George Nee, president of the AFL-CIO, talks to House Speaker Gordon Fox during the previous legislative session. Nee will ask Fox to consider a tax equity bill this session. (Photo by Bob Plain)
Progressives have a lot to look forward to in the upcoming legislative session. While everyone expects a high profile debate on marriage equality, it seems that State House leaders will consider tax equity, too. The Providence Journal reports this morning that House and Senate leaders are open to the idea of rolling back the Carcieri-era tax breaks for Rhode Island’s richest residents.
“Maybe it is a time to say, maybe we need to enhance some revenues,” Fox told the Journal. Paiva Weed said, “I would keep an open mind to a tax increase on the highest-wage earners.”
So popular has taxing the rich become that even House Minority Leader Brian Newberry told the ProJo he’s also open to the idea, if coupled with conservative proposals as well.
The only State House leader who seemed to dismiss the idea entirely was Governor Linc Chafee. Interestingly, he is likely the only one who would personally feel the effect of the income tax increase on families who earn more than $250,000 a year.
Chafee said he’s worried tax equity might make rich people move away from Rhode Island. I disagree. Rhode Island’s population decline is not because the less than 2 percent of its population that makes more than a quarter million annually are leaving and not being replaced; it’s because the 46 percent who earn less than $50,000 are leaving and not being replaced.
Regardless, it won’t be either Chafee or the extremely small and powerless Republican Party that will stand between Rhode Island and the additional $131 million in revenue it would generate for the state. It’ll be the business community.
But Laurie White of the Greater Providence Chamber of Commerce, didn’t seem on the defensive as long as the deductions that were eliminated can be reinstated. After all, it isn’t necessarily the people represented by the Chamber who make more than $250,000 – it’s a couple handfuls of lawyers, doctors, stock traders and powerful executives.
And last session, Gary Sasse, a former RIPEC leader and fiscal adviser to Carcieri, told the House Finance Committee that a small tax increase on Rhode Island’s richest residents would be advisable.
Also last session about half the House signed on to a bill that would have raised revenue by tying the tax rate on the rich to the unemployment rate – as an economic incentive to create jobs for the Ocean State. And that was prior to the November election, which has largely been seen as a mandate to raise taxes.
One thing we can certainly all agree on is that the reason for giving the richest Rhode Islanders a tax cut in the first place has been an abject failure. As George Nee, president of the AFL-CIO told the ProJo, “The basic, fundamental reason for doing this was that it was supposed to be a job creator. I think it is obvious that it has not had an impact on job creation.”
Or, it’s had a very big impact. Here’s a chart showing the relationship between job creation and tax cuts for the wealthy since 2005.
You beat me to it, Bob. I’ve been working on this for a little while and I have use that same chart when speaking with registered voters on behalf of certain candidates. Based on the platform on which they ALL won, they promised tax fairness that would lead to relief on property and car taxes that have risen in municipalities. The key is for key supporters and constituents to hold them to their promises. Will they? Or will they cave to the corporate influences?
I’ll believe it when I see it. It was the Democrats who passed the tax cuts for the wealthy elite in the first place.
Now that Fox and Paiva-Weed need to shore up their liberal support after the crime that is 38 studios, failing to lead on health care reform, letting the bigots win the fight on marriage equality, and siding with Boss Tweed (sorry, former Speaker Bill Murphy) and his predatory lending thug paymasters and killing pay-day lending reform, these “Democratic” leaders need to at least pretend to care about old fashioned liberal ideas like progressive taxation.
Until they prove otherwise with action, it will remain clear that the current D leadership is at the beck-and-call of the plutocratic rich.
Not only did you reelect these scoundrels, this very site supported Fox against a more progressive opposition all in the name of retaining the leadership. It’s called selling your soul. Is this a fool me once shame on you moment? What happens the next time? There will be a next time.
Have a happy new year.
“Tax Equity”? “Equity”, meaning “fairness”, correct? The only equitable tax, then, is one that treats everyone equally, which means a single flat rate, not a rate that changes from person to person. Is that the kind of equity we should expect this year?
