R.I. tax burden remains among nation’s highest

The good news, the Rhode Island Public Expenditure Council would tell you, is that the Ocean State didn’t move any farther up the list. The business-backed think tank’s latest analysis, based on fiscal 2005 figures, ranks the state No. 7 for its tax burden per $1,000 of personal income, the same as last year.
And in terms of total state and local tax collections per capita, Rhode Island actually dropped slightly on the list, to No. 9 from No. 7 last year.
Yet compared with Massachusetts and Connecticut, and with the nation as a whole, RIPEC says, the verdict is still clear: Rhode Island “is a high-tax state with state and local tax burdens ranking in the top 10 in the nation.”
Moreover, the tax burden in the state, which policymakers and government leaders have long said they want to reduce, actually grew slightly from 1995 to 2005, from $117.32 to $122.68 per $1,000 of personal income.
The tax burden in Massachusetts, meanwhile, declined from $112.90 to $107.31 in that time, and in Connecticut, it dropped from $122.64 to $119.17. In the nation as a whole, there was also a slight decline, from $113.23 to $112.84 per $1,000.
(The state with the highest tax burden in the nation by this measure, by the way, is Wyoming, at $150.76 per $1,000; New York ranks second, at $149.70.)
RIPEC’s analysis, which is updated annually, looks at the factors that contribute to Rhode Island’s ranking, and this year’s edition notes that the state’ “overreliance on the property tax continued to be the primary driver” of the high tax burden.
Property tax collections account for 40 percent of all state and local revenue tax collections, RIPEC notes in the report, compared with a national average of 31 percent. When measured as a share of personal income, the think tank says, property tax collections in Rhode Island are 44 percent higher than the U.S. average.
The overall property tax burden has declined slightly, however, from $50.67 per $1,000 of personal income in fiscal 1995 to $49.60 per $1,000 in fiscal 2005.
When it comes to individual income tax collections, meanwhile – one area where policymakers have recently sought to reduce the tax burden to make Rhode Island more competitive with its neighbors – the Ocean State actually compares favorably by both measures provided: At $27.21 per $1,000 in personal income, it’s ranked No. 21, while Massachusetts and Connecticut are at No. 5 ($36.16) and No. 13 ($31.74), respectively.
And per capita collections, at $930, place Rhode Island at No. 16, while Massachusetts ranks third, at $1,506, and Connecticut is fourth, at $1,438. •
To view the full report, How Rhode Island Compares, visit www.ripec.com.