March 29, 2008

How Is Art Handy Like a Diaper?

Justin Katz

It was one thing when Representative Art Handy (D, Cranston) decried the injustice of the little known diaper-service tax shelter during his testimony supporting his Economic Death and Dismemberment Act. We could at least give him the benefit of the doubt that he was speaking extemporaneously. But he apparently liked the image so much that he's used it in a Providence Journal op-ed:

The act would also bring our sales tax into the 21st Century by expanding it to include certain services. Just think about a mom who buys diapers at the local market. On a $10 bag of diapers, she'll pay 70 cents in sales tax. But a mother who can afford the luxury of a service that picks up her dirty diapers, launders them, and delivers them back to her door pays no tax at all.

As a basic factual matter, Handy is wrong. Diapers are non-taxable in Rhode Island. (Perhaps he ought to take that up with his local market.)

As a conceptual matter, he's wrong again. The money paid for a person's time spent laundering cloth diapers is taxable as income. The delivery vehicle's gas is also taxed, and any number of things — from property to supplies — are taxed, as well. The service provider doesn't just eat those costs.

As an economic matter, he's short-sighted. As the previous paragraph implies (and as I've said before), the wealthy person who hires a diaper cleaning service creates a job. That's why it's a service: because somebody has to do it, and more likely than not, that somebody falls in the income range that Handy claims a desire to protect.

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Democrats. Stymied by reality once again.

Posted by: Greg at March 29, 2008 8:47 PM

I don't know about the other readers of Anchor Rising, but the debate over how to resolve RI's ever widening budget deficit is becoming more "other worldly" by the day.

As Warren Buffett has noted, "price is what you pay. Value is what you receive."

Ed Achorn, Dan Yorke, Arlene Violet, John Hazen White Jr., and many others have been trying to make this basic point to the Rhode Island electorate: the taxes we pay in RI aren't, on their own, the issue -- it is the abysmal value we receive for them. For example, Rhode Islanders have repeatedly shown themselves to be willing to make very substantial investments in their children' education, via our relatively high spending on public schools. Yet in exchange, they have received very poor value, as evidenced by poor NAEP test scores compared to other states (even after adjusting for differences in poverty levels and other demographic factors).

Yet rather than engage in a long overdue discussion of how to increase the value taxpayers receive, we are being told by Handy, Sgouros, Crowley, Walsh, Malcolm and others that value isn't the issue at all. Rather, higher taxes are a great idea (even in the absence of better performance by state and local government) solely because they will redistribute more income. At best, the people asserting this also claim that those whose income is being redistributed (with no improvement in the value they receive) will passively accept this fate and not call Paul Arpin as soon as the Handy bill becomes law. At worst, they totally neglect this rather critical issue.

There is a part of me (and probably many of you) that still can't quite believe what I see and hear -- the degree of ignorance about the way at least part of the world thinks and acts is breathtaking in the extreme. And yet every day, the evidence continues to mount that this isn't just a bad dream.

So too thus the feeling that the full nightmare can't be far behind, in the form of the Democratic dominated legislature passing large tax hikes, failing to address the poor value we receive, and betting that so many Rhode Islanders are "bought into" the system (i.e., beneficiaries of state salaries, contracts, and/or benefit payments, or related to people who are, and therefore afraid to rock the boat)that they will retain their majority in November.

In my mind, there are only two big shoes that have yet to fall. The first is the long overdue and long awaited result of the extended federal investigation of corruption in Rhode Island. And the second is the announcement of either a large pension funding bond and/or big asset sales (the Providence Water system being the first indication) to substantially reduce or eliminate the large unfunded liability in our state pension funds (consolidation of the municipal plans into one state plan should also be part of this). Once these two developments occur, along with the big tax increases, the true dimensions of the end game in Rhode Island will be clear.

My bet is still on a last attempt by the union faction to fund their benefits and get out of Dodge, purchased at the price of an ideologically satisfying (if ultimately self-defeating) increase in the redistributive (or shall I just say, punitive) taxes that RI imposes on anyone who has managed, through talent and effort, to rise above the increasinly lower common denominator in this sorry state.

