2013: The Year for Tax Equity in Rhode Island


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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.


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