RIPEC: R.I. tax burden among highest in U.S. in fiscal 2014

THE RHODE ISLAND PUBLIC EXPENDITURE COUNCIL said Rhode Island continued to have one of the highest tax burdens out of any state in the country in fiscal 2014, ranking 13th highest per $1,000 of personal income at $107.66 and 14th highest per capita at $5,180. / COURTESY RHODE ISLAND PUBLIC EXPENDITURE COUNCIL
THE RHODE ISLAND PUBLIC EXPENDITURE COUNCIL said Rhode Island continued to have one of the highest tax burdens out of any state in the country in fiscal 2014, ranking 13th highest per $1,000 of personal income at $107.66 and 14th highest per capita at $5,180. / COURTESY RHODE ISLAND PUBLIC EXPENDITURE COUNCIL

PROVIDENCE – The Ocean State continued to have one of the highest tax burdens out of any state in the country in fiscal 2014, ranking 13th highest per $1,000 of personal income and 14th highest per capita, according to the Rhode Island Public Expenditure Council’s annual report “How Rhode Island Revenues Compare: 2016 Edition.”

The report, released Wednesday, provides details on state and local government revenue sources from fiscal 2014, the most recent year for which state and national data are available. Using U.S. Census Bureau data, the report compares Rhode Island’s fiscal system with those of the other 49 states and the national average.

“As the data indicate, the overall tax burden in Rhode Island remains high relative to the rest of the country,” John C. Simmons, executive director of RIPEC, said in a statement.

Among the New England states, Rhode Island’s total tax collections ranked fourth highest on both a personal income ($107.66) and per capita ($5,180) basis. Vermont ranked highest in New England per $1,000 of personal income at $117.54, coming in fifth highest nationally, while New Hampshire ranked the lowest in this category at $80.69, 46th nationally. The U.S. average is $100.72.

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On a per capita basis, Connecticut was highest among the New England states at $7,244, and fourth highest nationally, while New Hampshire again was lowest in the region at $4,345, or 24th nationally. The U.S. average is $4,711.

RIPEC said that since fiscal 2004, Rhode Island’s total nominal tax revenue grew nearly 30 percent, compared with 47.5 percent growth nationally.

“Because of this relatively slower rate of growth, Rhode Island’s national ranking improved since [fiscal] 2004, when the state had the seventh highest tax burden on a personal income and per capita basis,” the report states.

Property taxes continue to be the largest driver of the overall tax burden in the state, accounting for 44.6 percent of all fiscal 2014 tax revenues in Rhode Island. Property taxes account for only 31.3 percent of total state and local tax revenue in the United States as a whole.

The state’s property tax burden remained among the highest in the country in fiscal 2014, ranking fifth highest as a share of personal income ($21.48) and seventh highest per capita ($2,312). Nominal property tax collections increased in Rhode Island between fiscal 2004 and fiscal 2014, climbing 38.4 percent. Over the decade, property taxes as a share of total tax revenue increased by 2.8 percentage points, from 41.9 percent in fiscal 2004 to 44.6 percent in fiscal FY 2014.

“In particular, the property tax continues to place a substantial burden on individuals and businesses in the state, despite attempts to restrain levy growth, such as the property tax cap,” Simmons said.

“Policymakers seeking to promote economic development in the state should focus on reducing the property tax burden, especially for businesses. Systemic property tax reform will improve the overall business climate in the state, and allow us to gradually move away from the current incentives-based economic development strategy,” he added.

RIPEC said Rhode Island’s fiscal 2014 collections were similar to the national average on other taxes, such as individual tax collections, 24th highest per capita at $1,034 (national average was $1,078); and general sales tax collections, 32nd highest per capita at $870 (national average $1,097).

State and local governments in Rhode Island collected total revenue of approximately $12.5 billion in fiscal 2014, 3.9 percent more than fiscal 2013 levels. Year-over-year growth in the country as a whole, however, was greater – state and local governments across the nation collected total revenue of approximately $3.6 trillion in fiscal 2014, 6.7 percent higher than fiscal 2013 levels.

RIPEC said that in both Rhode Island and the U.S., a “significant factor” contributing to total revenue growth was an increase in non-general revenue collections, which includes insurance trust, utility and liquor store revenue. Comparing fiscal 2014 and fiscal 2013, growth in non-general revenues accounted for 58.3 and 65.8 percent of total Rhode Island and U.S. revenue growth, respectively.

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