March 14, 2012

Differing Interpretations of Tax Effects Play into Local Decision

Justin Katz

Experts disagree about whether the seven legislative proposals to increase personal income taxes on "the rich" will have an adverse effect on Rhode Island's economy, but the complexity of such changes requires a more local debate.

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Providence (Ocean State Current) - Throughout the autumn and winter, the Occupy Movement filled newspapers with slogans pitting Americans from the top 1% in wealth against the other 99%, whom the Occupiers presumed to represent.  That spirit has entered the General Assembly, this session, in the form of seven different proposals to increase taxes on "the rich."

Advocates tout a paper released this month by Jeffrey Thompson, an assistant research professor with the Political Economy Research Institute (PERI) at the University of Massachusetts.  Reviewing research literature related to the effects of tax increases on wealthy residents, Thompson concludes that, in general, "modest tax increases on affluent households are unlikely" to change their economic behavior or drive them out of the state.  It is more likely that they'll find ways to avoid the increased taxes, but such results "are not nearly as dramatic as the consequences predicted by some."

On the other end of the debate, the Rhode Island Center for Freedom & Prosperity (the parent organization for the Ocean State Current) expects significant consequences.  Using a computable general equilibrium (CGE) model developed by the Beacon Hill Institute at Suffolk University, the Center predicts that the most cited tax increase proposal would cost the state 1,372 jobs and 1,000 residents overall, while falling $13 million short of advocates' $118 million revenue target.

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Its funny. We classify as "rich" (not 1% but top 5% nationally) & we moved from RI to a modestly higher tax state last year.

So why did we move? Certainly taxes were HUGE but it was not the income tax alone by any means that drove us away.

It was the car tax that really did it. It offended me. Grossly so since I drove a beater, appealed and they stuffed me.

2nd offensive tax was property taxes since our "rich" town paid for 98.5% of the cost of its schools via property taxes since there was no aid formula.RI was only state in entire US without one so GA can pick whom they favor.

3rd was elimination of itemized deductions on state level in '11. Papers are so bad in RI and people are so unsophisticated I doubt many knew this one was coming in '11.

4th : Estate tax. I wouldn't die in RI and leave my $$$ to your pensions if you paid me.

So I guess that sums it up. Yeah, income taxes were bad but they are bad in many places. It was the CULTURE - the hatred of those that had achieved. I tried so hard to get my spouse to go and what did the trick was Iannuzzi. That was her straw-that-broke-the-camels-back. GA has no respect for tax payer and ill uses their funds. I am happy to pay my fair share but don't piss on me and tell me its raining. CULTURE IS CORRUPT. Far worse than high taxes and less easy to solve. RI = GREECE

Posted by: movedaway at March 14, 2012 3:12 PM

As a family that makes under 50K we are sick of hearing this communistic bull**** of TAX THE RICH. With the added irony of the fact that about 95% of the states rich (meaning over 250K using Nobama's standards) are Democrats.
I say if they want to raise it to 11% Republicans propose 15%. If they go along with that Republicans propose 20%, and so on. As a matter of fact, lower that "rich" standard to 125K so we whack all those husband/wife government worker types!
Think what a great flyer that would be-"Dump Art Handy, Frank Ferri, Edith Ajiello, etc.-they won't tax the rich their FAIR SHARE".
Stick their commie pandering right up their 6 figure a****.
And yes RI does = Greece.

Posted by: Tommy Cranston at March 14, 2012 7:53 PM

Mr Cranston would mention Frank Ferri, who's bowling alley is assessed by the town of Johnston at $ 1,775,000.00 and his Warwick home at $ 480,000.00, my guess is Mr Ferri pays about $50,000 +/-
a year in property taxes alone, not counting payroll taxes, income tax, etc.

Posted by: Sammy in Arizona at March 15, 2012 1:03 PM

T. Jefferson "That which you tax, you diminish; that which you subsidize, you increase". That is all you need to know. We may not diminish the "rich" much, but why do it at all.

Of my friends and relatives in RI, who would be regardedas "rich", I don't know many planning to die in RI. Despite the absence of estate taxes in Florida, it seems to be losing favor to the Carolinas. I think it is availabiltiy of water front property in the Carolinas.

Posted by: Warrington Faust at March 15, 2012 3:09 PM
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