The architecture of much of this current tax structure was designed by DINOs. The chairman of the senate finance committee may be a democrat, but he is far from progressive. The site supported one author’s endorsement of Fox against an opponent who publicly abstained from support of any position with which he felt uncomfortable. That appeared to be just about every position about which he was asked. Do not blame the site for one author’s informed opinion. And tax equity does not mean a flat rate. Those who earn more do so by using resources provided by the municipality, the state and the federal infrastructure at large. Therefore, in order to produce “fairness”, those who rely on anything subsidized in order to profit should be paying their share for the shoulders on which they stood to get there.
“And tax equity does not mean a flat rate. Those who earn more do so by using resources provided by the municipality, the state and the federal infrastructure at large. Therefore, in order to produce “fairness”, those who rely on anything subsidized in order to profit should be paying their share for the shoulders on which they stood to get there.”
Oh great, another Elizabeth Warren argument.
1. High income earners still provided more of the tax money (resources as you call them) to the gov to fund that gov’t spending than low income earners . As DD notes, a flat rate still produces more revenue from those who earn more than those who earn less.
2. The business owners are not the only ones who profited from their transactions. By claiming business owners somehow owe society a debt ignores their other benefits.
3. What percentage of one’s income should be given to the government in order for him to be paying his “fair share”?
Those who earn more do so by using resources provided by the municipality, the state and the federal infrastructure at large. Therefore, in order to produce “fairness”, those who rely on anything subsidized in order to profit should be paying their share for the shoulders on which they stood to get there.
A flat rate produces more government revenue from those who earn more than from those who earn less. It’s really simple math.
@jgardner: In fact, I worked for SENATOR Warren during her campaign and have met her a number of times. She is a brilliant economic mind and I drink that kool-aid over the tax cuts for the rich that have left the country in a less that excellent economic condition than when taxes were higher for upper income earners during the Clinton era. And, no, I’m not canonizing President Clinton. NAFTA was a terrible move … but I digress. It’s not merely income tax that needs overhauling. Capital Gains, estate tax and Wall Street Exchange taxes need changing as well. The bottom line reads that there are those who need tax relief and those that don’t. For a large percentage who have taken a hit or never had the chance to prosper, taxing them the same percentage as someone whose income remains over a quarter of a million dollars a year is not fair. Furthermore, revenue must be compensated by property and car tax increases. If you are not making over $250,000 a year, don’t worry. You won’t be affected. If You are making over $250,000 a year, don’t worry. You’re making over $250,00 a year. That’s still about $204,000 a year more than the average Rhode Islander.
That’s still about $204,000 a year more than the average Rhode Islander.
…and paying a lot more in taxes than the average Rhode Islander.
“the tax cuts for the rich that have left the country in a less that excellent economic condition than when taxes were higher for upper income earners during the Clinton era.”
Lol… the tax cuts — which benefited earners at all income levels, not just “the rich” — had absolutely nothing to do with the economic collapse. It was out of control, unchecked Congressional spending along with stupidly ridiculous housing mandates and cheap money that lead to the economic collapse.
“For a large percentage who have taken a hit or never had the chance to prosper, taxing them the same percentage as someone whose income remains over a quarter of a million dollars a year is not fair.”
It absolutely is fair. In fact, it’s the only fair thing to do if you are to claim people are treated equally under the law. Additionally, the vast majority of people at the $250,000+ income level have not spent their entire working lives there. They maybe get a few years earning that kind of money because they spent the vast majority of their employed life working to get to that level. And you’re going to charge them a different tax rate because they had some success? That is not fair.
This country’s government does not have a revenue problem. It has a spending problem. Until people realize this and pressure Congress to change, our future will remain bleak.
Dog, it’s actually only about 2% more in income tax than the average Rhode Islander. It’s 5.9%. It was 9.9%, but that was when the economy was strong in RI, prior to the 2006 “simplification” tax overhaul.
