tax expenditures – RI Future

It’s all well and good to know who the characters in the 2014 campaign for governor are, but we still need to know the major themes before we can know what the plot might look like.

Here’s a list of some of the public policies I hope get a good vetting during the next 12 months.

Wall Street vs. Main Street: Hedge funds, the real estate bubble, municipal bankruptcies and retirement investments … they all speak to what role high finance should play in economic development. Good, bad or indifferent – and I think it is a very good thing – because someone from Head Start and someone from venture capital are running against each other in a Democratic primary, RI will get to see this popular talking point play out in the form of a political campaign.
Tests vs. teachers: High stakes tests will and should be a part of this conversation, but the bigger issue is the achievement gap between affluent suburbs and impoverished urban areas. If NECAP scores demonstrate anything, they show that rich kids are getting a decent public education and poor kids, by and large, are not.
Cuts vs. expenditures: Conservatives will claim we need the lowest tax rates in the region to improve our economy while it remains to be seen if progressives will campaign on making the rich and powerful pay their fair share. Note that these goals aren’t necessarily mutually exclusive of each other. RI could, for example, the lower the small business tax rate and eliminate corporate tax expenditures (read: giveaways). And here’s hoping Clay Pell runs on a “tax me” platform!
Legal vs. criminal: There are a host of issues before the General Assembly that will likely spill over into the governor’s campaign because of their national implications – think voter ID and pot prohibition. Payday loans will be a particularly interesting one, as both Angel Taveras and Gina Raimondo have worked together on this issue.

What am I forgetting? Let us know in the comments what issues matter most to you this campaign season…

Tax breaks, or expenditures, are the entitlement programs that nobody seems to complain about. Though maybe we should, given they cost Rhode Island more than $1.7 billion a year in 2009. That same year the state took in just over $3 billion. In other words, we gave away more than half as much as we actually collected. The idea is that we’re getting something for these giveaways. But nobody really knows how this $1.7 billion investment is doing for the state because nobody is paying attention to the money we aren’t getting.

A bill being heard by the House Finance Committee today would remedy that wrong. It’s sponsored by Rep. Teresa Tanzi of South Kingstown and reps. Walsh, O’Grady, Valencia and Ferri have each signed on. They’ve got a strong ally in the Economic Progress Institute, too, which released a report on the issue that will do a far better job than me at explaining why this is a no-brainer for the Ocean State.

Here’s the condensed version from their release:

To ensure Rhode Island uses its available resources in the most effective way possible, it’s time to subject tax breaks, that cost the State over $1.7 billion a year, to the same scrutiny given to money spent through the state budget.

Like other states, Rhode Island increasingly writes into law provisions that allow people or businesses to reduce their taxes if they meet certain criteria. But Rhode Island is among the states that pay the least attention to whether tax breaks for businesses achieve their stated goals, according to a recent study by The Pew Center on States. The reputable research organization listed Rhode Island among 26 states that are “trailing behind”—Pew’s lowest ranking—because the State met none of the criteria for the scope or quality of evaluation key to determining whether tax breaks are worthwhile policy.

Pew found that while no state “regularly and rigorously tests” whether tax breaks for businesses are benefiting a state, 13 states are “leading the way” in generating answers about the effectiveness of their state’s tax breaks.2 Rhode Island should follow the lead of the exemplary states, including neighboring Connecticut, that are taking important steps to more carefully examine some or all of their tax breaks, particularly those enacted with the goal of creating jobs.

Tag: tax expenditures

What will be the big issues in 2014 governor’s race?

Silent spending