October 18, 2012

The Insanity Will Never End, Until We At Least Begin to Think About It

Carroll Andrew Morse

RI Public Radio reporter Ian Donnis' recap of the last night's Gordon Fox/Mark Binder debate includes this gem of Rhode Island fiscal insanity...

6. [House Speaker Gordon Fox], in the first time that I heard him mention it, raised the possibility of using the state income tax to reduce the high burden of property taxes. He didn’t offer further specifics. The comment came in response to a question from a resident troubled by high property taxes on the East Side.
Think through how this would work. Speaker Fox is suggesting that a statewide tax increase (or perhaps a service cut HAHAHAHAHAHA) can be used to subsidize the property taxes of East Side residents. There's is no fiscal way that this works out unless 1) the General Assembly rigs some kind of "property tax funding formula", so that politically favored constituencies like East Siders receive money taken from less politically favored ones or 2) more money is taken from East Siders in state taxes than they get back in property tax subsidies (with the legislature hoping that nobody on the East Side notices).

Do Rhode Island legislators really believe that everyone can come out ahead, in a plan to shift money from Group A to Group B? More importantly, does the legislator you are planning to vote for this November believe it?

Comments, although monitored, are not necessarily representative of the views Anchor Rising's contributors or approved by them. We reserve the right to delete or modify comments for any reason.

Binder is really putting the heat on Fox by exposing him for what he is. The only problem is the progressives over on RIF have Fox's back. The last thing they want is to lose the House leadership position and apparently are ready to absorb the hits that come with supporting him.

Posted by: Max D at October 18, 2012 11:51 AM

In Woonsocket, local radio is saying we should vote for the incumbent Democrat in District 51 because he will be heard by the leadership. They claim a Republican can get NOTHING done. So, I guess we're supposed to vote for the candidate that continues one party rule?

I guess the East Side should vote for Fox so they won't lose the leadership spot?

Screw it all, let's just move to a dictatorship and forget abotu striving for balance of power. Oh, sorry; I know the Democrats already consider us to have a balance of power.

Posted by: John at October 18, 2012 12:04 PM

Both candidates in the race are progressive, so you can excuse the RIFuture lemmings for being conflicted. Fox is the inevitable corrupted end result of ends-justifying-the-means, identity-driven, dependency-base progressive politics. Binder is the naive, idealistic progressive newcomer who views government as a powertool to achieve his benevolent redistributionist ends. It's Willie Stark Chapter 1 debating Willie Stark Chapter 9, a splitscreen vision into the future.

Binder's hammering of Fox on the 38 Studios issue is a mummer's farce. Binder has stated that he supports such loans in abstract and, like the rest of the economically illiterate progressive gang, has offered no principled objection to the EDC or these inherently corrupting public-private partnerships. It's all just Monday-morning quarterbacking and nitpicking the irrelevant details of this specific deal to score political points. Binder doesn't have the first clue about why central economic planning is fundamentally inefficient and flawed and can only lead to the result that occurred, regardless of how large or small the loan was or which people happened to be involved.

Posted by: Dan at October 18, 2012 12:46 PM

As the State has cut revenue sharing with cities/towns and added unfunded mandates, the municipalities have increased property taxes to make up the difference.

An increase in the statewide income tax could be used to restore revenue sharing to previous levels or otherwise support cities and towns, allowing for property tax relief.

Do I believe any of this will happen? No, not a chance in hell, but Rep. Fox was probably thinking along these lines when he made that statement. So, no, your two scenarios are not the only "fiscal way this works," but I agree that it is insane to believe anyone in the General Assembly will work to reduce our property taxes.

Posted by: Beg your pardon at October 18, 2012 1:00 PM

Beg your pardon Beg your pardon, but restoring an old subsidy involves one of the two options described in the main post; either we raise taxes on others to subsidize East Side property taxes, or East Siders end up paying more in taxes than they receive back in subsidies. Calling a program "revenue sharing" doesn't create magic money for free.

Posted by: Andrew at October 18, 2012 2:39 PM

Ah, yes, let the hospitals and universities be paid for on the backs of the poor (who pay property taxes just like the East Siders by the way) so long as the folks in the suburbs get a free ride.

Posted by: Russ at October 18, 2012 3:32 PM

"(or perhaps a service cut HAHAHAHAHAHA)"


Posted by: Monique at October 18, 2012 3:53 PM


I never said we would "create magic money for free," but thanks for that.

What I was arguing is that there are ways to adjust the State's finances that would, in theory at least, lead to property tax savings and reduce the overall tax burden of certain groups whether they be East Siders or anyone else.

Obviously, as the OP stated, that is still a shift of money from Group A to Group B and, no, RI will never come out ahead if that's all we do.

Moreover, I think how we are taxed is nearly (if not just) as important as how much we are taxed. This is veering into a much larger discussion, but I firmly believe the property tax is an inefficient and inequitable tax, yet our governments are becoming more and more reliant on it. That should be troublesome to us all.

Posted by: Beg your pardon at October 18, 2012 4:06 PM

Anyone that thinks raising the income tax will reduce property taxes is dreaming. This state is toast...fees and taxes will increase as the middle class flees with businesses close behind. The negative cycle will accelerate...and housing values will plummet. Run while you can...

Posted by: Mike at October 18, 2012 7:23 PM

"The comment came in response to a question from a resident troubled by high property taxes on the East Side."

This is a totally legitimate issue.

I know people on the East Side who pay more in property taxes than they do on their mortgage. The state has a HUGE problem with reliance on property taxes. Not to mention that property tax assessments can be manipulated by the politically connected, and they create a tremendous amount of overhead for the municipalities (39 assessors' offices, tax collectors, clerks, etc.)

It makes much more sense to eliminate local property taxes and replace them with statewide consumption and income taxes that include payments to the municipalities based on certain non-corruptible criteria.

For instance:

You could have the reimbursement formula pay $X per resident, plus $Y per dollar of GDP revenue created inside the borders. This would prevent suburbs from 'externalizing' the costs of hosting the businesses, colleges, hospitals, poor, disabled, and elderly.

Posted by: mangeek at October 19, 2012 4:46 PM

"troubled by high property taxes on the East Side."

I noticed thiswhen I firstmoved back this way in 1995. You could still buy a pretty good pile of bricks off the boulevard for about $155,000. Tax bills seemed to average about $5,000, which I thought excessive.

This is a necessary result of living in a good area of a decaying city. Someone has to pay the bills. As other areas of a city continue to decline assessed values (should) fall. As their values fall,the tax burden has to shift some where. To keep "revenues" up, the lower values have to be ignored or the tax rate raised. As tax rates are raised to produce the needed income from devalued property, the tax burden on property which has not sustained a dimunition in value becomes very undesireable. The only alternative (which is probably used) is to ignore the diminishing values and hold assessed values at artificil levels. How many assessments have been lowered to accurately reflect market values?

The other night I spoke with a relative who has his waterfront home in Warwick for sale. The assessment is $300,000 higher than the asking price which hasn't found a buyer in over a year. Isn't "fair market value" the price at which it should sell in 30, or is it, 60 days? Shouldn't the "assessed value" track "fair market value"?

Posted by: Warrington Faust at October 20, 2012 8:38 PM
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