The Tax Stat the Right Wing Doesn’t Want You to See

You’ve seen it so many times before it’s almost a cliché:  An anti-tax, corporate front group produces a report on taxes, and Rhode Island ranks unfavorably.

Invariably next, the fringe-right echoes the findings as confirmation of the correctness of their own solution to every problem, tax cuts for corporations and the wealthy paid for by slashes to government services and to benefits of government workers… win/win in their book. While it’s dangerous to dismiss these out of hand, the rest of us have learned to take these “studies” with a big grain of salt.

That’s why the headline of the recent PBN story caught my interest, “Providence ranked 15th in U.S. for favorable business tax structure.”

Say what? I almost didn’t believe it myself. Who produced that thing, Kate Brewster? Actually it was KPMG, not exactly a liberal front group:

Among a survey of 73 U.S. cities that offer the most favorable tax structures for businesses, Providence ranked 15th overall…

KPMG compiled the ranking using total tax index, a measure used to compare tax burden by comparing the total actual tax cost in U.S. dollars for each jurisdiction…

Among the U.S. cities, Providence ranked ninth for corporate income tax rate, 13th for its other corporate taxes rate, 59th for its statutory labor costs and 15th for its total effective tax rate.

That’s right, 9th and 13th for corporate taxes, offset only by our labor costs, little surprise given the higher cost of living in Northeastern cities. Is there more we can do to attract business? Sure, but the next time you read one of those studies suggesting cuts to spending on infrastructure, schools, and social programs to pay for reductions in corporate taxes don’t forget to ask yourself, is that really the best way to attract business?