Fairness Act stories spur flood of comments

PROVIDENCE – Providence Business News’ online coverage of the R.I. “Economic Growth and Fairness Act of 2008,” a controversial tax-policy bill that was the subject of a public hearing this Wednesday before the House Finance Committee, has inspired the most heated reader debate yet posted to www.PBN.com.

The 82-page measure – sponsored by Rep. Arthur Handy, D-Cranston, and Sen. Paul E. Moura, D-East Providence (H-7950 and S-2668) – aims to help plug the state budget deficit.

It calls for increasing the state’s personal income tax rate to 27.5 percent of federal liability, freezing the flat tax and increasing the capital-gains tax, among other provisions. It also would expand the sales tax “to include virtually all services,” according to Laurie White, president of the Greater Providence Chamber, which joined the Rhode Island Chamber of Commerce Coalition in opposing the bill.

Fairness Act supporters include the Campaign for Rhode Island’s Priorities, a coalition of local policy groups, which has said 90 percent of Rhode Islanders would see their taxes fall and the state would net $161.2 million to $185.2 million in new revenue of the measure were approved.

Our Tuesday story “Hearing set on R.I. tax and fee legislation” inspired four comments by the end of the next day.

“This is new tax scheme is pathetic,” wrote a reader identifying himself as Michael G. Riley of Narraganset. “Can’t the Democrats cut spending? Are they stupid?”

The measure’s plans for S corporations were blasted by Kenneth of Barrington, who also gave his name as Ken Block of Simpatico Software Systems.

“Rhode Island is already completely non-competitive, tax-wise, when compared to Mass. for business taxes and personal taxes for those who own ‘S’ Corps,” he wrote. “Increasing these taxes will only serve to further depress the state economy as businesses and business people flee the onerous tax burden imposed on us by a legislature that cannot or refuses to bring its spending under control.

“I suppose that I could temporarily swallow a tax increase, if I saw that a significant effort were made to cut spending. Alas, we are asked to pay and pay with no end in sight to the pain.

“Once the current budget deficit is addressed,” Block noted, “there still remains the nasty issue of $11 billion in unfunded pension liability, equivalent to $10,000 for every man, woman and child in the state, $20,000 for every tax-paying citizen of the state, or, using the legislator’s preference for overtaxing those that create jobs in the state, probably $50,000 on those [who] can most easily run away!!”

“Funny,” wrote Mike of Lincoln, “I see new sales taxes on lots of things in this proposal. Golf, landscaping, dry cleaning, jewelry repair, interior design, etc.

“They say that 90 percent of Rhode Islanders will see a decrease in taxes. Unfortunately, the remaining 10 percent buy 90 percent of these services, and many of these service businesses employ the remaining 90 percent. Luckily, [Sen.] Paul Moura’s union brothers won’t have to worry about losing jobs – unless they are going to have their union membership dues taxed. (Sorry, it was hard to type that while laughing.)

“I am sick and tired of the legislators in this state who think there is no limit to what they can take from businesses and hard working successful Rhode Islanders. I only wonder how the 90 percent are going to fund the pensions of all those state workers when the 10 percent move out of this state?,” Mike said.

Bruce of Providence also was critical, saying: “The General Assembly obviously does not feel that they must cut spending. Once again, they are finding a way to go back into our wallets to keep the party rolling. The answer is simple, cut spending.

“Handy’s example of a homeowner buying a bag of fertilizer and paying sales tax vs. a landscaper provide a service and the homeowner does not pay sales tax on the service is insane. The landscaper will pay a sales tax on the products he buys, adds it to the price he charges the consumer for the service. At the end of the year, that landscaper will also pay taxes at the end of the year. It is time for another Tea Party!”

“RIPEC urges caution in changing tax policy,” PBN’s coverage of a related report issued by the Rhode Island Public Expenditure Council early Wednesday, the day of the hearing – had attracted no comments on the site as of noon today.

The story cites the policy group’s ranking of Rhode Island as having the nation’s seventh-highest state and municipal tax burden, as a percent of personal income. Property taxes make up 40 percent of that total, an associated graph points out.

“A thoughtful tax restructuring effort – distinct from a piecemeal approach – will enable the establishment of a tax system that reflects the Rhode Island of tomorrow instead of the Rhode Island of yesterday,” RIPEC said.

The policy group described the Fairness Act as “an omnibus bill which will have a significant impact on the personal income, sales, business and property taxes currently in law” and noted the measure is only one of several bills before the Assembly “with the potential to impact the State’s tax structure.”

RIPEC urged lawmakers to wait for an upcoming “comprehensive report … that will provide further analysis to help the discussion and highlight issues for consideration before any changes are made.”

But the PBN’s post-hearing report, “Business leaders speak against ‘Fairness Act’,” had drawn three comments by the end of the day yesterday.

“Sgouros is communist,” wrote Michael G. Riley from Narragansett, who also had commented on the pre-hearing report. “Only in a state that openly supports Chávez [democratic socialist Hugo Rafael Chávez Frías, Venezuela’s president since 1999] could this theft be proposed. I have an idea: Cut spending.”

“Why shouldn’t we ALL pay our fair share of income tax?” countered David from Providence. “How can we possibly justify paying a lower percentage of our incomes in taxes than someone at the very bottom of the income scale? Do you truly feel it’s fair for us to pay a 6-percent income tax while the poor pay 14 percent? And why shouldn’t we pay a sales tax on the services we use disproportionately … such as legal and accounting services. What’s more, we would experience NO substantive impact to our quality of life should we pay our fair share, where as for most everyone else, each dollar affects one’s ability to pay for food, gas, or even medicine.

“I don’t believe we should be solely responsible for supporting an inefficient government,” he continued, “but how can we possibly justify NOT paying just as much as a single father working 2 minimum-wage jobs who still doesn’t make enough to properly clothe his children – much less buy them $150 sneakers. Come on folks, ambition is one thing, but unbridled greed, well, I’ll let you finish that.

“Before we torpedo this bill, let’s find out the facts for ourselves, not blindly believe the ideological rhetoric we’ve come to expect from our usual ‘business’ information sources,” David said. But, he added in a separate comment, PBN “had the most balanced story on this issue that I’ve seen. I applaud your effort to maintain balance in this world of divisive and sensationalistic journalism. … I thirst for accurate reporting so I can form informed decisions. Yet so many seem to be afraid of anyone with a differing view.”

Responses to Providence Business News articles and columns may be posted online, using the “Post a Comment” box at the bottom of each story; e-mailed to editor Mark S. Murphy from the site’s Contact Us page; or mailed to Providence Business News, 220 West Exchange St., Suite 210, Providence, RI 02903, Attn: Letters to the Editor.