This persistent argument from those opposed to a capital gains rollback that there is no evidence that passage of any tax relief for wealthier Rhode Islanders will result in saved or additional jobs is pure folly.
It is an argument rung out of emotion, with little vision or sense of history.
Beyond Cash Donations: How New Forms of Giving Are Transforming Not-for-Profit Accounting
Evolving Funding Landscape for Not-for-Profits Not-for-profit organizations are being asked to do more with less,…
Learn More
Take the latest release from The George Wiley Center, which maintains that “removing capital gains will rob the Rhode Island Treasury of millions of badly needed dollars.” The release further suggests that such a tax break will “reward millionaires with opportunities to cash in stock and make more millions while pushing thousands of children deeper into poverty.” And still, it maintains that the last capital gains tax relief — the American Power Conversion bill as it had been called — resulted in that company announcing layoffs.
Let’s get the facts straight.
- Those “millionaires” who would gain from capital gains relief, and the companies they run, are the very same “millionaires” and companies that are the major supporters of virtually every charitable agency in Rhode Island. If it were not for the “deep pockets” of these “millionaires” and their companies, thousands of Rhode Island’s most impoverished residents would be thrust onto the streets with absolutely no place to go.
- National surveys consistently measure the environment for entrepreneurial opportunity here as among the lowest in the nation because of Rhode Island’s high tax structure. We are a state of intelligent people with rich ideas, but if they take those ideas and develop them elsewhere, as the surveys suggest, then the businesses that evolve are developed in other more tax friendly states. Those businesses mean jobs, family wage jobs, as the Wiley Center puts it, and they are lost to Rhode Island.
- Only a year ago, Thomas D. Saler wrote for Bloomberg news: “Taxes: A Territorial View,” subtitled: “All men may be created equal, but state tax structures are not.” Dead last in the ranking for wealthier Americans was Rhode Island. “And who can figure why tiny Rhode Island hasn’t seen its upper crust slip across the border into 35th ranked Massachusetts, where our sample tax bills were 32 percent lower?” Saler asked. We suspect many have. We hear from executives frequently about the tax disparity and anecdotal evidence of wealthy people seeking refuge from our high taxes by leaving the state. Every time one of these people leaves the state, means they no longer pay any taxes here. A Rhode Island Public Expenditure Council study says that lower wage Rhode Islanders pay only a fraction of the percentage of income paid by wealthier Rhode Islanders in state income tax. We wonder if the state were to create a more equitable tax system and retain some of the higher wage earners, whether the net result might actually be an increase in tax revenues?
- The reference to American Power Conversion is unfortunate. We are in the worst economy we’ve been in for five years, according to various measures. Many companies have instituted layoffs in response to the slowing economy. So any layoffs by APC have nothing to do with capital gains. However, a look at what happened is maybe the best argument that can be made in favor of the phase-out. The bill to which the Wiley Center referred was passed in early 1993. At the end of 1992, APC had 650 Rhode Island employees. At the end of 2000, APC had 1,480 Rhode Island employees.