Time will tell. But the unreality of this debate is amazing.

Posted by: John at March 29, 2008 10:01 PM

Great post John.

This over at Ocean State Republican discusses a related issue by which the unions might try to get theirs by sticking it to the rest of us - pension obligation bonds:

It is one installment of a five part series they ran on public sector pensions in RI. IMHO they did a nice job - well worth the read. The entire series appears within this section of the web site:

Posted by: Reagan Republican at March 30, 2008 12:41 AM

Handy is a liar,period.And concerned for the rights of pedophiles.How does this piece of crap get elected?This is your "progressive"folks-up close they are dirty,lying,manipulative termites wearing down the qualities of normal society to play to the dregs they really represent.

Posted by: joe at March 30, 2008 8:39 AM

John has it exactly right. The "circling of the drain" is upon us.
On a related issue, can someone confirm there is even one "diaper service" company in the state?
I can't seem to find one in yellow pages, online, etc.

Posted by: Mike at March 30, 2008 11:32 AM

>>How Is Art Handy Like a Diaper?

They're both full of the same material!

Posted by: Ragin' Rhode Islander at March 30, 2008 2:49 PM

Only reason I can figure Handy got elected is because his opponent was A) Republican, and B) a close ally of Steve Laffey.

Posted by: EMT at March 30, 2008 2:50 PM

Good point, EMT. I still think Fung would've been elected mayor if he had distanced himself from Laffey.

Posted by: rhody at March 30, 2008 3:42 PM

Mike, none listed on line. But I found one in the Narragansett analog phone book.

So a diaper service exists, even if the tax on diapers doesn't.

Diapers as a reason to tax the dickens out of us. Pretty lame.

Posted by: Monique at March 30, 2008 4:09 PM

Yeah, what would a tax on the state's one diaper service bring in-maybe 5 grand?
Meanwhile, the tax on trade-in cars would cost all Rhode Islanders, even the poorest, millions per year.
Yet, the "progressives" incessantly talk about diaper services but nary a word about their tax on trade-in cars.
Wonder why?
Another reason why I have NO PROBLEM ridiculing every foible of the leftist elite like Jerzyk and Segal. They take away food from my kids to fund their communist schemes while their millions immunize their own [children] from the folly of their taxes.

Posted by: Mike at March 30, 2008 8:50 PM

Alright, Mike. I'm clearly not offering this as defense of any of the people with whom we both disagree (even dislike) on the political stage, but apparently a new ground rule is necessary: keep the harsh adjectives as descriptive of the people with whom we're dealing.

Posted by: Justin Katz at March 30, 2008 8:56 PM

You know Mike,what gripes me about Jerzyk and Segal aside from their idiotic leftist politics is that they inveigle younger students at Brown and probably some other schools into their net and have these young people believing they are the fountain of knowledge and wisdom.The only thing these kids will learn from them is how to use boilerplate,stalinist language to deal with every situation.I noticed how Jerzyk went off on Grace Diaz after she "dared"to have the temerity to support Hillary instead of Obama.After all,he was her handler in her election campaign.Actually I think Diaz is older than Jerzyk,but apparently not as well educated.A plague on both their houses,but it just shows the patronizing,intolerant attitude that is always bubbling to the surface with these politburo types.Independent thought scares them more than anything.

Posted by: joe bernstein at March 30, 2008 11:04 PM

Stalinist? Dude, that is so 1961.

Posted by: rhody at March 31, 2008 12:17 AM

Rhody-exactly my point-these wannabes have an attitude that if you don't subscribe to every iota of their doctrinaire talking points you are not going to be accepted as a "progressive"-you made a joke about one line of what I said,fine,but you didn't address what I believe was a description of a certain type of rich white progressive condescending behavior towards those they are "helping"-I think half or more of these "activists"from the Brown University milieu are just trying to show mommy and daddy how independent they are(but don't forget to send the money)

Posted by: joe bernstein at March 31, 2008 8:24 AM
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