The Providence Journal reports that Governor Gina Raimondo intends to give a 30% discount across the board to car taxes in every municipality.
Raimondo deserves a modest nod for choosing not to completely eliminate car taxes, a regressive plan that for some reason many progressives think would help economic justice.
But the governor’s plan fails to affect the very core of the injustice to Rhode Island’s car taxes: municipalities have paid different rates since the tax was converted from a state-level to a municipal tax under Governor Donald Carcieri. In Providence, residents pay a 6 percent car tax, while the lowest rate remains Block Island’s, at 0.975 percent (Pawtucket has a lower nominal rate than Providence, but is actually the highest rate for certain drivers, since there is no cancellation of the tax on the lowest-value cars. More on how that works in Providence here— it’s not as great as you think, either). Activists for car tax justice like David Norton of Pawtucket have recently contributed to RI Future calling for a “one state, one rate” policy.
Some people wonder why I’m so up in arms about the car tax. Reducing the car tax by 30 percent would lose the state close to $70 million, a nearly mirror-image subsidy to driving to the proposed carbon tax championed by progressives like Representative Aaron Regunberg. At $200 estimated per household, the carbon tax would have put an $80 million price tag on carbon throughout the state, while specifically building in tax credits to return money to lower-rung households. Lowering car taxes gives the biggest benefit to the owners of expensive cars (especially if those households have multiple cars), while doling out only modest tax breaks for lower-middle class households. As a quarter of Providence residents own no car, and those residents are more likely to be poor, immigrants, disabled, or people of color, the tax cut excludes some of the most deserving people in the state. Car tax reduction is a Bizarro Carbon Tax.
Some have suggested that the best way to lower the impact of the car tax on lower-income families is to put a higher exemption in place for the first increments of car value. In Providence, for instance, that exemption blocks a tax on the first $2,000, though the benefit creeps up the ladder equally as $60 per thousand on cars of any value, acting like a flat tax cut.
(Time lapse of Kennedy Plaza: The many RIPTA riders who already face poor service will get no benefit from this tax cut, poor or not)
I disagree. We don’t want a tax plan that incentivizes people to keep older, inefficient cars. Instead, we want our goal to be creating a progressive tax system that shields the lowest income people from the direct effects of that tax. Doubling the Earned Income Tax Credit, at $190 million, should be a top priority for Rhode Island legislators. That would mean that a person of low income paying the car tax would see that tax canceled out, while a low income person taking the bus would get the tax credit and not pay the car tax. Having the right incentives means we can have our progressive cake and eat it too. Across the Western world, countries with better equality records than ours have very high car taxes, and spend their budgets instead on programs of social uplift: U.S. social spending is already on par with socialist Denmark, but we spend it on different, less effective things, like subsidizing driving.
Under the current rates, a person with a $16,000 car in Providence pays the same in car tax as a RIPTA rider pays in yearly fares; a resident of Block Island must own an $85,000 car before they pay the same as a RIPTA rider. The governor’s plan doesn’t fix this inequality between towns, but it does worsen the inequality between RIPTA riders and drivers: under the new rates, a RIPTA passenger will pay more in fares than the Providence owner of $20,000 car would pay in car tax. On Block Island, only the owner of $123,000 in car wealth will pay what a RIPTA rider pays to sit on infrequent buses. The staggering $840/year cost of RIPTA is unaddressed by this plan, as are poor service frequencies.
Progressive legislative reactions
The “Fair Shot Agenda” caucus in the State House produced an impressive group of legislators to support economic justice goals such as a statewide $15/hour minimum wage, sick days, school repairs, and what the caucus called progressive changes to the car tax. Reporting on this has been clear that the caucus did not really explain what it meant to do with the car tax, specifically. As part of this process, I contacted my own representative, Aaron Regunberg, for this interview. Regunberg wrote by email to decline a full interview, though he did send this tweet:
@TransportPVD that we support reducing the regressive car tax by ensuring the wealthy pay their fair share. And yes, I want more RIPTA funds
— Aaron Regunberg (@AaronRegunberg) January 16, 2017
Despite Rep. Regunberg’s reticence to go on record with a longer interview about this subject, a suburban member of the Fair Shot Agenda caucus, Representative Art Handy of Cranston, did retweet a call to address the inequality between RIPTA fares and car taxes.
— James Kennedy (@TransportPVD) January 8, 2017
Call your state legislators, especially if they’re one of the proponents of the “Fair Shot Agenda,” and demand that they address the car tax to create a “one state, one rate” policy that is fair to all municipalities. That is the root of the inequity in the car tax. Lowering the car tax gives more money to the rich in order to give less to the middle class, and nothing to RIPTA riders– many of whom already pay more in fares than many drivers pay in car tax. Lowering the car tax would also exclude our immigrant community and worsen our climate goals. It’s time for the Fair Shot Agenda folks to stand up and fight Speaker Nicholas Mattiello. They have the wind to their backs.