If you are of a certain age “Ferris Bueller’s Day Off’ is an iconic movie. Reading about the fretting going on in the media about the latest edition of CNBC “Business Rankings” I can’t help but think about the movies’ opening sequence when Ferris’ parents, thoroughly convinced he is sick (once again) let him stay home from school and as soon as they close the door to his bedroom and are safely out of ear shot he shoots up from under the covers and says:
Five years ago, CNBC ranked us 48th in the country. At the time, our unemployment rate was less than half of what it is today, 5.2% for July of 2007. In the legislative session that followed, there was a progressive proposal to revamp the tax structure of the state, known as the Economic Growth and Fairness Act of 2008. I’m not interested in re-arguing those ideas here, what I am interested in is the response to the bill from the corporate class in Rhode Island. Writing in The Providence Business News, Greater Providence Chamber leaders Laurie White and Ed Cooney specifically referenced the CNBC ranking as a reason to kill the bill. But more interestingly, they ended their essay with these words:
Protect our jobs. Fight for our ability to compete. Stay the course on tax reform.
I could be snarky and ask “Whose jobs?” but I won’t. But I will point out the current unemployment rate is 10.9% according to DLT. But it is the “stay the course” line that is intriguing to me for two reasons.
- We have stayed the course. And it hasn’t worked.
If 5 years ago we were ranked near the bottom in the country we are now at the bottom (again, assuming these lists matter, which I am not willing to concede, but for arguments sake….). In those 5 years, we have seen the Flat Tax option for high income earners made permanent, cuts to the income tax, two rounds of draconian pension reform to public sector workers including teachers and state employees, an erosion of collective bargaining rights in the public sector, cuts to social services in the state budget, aid to cities and towns in the state budget slashed and slashed again, and the escalation of the property tax cap at the local level thanks to the 3050 law of 2006.
In other words, state mandated austerity for the last five years and our ”Business Climate Ranking” declined. Now, we can believe the corporate class and say “stay the course” or as more recently stated “give the cure more time to work” or we can wake up to the realization that Ferris isn’t sick…he’s skipping school.
2. When did Tax Reform Start?
When Ferris says “They bought it” who is “they” in this case? The legislature? The Press? Both? Maybe…. you can help decide. See, the theme in the debate over the proposal in the last legislative session to raise income taxes on the wealthy centered in part on giving recently enacted tax cuts a chance to work. SOME local media outlets (I won’t link to them, you can find them on your own and decide) fell for the argument hook line and sinker that tax reform just started in 2010. That’s why when Chamber Lobbyist Kelly Sheridan wrote in The Providence Journal “It would extremely unwise to dismantle the 2010 reform before the first returns are evaluated” it was a theme repeated by members of the legislature AND, unfortunately, members of the media.
But wait a minute: Didn’t the Chamber use the exact same argument in 2008 about letting tax reform take affect so that it can be evaluated before it is changed? Yes, as we see in the 2008 piece in PBN referenced above. They also did it in 2009, when there was a strong push to repeal or reform the Flat Tax for high income earners. That is where the line “give the cure time to work” comes from. ( Of course in 2009, we were still ranked in 48th place by CNBC).
Why does it matter? Because if the Chamber and the powerful corporate special interests are allowed to pull the wool over the media and the politicians eyes every year by saying “hey, we just implemented this last year, let’s give it a shot” most people are good natured enough to say “ well, sure, why not? We’ve got to try SOMETHING.” Well, we’ve been giving them their shot for the better part of a decade, and if only people would remember that they keep using the same argument that “this time, things will work out” then maybe we won’t fall for the sales job. Again. Maybe? Hopefully? Hello? Bueller? Bueller? Bueller?
Look, I get it. Ferris Bueller is an endearing kid. He’s funny, likeable, smart and in a 1980’s John Hughes movie kind of way showing a safe way to “fight the power.” But it isn’t real. And neither is the line of argument put forward by the corporate class in Rhode Island that we need to “stay the course” or “give the cure time to work” on austerity. Hopefully Rhode Island can turn things around – but we will never do it by continuing to run the same plays and chase ideas that continue to drive out economy deeper into a ditch while enriching those at the top of the economic ladder. You want a cure that works? We can start by stopping doing the things we know that don’t work.
Parroting the tired progressive argument that Rhode Island has implemented “austerity.” Do you know what the actual definition of austerity is, Pat? It’s a real reduction in spending.
Tell me, how much has Rhode Island reduced state spending in real terms?
Here is another movie quote for you: “Zero point zero.”
I would agree with Pat on this. I don’t think the personal income tax rate or corprate tax rate is what makes RI “unfriendly” to Business – if you ask any business owner who actully runs a business on a day to day basis, I think it would be the amount of buracracy, red tape, and miscillaneous fees that is the real burden to growth. Anyone who has tried to build and expand a business knows how a difficult and expenseve the process can be. The amount of seperate agencies and depoartments in the RI government is insane, each of which requires it own trip to an office in a different part of the state. RI could benefit from a substantial streamlining of the regulatory process. I am not even suggesting repealing any existing regulation or elimitating employee – just have all of the Environemental regulators in one department, rather then the DEM, CRMC, NBC, WRB, CWFA. Couple a tax increase with a revamping of the state’ss overabundance of departments and agencies, and a consolidation of fees and expenses. I take a slight increase in taxes if I could just write a handful check to the state a year instead of 20-30 and enjopy a streamlined regulatory process.
