PM

That single sentence says it all. This is the real "RI Future".
Reward the bums, cronies, losers and perverts.
Decent family people are told to "Screw" in rather unambigous terms.

Posted by: Mike at January 28, 2009 7:19 PM
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