January 4, 2010

Chafee Floats Expansion of Sales Tax in Gubernatorial Coming Out Party

Marc Comtois

After loaning himself a couple hundred grand, former Senator Lincoln Chafee announced his expected bid for Rhode Island Governor as an independent this morning. The headline is his willingness to expand the sales-tax base. From Katherine Gregg's story:

While he would prefer the state generated new revenue from economic growth, "not by raising taxes and fees,'' he said: "We have to honestly confront the immediate gap between the revenue we take in as a state government, and what we need to spend to support the services we provide, particularly our schools and state colleges.''

Chafee said he believes "the least harmful tax to job growth and economic development is a broad-based sales tax."

While Rhode Island's 7 percent sales tax is "already the nation's second highest, surpassed only by California...Rhode Island has one of the broadest lists of exemptions, including: food, clothing, over the counter drugs, over 70 categories that total $9 billion a year.''

"Make no mistake; I will oppose any changes to our taxes without first reforming our spending, particularly the mandates,'' he said. But "we have to make choices,'' he said, and "rather than forcing our property taxes to rise across Rhode Island, we should carefully examine a two-tier sales tax. Other states have this system and it is working.

"Illinois has a 6.25 percent sales tax but a separate 1 percent tax on food and over the counter drugs. Tennessee has a 7 percent sales tax but a 5.5 percent tax on groceries. Working together, we can find the right formula for Rhode Island, one that provides the revenue we need to spare property taxpayers an ever-increasing burden, while taking into account the strain that families already feel from taxes.''

This isn't the first time this idea has been floated--the Poverty Institute has been throwing this idea out there for a few years, for instance--and it's in line with Chafee's track record of favoring tax increases to "pay for" things while also proposing budget cuts. The only problem is that Chafee's brand of fiscal responsibility seems to always get the tax increase side of things through and not the promised cuts. I have little faith that a gravitas-challenged Governor Chafee will be able to persuade RI's General Assembly to do any different.

UPDATE: Chafee offers more ideas HERE (I assume this is the prepared text of his announcement speech).

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Chaffee remains a baffoon. Same old answers - raise taxes just like he did in Warwick - in order to pander to the public sector unions. Remember when the raise to 7% sales tax was a temporary fix? Then we added the 1% meals tax. Go back to shoeing horses Linc, maybe one will kick you in the head and knock some sense in.

Posted by: Jim at January 4, 2010 11:31 AM

About the only thing I agree with in Chafee's statement is that we need to find the right formula for our tax rate. However, I believe that we would collect more in tax revenues by LOWERING tax rates. Go ahead and tax everything for all I care, no one knows of all the exemptions, but lower the tax rate to something like 3%. Now we'll have lots of MA and CT residents flocking to RI to buy things, and it will attract more business and more jobs. Raising is not the answer here.

Posted by: Patrick at January 4, 2010 11:41 AM

Walter Mondalte just called. He wants his "I'm raising taxes if elected" platform back!

Buffoon doesn't even cut it any more. We're going to need to think of a new word.

2010 is going to be fun.

Posted by: Will at January 4, 2010 11:53 AM

"2010 is going to be fun"

I hope you are right, Will. I see an endless series of battles to try to keep our state and country from accelerating their downward spirals, all while trying to field enough good candidates to replace the loons in charge of the asylum come November. More people have to get involved and actually DO something to effect change. As Justin alluded to in a previous post, simply perusing every piece of legislation for sneaky ways that the legislature is trying to nail the taxpayers is a full time job (and a boring one, at that).

I see it all too often: well meaning folks who simply talk amongst themselves. This can be a fun year, an historic year even, and I think more people are engaged than ever before. But we need many more concerned citizens to step up to the plate.

Posted by: MadMom at January 4, 2010 12:20 PM

Senator Chafee seems to be trying to put forward possible ideas that may not appeal to everyone, but may help to alleviate the serious statewide budget shortfall.

First and foremost, the senator believes we must control statewide spending by addressing waste and unnecessary mandates. He said as much in his speech, if you read the text on his website.

Furthermore, he wants to halt the current administration's practice of pushing tax burdens down to Rhode Island's cities and towns... a statewide tax cut is not really a tax cut if the money just has to be made up at the local level to fund necessary services like public schools.

This proposal is one of many options being considered, and the senator is open to hearing other new ideas for how to close the budget gap and return the state to a balanced budget.

