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RIPR is a (paper) newsletter
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Available Back Issues:
- Feb 08 (30) - IRS migration data,
and what it says about RI, a close look at "entitlements", historic
credit taxonomy, an investment banking sub-primer.
- Dec 07 (29) - A look at the state's
underinsured, economic geography with IRS data.
- Oct 07 (28) - Choosing the most
expensive ways to fight crime, bait and switch tax cuts, review
of Against Prediction, about the perils of using statistics
to fight crime.
- Aug 07 (27) - Sub-prime mortgages
fall heaviest on some neighborhoods, biotech patents in decline, no photo
IDs for voting, review of Al Gore's Against Reason
- Jun 07 (26) - Education
funding, budget secrecy, book review of Boomsday and the Social
Security Trustees' Report
- May 07 (25) - Municipal finance: could citizen
mobility cause high property taxes?
What some Depression-era economists had to say on investment, and why
it's relevant today, again.
- Mar 07 (24) - The state budget
disaster and how we got here. Structural deficit, health care,
borrowing, unfunded liabilities, the works.
- Jan 07 (23) - The impact of real
estate speculation on housing prices, reshaping the electoral college.
Book review of Blocking the Courthouse Door on tort "reform."
- Dec 06 (22) - State deficit: What's
so responsible about this? DOT bonding madness, Quonset, again,
Massachusetts budget comparison.
- Oct 06 (21) - Book review: Out of
Iraq by Geo. McGovern and William Polk, New rules about supervisors
undercut unions, New Hampshire comparisons, and November referenda guide.
- Aug 06 (20) - Measuring teacher
quality, anti-planning referenda and the conspiracy to promote them,
affordable housing in the suburbs, union elections v. card checks.
- Jun 06 (19) - Education report, Do
tax cut really shrink government?, Casinos and constitutions, State historic tax
credit: who uses it.
- May 06 (18) - Distribution
analysis of property taxes by town, critique of RIEDC statistics,
how to reform health care, and how not to.
- Mar 06 (17) - Critique of commonly
used statistics: RI/MA rich people disparity, median income, etc.
Our economic dependence on high health care spending. Review of
Crashing the Gate
- Feb 06 (16) - Unnecessary
accounting changes mean disaster ahead for state and towns, reforming
property tax assessment, random state budget notes.
- Jan 06 (15) - Educational equity,
estimating the amount of real estate speculation in Rhode Island,
interview with Thom Deller, Providence's chief planner.
- Nov 05 (14) - The distribution of
affordable houses and people who need them, a look at RI's affordable
housing laws.
- Sep 05 (13) - A solution to pension
strife, review of J.K. Galbraith biography and why we should care.
- Jul 05 (12) - Kelo v. New London:
Eminent Domain, and what's between the lines in New London.
- Jun 05 (11) - Teacher salaries,
Veterinarian salaries and the
minimum wage. Book review: Confessions of an Economic Hit Man
- Apr 05 (10) - Choosing a crisis: Tax fairness and school
funding, suggestions for reform. Book review: business location and
tax incentives.
- Feb 05 (9) - State and teacher
pension costs kept artificially high. Miscellaneous tax suggestions for balancing the state budget.
- Dec 04 (8) - Welfare applications and the iconography of welfare
department logos. The reality of the Social Security trust fund.
- Oct 04 (7) - RIPTA and DOT, who's really in crisis?
- Aug 04 (6) - MTBE and well pollution, Mathematical problems with property taxes
- May 04 (5) - A look at food-safety issues: mad cows, genetic engineering, disappearing farmland.
- Mar 04 (4) - FY05 RI State Budget Critique.
- Feb 04 (3) - A close look at the Blue Cross of RI annual statement.
- Oct 03 (2) - Taxing matters, a historical overview of tax burdens in Rhode Island
- Oct 03 Appendix - Methodology notes and sources for October issue
- Apr 03 (1) - FY04 RI State Budget critique
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Responsibility:
 Tom Sgouros
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Sat, 10 May 2008
Business subsidies
I was reviewing some statistics about state tax revenues last week,
and looked at business taxes. Along with the income tax and sales
tax, business taxes were once the third important leg of funding state
operations, but no longer. Between 1996 and 2006, income tax
collections rose by 76%, sales tax collections by 97% and business
taxes by -- wait for it -- 14%, far less than inflation over that
decade.
Why have business tax revenue declined so much? The economy has
suffered recently, but not for all of that decade. The biggest reason
for the decline is a nearly endless stream of special tax breaks. We
offer businesses several different investment tax credits, an R&D
credit, a credit for wages paid in an Enterprise Zone, a jobs
development credit, a job training credit, a biotechnology tax credit,
an "innovation and growth" tax credit, and much more. Some of these
are worth millions of dollars. For others, we simply don't know what
the effect is on the state budget. But the result is that 94% of the
businesses in our state pay the minimum corporate tax of $500.
Most of these cuts were made in the name of economic stimulus. But
for most of them, we don't really know how much the tax credit costs
us, or what we've gotten in return. As usual, the state has been
making decisions over millions of dollars in foregone revenue in the dark.
Sen. Stephen Alves, the chair of the Senate Finance committee, has
proposed raising the minimum corporate tax to deal with this issue,
but the last thing we need is a head tax, on people or businesses. An
income tax can't put a business out of business, since no income
equals no tax, and that's the fairer way to raise revenue than with a
hefty annual fixed payment that doesn't change with a business's
income. The minimum tax is already too high. The problem should be
fixed by determining which of the tax breaks aren't doing what was
promised.
Rep. Peter Lewiss of Westerly has proposed an admirable approach to
the problem in the "Development Subsidy Job Goals Accountability Act"
(H-7953). The idea behind the legislation is to begin to make public
exactly what we are getting for the many tax cuts we give businesses.
It also proposes a public economic development budget for the state,
to provide a unified picture of what, exactly, the state does in the
name of economic stimulus, via the many different departments that do
it. The bill was heard in House Finance last week, but it's not clear
if it has the votes to clear the committee. If you care about
accountability, let Rep. Steve Costantino, the chair of House Finance
know, along with all the committee members.
16:40 - 10 May 2008 [/y8/cols]
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