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Thu, 18 Nov 2004We got the following press release in the Governor's e-news today. Reducing Rhode Island's Tax BurdenHear, hear! "If we are to grow our economy and attract the kinds of jobs that will keep our children and grandchildren here," the Governor noted, "we must reduce our tax burden, and we must begin now!" Even the ones who have seen their taxes cut consistently over the
past 10 years? They should get a cut along with the ones who have
seen their taxes increase over the same period? The fact is that
high-income people (people with incomes more than five times the
median) pay "Second, it should be a multi-year plan, say 5 years, with a specific programmed reduction, with a goal of achieving a total tax burden more in line with Massachusetts." Sure, why not? Massachusetts set arbitrary caps on local taxes twenty years ago, and chaos ensued. We could do that, too. "Third, the tax reduction should be focused on state income taxes, the broadest tax affecting the most Rhode Islanders. It must be simple to understand and hard for government to reverse. We must not promise a reduction on one hand, and push through a tax hike with the other. The key is to reduce the overall burden. Let's kick the tax habit." If the key is to reduce the overall burden, ignoring the distribution of the burden is the key to getting it wrong. Lowering the only progressive tax in the array of taxes levied by our state and towns will only increase the pressure on the most regressive one: the property tax. The state can continue to beggar itself if it wants to, but the towns operate under laws that say they can't. Public education, for example, is still a right in this country. If the state could double the income tax and apply that amount solely to property tax relief, over two-thirds of the state would see a tax cut. Some would see a cut of thousands of dollars. If the income tax were to go up only 10% -- a return to the bad old days of 1996, and that money applied to property tax relief, then around 90% of the state would see a substantial cut. Many of these are the ones on whom taxes went up over the past decade. If the Governor wants to see real tax relief, he should work to fix the broken relationship between the state and the towns. They don't trust the state to make good on its promises of funds, and the state doesn't trust them to lower taxes if they receive extra state aid. This is the problem we face. The habit we need to kick is the habit of addressing the symptom instead of the problem. 23:02 - 18 Nov 2004 [/m0411] link The RIPTA board voted yesterday (11/17) not to cut its service, but instead to raise its fares, to fill a $1.9 million budget hole for this fiscal year. This is a good thing, but as usual, the way a budget crisis is "solved" around here is simply to put it off until next year. Next year's budget is looking much worse already, with an almost $10 million hole in it. None of the pressures that have brought RIPTA to this pass have been made to go away. Health insurance will still increase, the cost of paratransit will still be higher than the dollars it brings in, and few think fuel prices are headed down any time soon. What's also funny about the solution is that while some of the costs will be cut using the Governor's solution (not filling vacant positions), the bulk of the cost ($1.1 million) will be filled by getting more money from DHS under the RIte Care program, which subsidizes bus passes for people who are part of the program. It's not 100% clear to me why transportation has to be funded under health care. Perhaps that's what it takes to run the system we need. But health care premiums are already under pressure. Will this help? There's more about RIPTA's budget woes in issue 7. |