I think it takes a great deal of leadership to actually put forward potential policy solutions for public review. I know for a fact that the senator wants to hear from Rhode Islanders about their thoughts on his proposals, and other potential solutions he may consider.

Real leadership takes guts... not just rehashing what everyone wants to hear "no new taxes". I don't like being taxed any more than you do, but I also believe we can't continue to run an increasing budget deficit without repercussions.

Posted by: Jake Paris at January 4, 2010 12:33 PM

In reading the GOP's reaction to Chaffee announcment I enjoied remembering the quote by the former Warwick School Committee Chair. However, the actual quote referred to then Mayor Chaffee not just as a monkey but as Curious George. Perhaps that replaces buffoon.

Posted by: Jim at January 4, 2010 12:49 PM

>>"Real leadership takes guts... not just rehashing what everyone wants to hear "no new taxes". I don't like being taxed any more than you do, but I also believe we can't continue to run an increasing budget deficit without repercussions."

Real leadership would be benchmarking NH and calling for the elimination of the sales and/or income tax (ideally both, but at least one as a start), and then adjusting the state budget accordingly to live within whatever revenue remained ... the public unions and poverty industry be damned.

That would make Rhode Island hospitable for "working families" instead of "special interest families" (state and municipal union households) and "parasitic families" (welfare queens and their illegitimate progeny).

Somehow I don't think we'll hear such "leadership" from the Senator who, as I recall, while in Washington decried budget deficits, reflexively advocating higher taxes rather than cutting spending.

I also recall that he got along quite famously with the unions while Mayor of Warwick.

In other words, he's part of the problem, not part of the solution.

Posted by: Ragin' Rhode Islander at January 4, 2010 1:11 PM

The Village Idiot has spoken. Based on his fundraising so far, no one is listening.

But the Projo will do everything they can to promote him.

Posted by: BobN at January 4, 2010 1:21 PM

Whether or not union members (who are also taxpaying citizens) were fans of then-Mayor Chafee is besides the point when discussing his desire to reign in the state budget.

He ran a budget surplus for 7 years as mayor of the city, and ushered in unexpected levels of economic growth. He was able to accomplish that feat in part due to his fiscal conservatism... cutting wasteful spending and consolidating overlapping municipal programs.

Senator Chafee was not a member of the Budget Committee and therefore had very little control over those bills introduced on the floor of the Senate to cut wasteful spending. However, he was still consistently rated as one of the Senate's strongest fiscal conservatives by the non-partisan Concord Coalition.

Posted by: Jake Paris at January 4, 2010 1:27 PM

Chafee would be bad for RI. He is a baffoon but that is missing the point. He is part of the problem. He is part of the reason we are in this mess.

His MO is tax and spend. Need more money for BIG Government? Just raise taxes, the people will pay. The public sector unions need more. Giove them what they want, the taxpayers will come through.

I want a candidate who will shrink the size of government, lower taxes across the board, bring in business and the jobs they create, and change the very foundsation of the way things are done in RI.

I'm sorry Gordon Fox and Linc Chafee in the same building is bad news for everyone.

People!!! Taxpayers are moving out of RI. Businesses are not going to come here because it just costs too much. What are we thinking?

"2010 will be fun." ??? No. 2010 will be a nightmare.


Posted by: Sol Venturi at January 4, 2010 2:46 PM

Please don't tell me we are going to have to read such prepared political jargon as posted by Mr. Paris for the next year. "Real leadership takes guts." Wow.

We haven't seen any specifics about spending cuts, but Chafee's already willing to talk specifics about tax increases. We know what makes him most comfortable. Suggesting we tax food isn't gutsy, it's disgraceful.

Posted by: mikeinri at January 4, 2010 10:18 PM

I guess the Chafee campaign has got themselves an intern to blog prepackaged talking points, that I guess we're supposed to believe at face value?

"He ran a budget surplus for 7 years as mayor of the city, and ushered in unexpected levels of economic growth"

You seem to forget that little part about Chafee also raising taxes nearly every year he was mayor, and never once lowering them. Whoopsie.

PS You can eliminate the deficit by cutting spending. No new taxes. Yeah, we're taxed enough. Just a thought.

Posted by: Will at January 5, 2010 1:15 AM

Will wrote:
You seem to forget that little part about Chafee also raising taxes nearly every year he was mayor, and never once lowering them. Whoopsie.


