I was or will be on Channel 10′s News Conference Sunday show this week, depending on when you’re reading this. John Simmons, of the Rhode Island Public Expenditure Council, was a guest with me. An exchange we had reminds me of many I’ve had recently, including this comment from Dan DaPonte, the Senate Finance Committee chair.
It is an unmistakable fact of legislation that Rhode Island repeatedly cut the income tax in the years 1997-2009. We cut the tax 10% between 1997 and 2002, we cut the capital gains rate in 2005, and we implemented the “flat” tax option in 2006. All of these constituted cuts that were either exclusively for the richest of tax payers or predominantly for that top end. The graph here, an old favorite of mine, shows the effect of the various cuts on the top 1%, and the median taxpayer, along with the unemployment rate during the period, just for fun.
In 2010, the legislature adopted a tax change (for tax year 2011) that froze the flat tax option in place and incorporated it into the tax code, preventing it from being easily repealed. There were a large number of changes made that year, and the jury is still out on whether that was an advantage for rich people or not. It was not designed to be, and possibly it was not, though only time will tell for sure.
However, the fact that the 2010 change may have been essentially neutral does not change the fact that the previous 13 years were characterized by repeated tax cuts for rich people. The Almond cuts alone were worth about $100 million per year by 2002. Nonetheless, when you complain about tax cuts for rich people, people like Simmons and DaPonte reply that the 2010 changes were not a tax cut for rich people and therefore “progressives are wrong.” Then they go off into the weeds trying to demonstrate conclusively that the 2010 changes were not tax cuts for the rich. If you watch the Sunday show, you’ll see John doing exactly that, and then getting miffed when I interrupt to say that the answer he’s giving is irrelevant to the complaint I’m making.
Here’s DaPonte:
I’m still quite honestly confused at the liberal opinion that the 2010 personal income tax reform was a big giveaway to high-income earners. From everyone that I’ve heard from, particularly tax professionals who do this stuff for a living – they have a completely opposing opinion, that that is not, in fact, what we did do.
But what did you do during the previous decade?
Whether you think that tax cuts for rich people constitute enlightened public policy or whether you think that they were a source a source of great inequity in the tax code and a source of real pain for our cities and towns (and the people who pay property taxes), it is tiring to hear people try to deny what actually happened in the last decade and a half or to obfuscate the issue, which is precisely what’s going on here.
The state of Rhode Island gave up a tremendous amount of revenue to these tax cuts. The cuts produced a tremendous amount of fiscal pain in the cities and towns, and contribute to the fact that so few school systems have anything like a real music program left or new books on their library shelves. Whether they added something to our economy is debatable (and I’m happy to debate it) but 100% irrelevant to the claim that they happened.
The 2010/11 tax changes are a part of this story only to the extent that they make restoring the status quo ante far more difficult. Other than that, they have nothing at all to do with the larger offenses against tax equity committed over the last 15 years. When you talk to people about tax equity, don’t let the subject change.
Thanks Tom.
I have to agree with the commenters over at Ted Nesi’s blog who implied Nesi should have recognized an obvious Aunt Sally. He can’t be that naive. DaPonte seems like one of the men who used to stand outside courthouses with a straw in his shoe.
The graph is very interesting. It seems like many times in these discussions the impact of federal cuts is left out.
I’m looking forward to the discussion on the Channel 10 News Conference. I think it is very disconcerting that at the very beginning of the General Assembly Session both Fox and Paiva-Weed are in lockstep with RIPEC:
“– Fox says he backs the RI Public Expenditure Council’s call for “a coordinated effort involving *education*, job skills training, transportation and infrastructure, regulatory reform and . . . *tax policies* . . . . I also embrace RIPEC’s concept of the Council of Economic Advisers to develop a consistent plan for long-term economic success.”
wrnipoliticsblog.wordpress.com/2013/01/01/fox-paiva-weed-easily-regain-leadership-posts-pledge-heightened-economic-focus/
Politics mystifies me. It just seems public policy in Rhode Island is directed and controlled by people who never have to stand for election but who always seem to be in power. Maybe that’s what causes me to drop out of the pack and be a “third party dreamer”. What do I know?
The 10 News Conference was a very interesting and revealing discussion. It’s funny how even Angus Davis said, just a few weeks ago on Executive Suite, that one of the big problems here is lack of quality public services. He used the Silicon Valley as an example of high taxes paying for good public services making the Bay Area an attractive place to move to and live. Unfortunately, that discussion took the tone of two college buddies getting together to make an infomercial plugging another consumer surveillance system but listen to how much what he has to say contrasts with Simmons’ Grover Norquist stance. It’s about 16 – 17 minutes into the video. Listen to what he says about the high cost of going to Fenway Park to see the Red Sox and how cutting taxes down to zero won’t do much for us:
www.wpri.com/dpps/sp_home_2/sp_home_21/1227-swipely-brings-main-st-analytics_5194047
These policy essays are effective, but would be even more so if the rest of us could get a handle on exactly what the Rhode Island Public Expenditures council really is.
It seems to me that its the Chamber of Commerce by any other name, a group of influential guys who insinuate themselves into the governance of the state when they have absolutely no official leg to stand on.
RIPEC seems like a ruse on the average Joe, who thinks it has real authority.
But maybe I’m wrong about that.
I would really appreciate a background essay on RIPEC, or maybe, an update of one that’s already been written.
Does a listing of the RIPEC board of directors help explain?
Does a list help explain? Yes and no. You get to infer a bit more judging from the name recognition factor, assuming that one knows a good number of the names.
The group has at least a couple of decades of history by now. How about an overview of that? How about a narrative?
For me, what it boils down to is this: Are these guys actual members of the state government, or have they conned their way into our field of vision under that pretext?
Do they sit on a board appointed by the governor or the legislature, or do they just pontificate and act important?
I’ll put writing something on the agenda, but it sounds to me like you understand the situation pretty well. You’ll notice the board list also has affiliations. Did you see any from labor or anti-poverty groups? RIPEC has actually been around since the 1930s.
OK, I sense your reluctance to explain RIPEC, but I still wonder why.
Anyone else have an insight into RIPEC or a general idea of its function and history?
Reluctance? How about just lack of time? When you’d like to commission a piece, do get in touch. Until then, thank you for the suggestion.
Hey, something good came out of this!
I’ve discovered the true definition of twee.
Do tell.