And J, it was out of control deregulation that led to the economic collapse. Not out of control government spending. It was enormous derivitive markets that equated to betting against american success and rigging the game to ensure the only success was for those who stacked the deck. It’s out of control austerity that leads to Hayekian style economic implosion and jobless rates to rival or exceed those of the first great depression. The only real spending problem, to which I will gladly admit, is a bloated and unnecessary military and the imperialistic warmongering to which that leads.
Man you gotta get me some of what you’re smoking.
“out of control deregulation”
Another tired assertion with little to no supporting evidence. Outside GLBA — a terribly weak example of deregulation, by the way, as investment banks were already allowed to trade MBS’s and CDO’s before its passage — and the CFMA, I’d be surprised if you could name 1 other example of a deregulation which played a part in the economic collapse. On the side of increasing financial regulations, we had SOX compliance, PATRIOT Act, HUD mandates, CRA mandates, new SEC regulations, Congressional pressure on Fannie and Freddie to get balls deep into the sub-prime lending market, while simultaneously rebutting efforts to increase oversight (see Frank, Barney and Dodd, Christopher) on those same GSE’s.
“Not out of control government spending.”
Yeah, that was dumb. I meant to say out of control gov’t spending has left us in a terrible long-term economic position, but it was definitely gov’t and monetary policies that caused the collapse.
“It was enormous derivitive markets that equated to betting against american success”
Let’s say that was the case. That still doesn’t move the needle on your argument of “deregulation” because derivatives did not become less regulated. Besides, derivatives don’t cause losses, they simply transfer them. So for each one “betting against American success” was someone else betting for it. If you want to argue crony capitalism and regulatory capture, I’m with you, but those are largely the results of regulations, not in spite of them.
“It’s out of control austerity”
Where? Certainly not at the federal level. Austerity requires actual, significant cuts in yr over yr spending. When’s the last time that’s happened? Heck when’s the last time the federal gov’t spent less than took in? Not anytime recently, that’s for sure. Certainly States have had budget problems, but then again, States don’t have access to a printing press and most have a Constitutional requirement of balanced budgets.
“Hayekian style economic implosion and jobless rates to rival or exceed those of the first great depression”
That’s funny because gov’t intervention is traditionally a Keynesian approach, and GD era unemployment rates didn’t start until after the gov’t started intervening in the economy.
“is a bloated and unnecessary military”
I’m going to assume that’s a typo as I couldn’t possibly imagine you’re suggesting the existence of a military is unnecessary. That said, even if we cut the DOD budget by 50%, which I actually think we should, that still leaves a budget deficit north of $600B. You can’t tax your way out of that one, so what are you going to cut?
No. Our military is unnecessarily large and bloated. That is not a typo. But we agree that cutting it half would be a good start. Out of control austerity is a reference to the mistaken measures taken by the EU in order to attempt to solve their economic crisis. Hayekian style economic implosion refers both to the EU’s austerity measures as an example of the wrong direction and how the idea of austerity and “controlled spending” curtailed the size of the stimulus package that should have been passed in order to plug the drain of recession caused by (excuse my lack of clarity) the lack of regulatory measures that failed to keep up with the nefarious nature of the predatory banks and mortgage markets that cut through “moral obligation” like a hot knife through an ice cream sandwich.
You’re just full of these discredited talking points aren’t ya?
“Out of control austerity is a reference to the mistaken measures taken by the EU”
1. Nice move of the goal posts, but we were discussing the US, not Europe.
2. What austerity measures? Austerity requires serious cuts in gov’t spending, but most of the EU countries widely cited as examples of undertaking austerity (UK, France, Italy, Spain and Greece) actually increased government spending (mercatus.org/sites/default/files/totalgovexpenditurenew580.jpg). Isn’t that a Keynesian approach?
