March 31, 2010

Stimulating Everybody in Rhode Island

Justin Katz

Rep. Stephen Ucci (D., Cranston, Johnston) has proposed legislation with a targeted "stimulus" intention:

The bill (2010-H7905) would implement a three-year freeze on the sales tax of all building materials used in the construction of new or improvements to existing residential and commercial buildings.

"The retail sales tax incentive program would essentially amount to a seven-percent discount on raw materials used to construct or make improvements to any building, including wiring and plumbing supplies," said Representative Ucci.

In addition, Ucci's construction stimulus package would implement a three-year property tax moratorium on all new construction and improvements to existing buildings completed in 2011, 2012 and 2013.

I suppose, since it's my industry, I shouldn't be inclined to criticize the intention, and I suspect the legislation's chances of making it into law are just about nil. But I do wonder why the move should be so limited. If it would be a good thing, by decreasing sales tax and holding back property taxes, to stimulate the economy, why not stimulate it all around? Construction's an integral field for economic development, but it doesn't really open up new routes for economic growth.

Once the houses and office buildings are erected, people have to live and do productive things in them. That's what the state ultimately has to begin encouraging, rather than discouraging.

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What happens to housing prices when you encourage building in a declining population? My understanding is that the population here is declining, is it wise to add more housing?

I'm hearing that landlords in my neighborhood are having trouble filling space, even at a loss.

Perhaps trying to spur construction is the wrong avenue. People are leaving here. Let's start by trying to grow our economy, getting people to come here, and then there will be plenty of demand for housing.

Posted by: mangeek at March 31, 2010 3:55 PM

Sounds like you want stimulus as long as it is your tool which is being stimulated......

I would counter that the building and real estate trades already break the back of us "paying" customers by the amazing amounts of tax breaks they already get.

I own my house, but up the road someone can deduct one million dollar mortgages and high property taxes from their Fed income tax.

I own my boat, but millions can deduct boats and RV loans from their taxes - second homes!

There are some amazing tax credits right now for insulation and energy upgrades (many end 2010) and many more in the Home Star program - cash for caulkers, etc.

That's just the beginning. A "Conservative" might say that people need those places to live in anyway, so why break the budget asking them to do what they would do anyway?

You were against it before you were for it, before you were against it.

Heck, I told you that you were a liberal. I know one when I hear one.

Posted by: Stuart at March 31, 2010 8:17 PM

If RI doesn't change its anti-business climate it will end up like Detroit, where a shortage of residential buildings is certainly NOT the problem. The continuing exodus of the producers will soon leave nobody to pay for the welfare state.

November, 2010 is the tipping point. If the General Assembly is not replaced by a conservative majority, the endgame begins.

Posted by: BobN at April 1, 2010 8:25 AM

Bob fails to cast his opinion into the ring (stimulus or no stim), but rather repeats the chicken little projections which seem to define conservatives and this site.

The world will not end. RI will not end.
Things change - they always do, and sometimes quickly. The world is going through changes, including one of excess productivity which will cause high unemployment for the foreseeable future. You can't continue to have a fake economy where thousands of condos are built for customers who cannot afford them. We are in transition, both in RI and in the whole country.

"Conservative" states like Alabama, KY and Arizona, OK, and VA have budget gaps as large or larger than "liberal" states like Ma., CT, etc.

So your "vote for me" diatribe has no common sense behind it.

If some conservatives get in, they will blame all the problems who those who came before and complain how they cannot get anything done - period. After all, complaining is their stock in trade - when they aren't taking away our rights, etc.

Posted by: Stuart at April 1, 2010 9:05 AM
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