TR2: Rhode Island

Trotting out our ‘Tax Revolt 2′ thesis again, after data released today showed that the unemployment situation in Rhode Island continues to deteriorate (CA, MI, RI, and SC are the four states that now have double digit unemployment – their ranks should get more crowded in the months and year ahead). We noted that at least three of the four have some of the most uncompetitive tax codes in the country, and have had for some time (we’re less familiar with South Carolina; according to at least one editorial, it may be too tax friendly, resulting in a suboptimal revenue base). While four states is too small a sample to provide any empirical support, we took a quick look at tax related news in Rhode Island, as we had noted their relatively high (and rising) unemployment rate in recent years. Sure enough, talk of tax reform has been on the front burner since at least 2008:

PROVIDENCE, R.I. (AP) — An advisory panel soon issues its final recommendations for changing Rhode Island’s tax code in ways that are supposed to attract businesses and retain jobs. Governor Carcieri created the group in May. The panel is expected to release its ideas during a meeting Wednesday morning at the State House. Carcieri has pledged that he will not raise personal income, corporate or sales taxes as the state faces a tanking economy and massive budget deficits. Carcieri has said he would support lowering Rhode Island’s corporate tax to make the state more competitive with neighboring Massachusetts and Connecticut.

A recent Providence Journal column offered some additional detail and background:

The proposals also include a drop in the state’s corporate income tax rate to 8 percent from the current 9 percent, a clear signal to businesses that state leaders have heard their complaint that Rhode Island’s rate is too high and among the highest in New England… A new tax code that is fair, transparent and competitive is a key to making Rhode Island a leader, not a laggard.

URLs:

http://news.yahoo.com/s/ap/20090311/ap_on_bi_go_ec_fi/state_unemployment

http://www.gtowntimes.com/story/editorial-dec–29- 

http://newsblog.projo.com/2009/02/panel-to-recomm.html

http://www.projo.com/business/johnkostrzewa/BZ_JK0201_02-01-09_A5D4A1I_v19.3f43181.html