The Providence Business News takes great pride in reporting accurately and in-depth about the men and women, the decisions and forces that shape the fortunes and future of this great state. But on occasion we move from behind the notebook.
The recently concluded series, An Economic Agenda, whose last panel discussion was held at the Business Expo last week, was one such time. We asked business and public policy leaders to come together to discuss topics of urgent importance – taxation, transportation, energy, insurance, work force development and affordable housing. All seven sessions are recapped in a special section in this week’s edition.
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The stars of the panels were Rhode Island decision makers, men and women whose ideas will ultimately determine the health and welfare of our home. Their contributions to the public debate should – and will – make a difference. But for change to happen wisely, we all need to be informed, and we all need to be involved. There is no better starting point than the insightful analysis contained in this special section.
Tax reform momentum needs to continue
If it’s Monday, there must be another report on Rhode Island taxes in the mail. As tempting as it is to tune out yet another dire warning about how taxes are hurting the state’s competitiveness, resist the urge. Tax reform is finally on the front burner at the State House and the time to act is now.
The two most recent papers were published by the Rhode Island Public Expenditure Council. One analyzed the property tax in all 39 municipalities and found that the burden is inequitable and is rising, largely because of mushrooming educational expenditures.
And a poll of voters released at the same time found that, by a wide margin, the tax that voters would most like to see reduced is the property tax, not the income tax, which has been getting all the publicity.
The second study assessed the available research to see what impact high marginal tax rates have on economic development. In a survey of peer-reviewed pieces dating back to the 1950s, RIPEC found evidence to support the contention that economic development decisions are made on the basis of tax rates. And it also found that tax differentials between states in competition with one another can affect development, although in both cases, the effect was uneven.
There is also compelling evidence that the high marginal income tax rate is having a negative impact on everything from charitable giving to state tax receipts. Clearly there’s a lot of work to be done, and the House took the first step last week by passing the Providence Chamber of Commerce’s reform package. Now it’s the Senate’s turn. And once that is done, both houses should start looking at property taxes.