“curtailed the size of the stimulus package that should have been passed in order to plug the drain of recession”
Another tired, unfalsifiable statement. You mocked me as being hyperbolic (intentionally so) when I suggested something similar for the minimum wage increase, but I’m supposed to take that statement as serious? Lol, not so much.
“the lack of regulatory measures that failed to keep up with the nefarious nature of the predatory banks and mortgage markets”
What part of “gov’t regulations incentivized and required banks to lend to people everyone acknowledged were greater risks of default” sounds like a “lack of regulatory measures” to you?
When the bonuses favored approving unprecedented NINA loans and the banks entered into markets allowing profit whether the bank was repaid or forced to forclose due to no restriction of bank diversification in investment does, indeed sound like a lack of regulatory measures. The “goalposts” were not moved because we’re not playing football. That would imply someone winning in this situation when, obviously, only one to two percent of the population actually are. Not me. And, according to your less than diplomatic tone, neither are you. We
www.bbc.co.uk/news/world-europe-20320993 - Just some wild protests to mythical issues like austerity and the mistreatment of unicorns and such. In a global economic body it benefits the whole body to know how all systems are functioning. ”First, do no harm.”
Unfalsifiable but tired at the same time? I fail to see how looking to past measures and learning from the shortcomings of indecision and wrong decision is tired. We may be through with the past, but the past is not through with us.
“When the bonuses favored approving unprecedented NINA loans and the banks entered into markets allowing profit whether the bank was repaid or forced to forclose due to no restriction of bank diversification in investment does, indeed sound like a lack of regulatory measures.”
Banks made questionable loans to people they knew would likely not be able to pay them back. Banks have always been able to do that. So why wasn’t that an issue before? Because no “heads I win, tails you lose” situation like that had existed before. Because gov’t regulations already in place forced and incentivized banks to socialize the risk and privatize the reward. Well when you do that, no wonder there was a big push in that direction.
“Just some wild protests to mythical issues like austerity”
Those governments can call it whatever they like, but when you keep spending relatively flat or increase it, then it’s not really austerity.
“I fail to see how looking to past measures and learning from the shortcomings of indecision and wrong decision is tired”
Like the cheap money that fueled the stock bubble during the roaring 20′s and again during the 90′s? Like during the Great Depression when FDR’s Treasury Secretary complained about having spent more money than ever before but having nothing to show for it but an enormous debt? And that was after more than 5 years of New Deal spending. It’s not that looking back at history and realizing what mistakes were made — IMO we don’t do enough of that — is tiring, it’s that every time the stimulus spending is criticized as being ineffective or wasteful or unnecessary, proponents argue it didn’t work because we didn’t spend enough. Such a statement cannot be proven false. I understand economic modeling is an inexact science because so much of it is based on human behavior which is difficult to predict, but that’s exactly why I find it amazing that someone can sit there and say if we had spent more money it would have been better. What evidence could you possibly have to back that up? The same economic models that were wrong the first time?
krugman.blogs.nytimes.com/2011/09/05/on-the-inadequacy-of-the-stimulus/
Krugman’s article accepts 2 premises that I don’t agree with:
1. That politicians taking money out of the private economy and shoveling it to their political cronies would have “jump-started” the economy.
2. Politicians were terrible at shoveling what Krugman estimates is $500B to their cronies. Spending triple or quadruple that would have somehow changed that?
I guess I missed the part of the article that mentioned “shoveling money to their political cronies.” Did I get the link wrong?
Dog, it’s actually only about 2% more in income tax than the average Rhode Islander. It’s 5.9%. It was 9.9%, but that was when the economy was strong in RI, prior to the 2006 “simplification” tax overhaul.
No matter what percentage you put on it, someone paying 5.9 percent on $204K is paying a lot more than 2 percent over someone making $46K but you knew that. You just can’t use real dollars because it doesn’t support your argument. By the way, when was the economy ‘strong’ in Rhode Island. Certainly not in 2006 and you can try and make a correlation between the economy and the tax rate but the 5.9 percent rate didn’t come until 2010. We were already in the dumper by then.