Please give us the tax raising history of a potential GOP candidate for Governor and former mayor of Cranston.

Posted by: Phil at January 5, 2010 7:17 AM

Yes, I am indeed a Chafee campaign supporter. But, for the record, no one gives me talking points to write from. I write my own posts.

Sorry if my writing seems too jargony, but I just like to see political candidates come up with plans that aren't designed to appease everybody. Politics, in part, is the art of compromise.

So far, Senator Chafee has put forward one possible idea that has already gotten people to discuss the pros and cons of a sales tax in comparison with the property tax. To me, that's a leadership role he's taken... maybe you disagree, but at least we're here talking about it.

Was I incorrect about what happened to the City of Warwick's finances while he was Mayor?

Posted by: Jake Paris at January 5, 2010 8:38 AM

Well, Jake, it's sort of like giving BJ Clinton credit for the federal budget improvement during the 1990s. Neither politician had anything to do with the economic forces that increased government revenues. Your attempt to say Chafee made it happen is simply not based on facts, and I reject it.

A more relevant question would be: What were the levels of Warwick city government spending during Chafee's tenure?

Since he prided himself on being a management guru in yesterday's press conference, it would be helpful if he could provide some evidence to support his claim.

And saying that city employees were happy because he gave them unprecedented pay raises doesn't count.

Posted by: BobN at January 5, 2010 8:50 AM

BobN: You ask a very fair question there about Warwick city spending.

Unfortunately, as far as I can tell, the City of Warwick only has their annual budgets posted online going back to 2005. (http://www.warwickri.gov/index.php?option=com_content&view=article&id=863:amended-general-fund-budgets&catid=46:financedepartment&Itemid=30)

As a former IT manager, one proposal I'd have for any local or state government is to place these records online so that concerned citizens like us can research issues like budgetary spending.

I've just put in a request for that data, and will definitely follow up.

Posted by: Jake Paris at January 5, 2010 9:45 AM

If Linc plays this right...
His speech got pounded on by Gio Cicione and Bill Lynch. If played right, getting assaulted by a couple of unpopular party hacks benefits him (and puts pressure on the other guys to put their tax plans out there).

Posted by: rhody at January 5, 2010 10:22 AM

There was plenty of discussion of municipal tax rates during the 2006 Senate campaign, example with numbers available here.

Posted by: Andrew at January 5, 2010 10:37 AM

Mr. Paris, why do the "courageous leaders" always put forth a plan that will raise my taxes? Why not begin with a plan that will cut spending? Ya know, just to get us talking about "the pros and cons"? That's what "fiscal conservatives" do.

And, if you don't mind me asking, are you a native RIer?

Posted by: mikeinri at January 5, 2010 9:50 PM

Hi Mike,

While I do understand that folks (including myself, btw) are eager to hear specifics from Senator Chafee on his cost-savings plans, you can rest assured that cutting back on wasteful spending at the Rhode Island State House is one of his primary goals.

In fact, in his speech he did say he wouldn't implement any taxation changes until some cost savings had been achieved. It's certainly my belief that he'll develop detailed plans to accomplish just that as the race for governor heats up.

No, I don't mind you asking at all about my past. I was raised in West Barrington, RI and attended the University of Rhode Island, where I majored in Computer Science.

Posted by: Jake Paris at January 6, 2010 11:14 AM

Thanks Jake. I wanted to ensure all the deserved credibility of a suffering RIer. :)

I believe my complaint remains unanswered however. Chafee talked ambiguously about spending cuts, but specifically about tax increases. A fiscal conservative would submit specific spending cuts first. But, alas, I believe Chafee doesn't want to alienate the leftist coalition of labor and social liberals who currently support him.

Posted by: mikeinri at January 6, 2010 5:38 PM

Mike: I can't disagree with you that some folks would have liked to see cuts discussed before taxes, while others have been okay with Senator Chafee's choice to put forward the arguably harder-to-sell part of his economic recovery plan first.

My sincere belief though is that you will see a serious discussion of spending reduction long before this campaign is over. At that point, voters should have a more complete picture of Senator Chafee's fiscal conservative values.

All this is a long way of saying that I hope you stay tuned :)

Posted by: Jake Paris at January 7, 2010 2:29 PM
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