A new report confirms what progressives have saying for several legislative sessions now: Rhode Island needs tax equity.
According to the nonpartisan Institute on Taxation and Economic
Policy report the poorest Rhode Islanders will pay more than twice as much in
percentage of income than will the richest residents of the Ocean State. Rhode
Island has the eighth highest taxes on the poor in the nation, according to the
report.
We know that governors nationwide are promising to cut or
eliminate taxes, but the question is who’s going to pay for it. There’s a good
chance it’s the so-called takers who spend so much on necessities that they pay
an effective tax rate of 10 or more percent, due largely to sales and property
taxes. In too many states, these are the people being asked to make up the
revenues lost to income tax cuts that overwhelmingly benefit the wealthiest
taxpayers. Cutting the income tax and relying on sales taxes to make up the
lost revenues is the surest way to make an already upside down tax system even
more so.
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| Sales taxes disproportionately burden the poorest |
Read the entire report here. Or read the Kathy Gregg’s front page ProJo here and Ted Nesi’s blog post here. Nesi and Gregg are Rhode
Island’s two most influential journalists, and influential progressives often
complain that both have editorial biases against liberal economic policies.
This report forces both writers to acknowledge Rhode Island’s
very regressive tax structure, which is something progressives feel is often
ignored by the local media even though it is very popular in both the General
Assembly – where almost half of the legislature co-signed a tax equity bill
last session – and among Rhode Islanders in general – a Fleming poll last year
showed almost 70 percent favored a less regressive income tax structure.
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| Property taxes disproportionately burden the middle-class as we've seen in Charlestown |
But the Providence Journal’s story goes one step farther,
implying in the very first sentence that the report could affect the politics
of tax equity at the State House. “As the tax debate begins anew on Smith Hill,
a new study has identified Rhode Island as one of 10 states with the highest
taxes on the poor,” writes Gregg, who is widely regarded as the most astute
handicapper of local politics.
The ProJo story quoted Kate Brewster of the Economic Progress
Institute to illustrate how the new report could tip the scales toward tax
equity this legislative session.
Kate Brewster, executive director of The Economic Progress
Institute in Rhode Island, viewed the report as ammunition for the campaign by
organized labor and others to persuade state lawmakers to ask the wealthy to
“pay a little more” by creating a new tax bracket. Advocates are drafting a
bill that would raise the top rate from 5.99 percent to 7.9 percent on those
whose household income tops $250,000.
“This report provides clear evidence that our tax structure is
very regressive and policies are needed to improve fairness for the state’s
low- and modest-income taxpayers,” Brewster said of the study titled “Who
Pays?”
Brewster acknowledged that the sales tax hits the poor more
heavily than any of the other taxes do, but she voiced hope lawmakers would
look at the “combined impact of all state and local taxes.”
“If you look at the overall impact, it appears there is more
room to ask upper-income households to pay more, through the personal income
tax,” and to help the poor by increasing the size of the refund available
through the state’s earned-income tax credit, she said Tuesday.