You got it Sully.
The argument that your “article” made was that Rhode Island supposedly tried implementing the recommendations of the business community to make the state more business-friendly and the ranking went down, so therefore the recommendations were bunk in the first place. Putting aside the obvious counterpoint that rankings are relative to other states and do not directly measure whether the state has become more business-friendly or not, I agree with Sully and other commenters that the reforms you listed aren’t directly related to the business-unfriendliness of the state in the first place.
Has Rhode Island significantly lowered its business fees and taxes? No. Has it significantly reformed its regulatory scheme? No. Has it changed its “insider” political culture? No. Has it changed its hostile organized labor climate? No. Has it stopped handing out grants and loans and contracts to “connected” businesses? No. So Sully’s point undermines your point.
I have a suggestion for the progressives here: if you want to know why businesses and productive individuals are leaving the state, or deciding not to locate in the state in the first place, simply ASK them. I have been doing just that over the past decade, and it’s the same set of responses over and over: taxes, regulations, “insider” culture/corruption, and poor weather. Some of these are not difficult to change!
“I think it would be the amount of buracracy, red tape, and miscillaneous fees that is the real burden to growth. Anyone who has tried to build and expand a business knows how a difficult and expenseve the process can be.”
How does raising taxes solve that problem? How does raising taxes lead to economic recovery? The taxpayer doesn’t want to hear that we need to raise taxes because what were doing doesn’t work. They want to hear what does work. So far no one has explained how raising taxes will work.
What are you talking about? I am not saying raises taxes solves the problem, I am saying I would rather have bureaucracy and fees cut then a tax cut, and I would even agree to a slight tax raise if the trade off is a significantlystreamlinedregulatory process and less fees. I thkn most business owners with growing business would agree.
Too much of the “business friendly” focus is on the tax rate, which is the easiest thing to change, as if it’s the only factor in economic growth. Pat’s post is correct in that state leadership pushes through a tax cut, slap themselves on the back, thinking that is all it takes to change the economy. I am not saying it don’t matter, but anyone who actually owns a business will tell you that the regulatory/administrative process over all is WAY more burdensome that a modest increase or decrease in the tax rate. I would include a simplification of the tax code in the analysis, if not a tax cut. If state leadership really wanted to get serious about being probusiness, they would make it easier to do business in the state instead of small tax break, or even worse but more common, targeted tax breaks and money give aways.
“I am not saying raises taxes solves the problem, I am saying I would rather have bureaucracy and fees cut then a tax cut, and I would even agree to a slight tax raise if the trade off is a significantly streamlined regulatory process and less fees.”
We agree but no where in Mr. Crowley’s post does he come up with a plan other than austerity doesn’t work. It’s just another talking point for raising taxes. His post is the same old tax the rich crap and was meaningless until you provided him with a bandwagon to jump on.
Hey, Pat.
Every now and then, I’m going to give you props.
You certainly care enough about other people to deserve that.
But labor hasn’t really shown up for this struggle, not in terms in any way commensurate with the threat that faces those of us who haven’t yet been crushed by life.
I’m tired of spiritual poverty and the whiny form it takes in our present labor movement.
If you can’t move mountains, alright.
But if you can’t make people aware of the immediacy of the threat, apprised of the very real possibility that schlock jobs and indebtedness might be their fate into the foreseeable future, then that’s a failing on the cultural level that I can’t abide.
People need to take heart.
Look to the arts with your union money. (Repeat.)
Look to making kids laugh at goofy skits in the park,
or look to watching big Nazo on Promenade St., or look to
listening to Paul Geremia, a legit survivor and elder, as he sings at Vets.
People aren’t stupid; they know what’s real.
Look to colored construction paper in each classroom, given as a union gift to our
children during hard times.
Support photo shows by kids, of kids, everyone laughing their asses off.
Look to dancing down Elmwood, doing the winter solstice samba, for fun and civic profit.
Look to beautiful Providence itself as a source of middle class wealth through support of the arts, science, design, craft, sales.
We still have the freedom to promote excellent exemplars of the community to local government.
We just need to refresh our memories as to what community means,
what nation means,
what sovereignty means
to culture.
Supported by the arts community and by creative people of skill who see synergies in all fields, we are capable of creating a destination city that people who love the good life will not be able to resist.
Then, with that energy, we’ll be ready for anything.
From art to tech to prosperity the clean,
lawful, correctly regulated way
because we have been fed well
in the side kitchen
of the culture
of the dynamo city
of the northern hemisphere.
Culture, color, cleanliness.
righteous conditions. reachable.
design,
fabrication waiting, …what words
when the passion to learn about home,
about people,
and the catamarans they build,
the rides they drive,
and the renegade 12′s they race in the bay
becomes great enough–
when the passion to read, to learn, to sculpt,
to draw, to sketch ideas
over delicious meals with friends
becomes great enough,
humane designs
on human resources
and on our earth
will be so compelling, and deeply rewarding,
they’ll make babies smile.
Smoothliner roll, from Boston to New York,
from pole to pole.
Energy, flow.
Providence, grow.
Energy flow
Providence grow.