July 12, 2012

RI's Paradox of Being Great, but Still Failing

Justin Katz

Remember when the local PolitiFact took the Ocean State Policy Research Institute (OSPRI) to task for claiming that the estate tax was driving Rhode Islanders out, especially down to America's retirement peninsula? One statement from that article has stuck with me, over the year and a half since:

One expert was Kail Padquitt, staff economist for The Tax Foundation, a think tank that studies federal and state tax policies, who said he hasn’t seen any proof that the prospect of paying estate taxes drives people to move.

"You can see people are leaving a state, but (determining) why they are leaving is hard," Padquitt said. "Florida has sunshine, low taxes and warmth. Why wouldn’t people move there?"

That rhetorical question has come to mind recently for a couple of reasons. For one thing, I've been working on a related bit of research for OSPRI's successor organization, the RI Center for Freedom & Prosperity, to be released next week.

Today, though, the quotation came to me in relation to another, separate but related, context. As most folks who follow RI closely have already heard by now, CNBC placed the state dead last (again) on its business friendliness ranking, and very poorly in other areas. Marc Comtois's Anchor Rising post on the subject includes a reaction to RI Future's Bob Plain.

Continue reading on the Ocean State Current...

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"'You can see people are leaving a state, but (determining) why they are leaving is hard," Padquitt said."

Not really. You can just ask them why they left, which I have been doing for the past decade as I have encountered fellow exiles. The responses have been roughly as follows:

"Taxes and no jobs."
"Corruption and no jobs."
"Taxes and corruption."
"Taxes and no jobs."
"Bad weather."
"Taxes, corruption, and no jobs."

That last response was my own, by the way.

Posted by: Dan at July 12, 2012 3:18 PM

I think Joseph P. Kennedy made the point for all time. Massachusetts went through lengthy litigtion in an attempt to tax his estate (can't remember the case name or citation).

Anecdotally, I know a number of wealthy Rhode Islanders who have retired to Florida, and it wasn't just the warmth.

If you are selling a business in Massachusetts,the first advice from experienced counsel is "move to New Hampshire".

Posted by: Warrington Faust at July 12, 2012 4:59 PM

WE moved just over a year ago and I still look at our towns RE to see if houses are selling. Our property taxes went way up - not as a result of mil rate but they reassesses the house.

Meanwhile I had the ability in 12 , since we did a split return ( half year in RI ) to look at our taxes here in a fairly high tax state we moved to vs RI and guess what: RI took away our ability to to itemize so the taxes are just as hight there as here. Ha!

And yes the estate tax drove me out. Remember Capital Gains in RI are taxed as income and you get no deductions so if you sell and have a gain you're caught too.

Too many reasons not to leave...

Posted by: robert at July 13, 2012 7:15 AM
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