State and Federal Tax Policy

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State Releases Tax Credit and Incentive Report
The Division of Taxation has released their 2011 Tax Credit and Incentive Report, showing how much the state is forgoing in revenue to provide corporate tax credits and incentives, and which companies are benefitting from them. The Poverty Institute applauds the legislation enacted this year which will ensure that, come January, the Division of Taxation will be able to report the job and wage data by tax credit recipient. This will provide a better picture of how these tax credits and incentives are benefitting Rhode Islanders and the state’s economy.
Click here for a summary chart with information on the six specific tax credits
Click here for a Tax Facts issue brief from The Poverty Institute in response to the report release
Click here to view the Division of Taxation's full report

ISSUE BRIEF:  RESUSCITATING REVENUES: A Balanced Approach to Balancing the Budget (6.11)
Rhode Island needs a balanced approach to addressing the state’s budget shortfall by including proposals that would raise revenue and not just cut spending.  Three of the largest sources of state revenue – personal income, sales, and business taxes – could be modified to improve the sustainability and adequacy of our state’s tax structure. 
Click here to read more about The Poverty Institute’s recommended modifications.

STATE-BY-STATE ANALYSIS: THE BUSH TAX CUTS AFTER TEN YEARS (6.7.11)
It has been 10 years since President Bush signed into law the first of several tax cuts for the wealthiest in our country. Currently, Congress is debating extending these tax cuts yet again. A new analysis shows that , locally, 44.6 percent of the benefits of this tax cut extension in Rhode Island would go to the richest five percent of the state’s taxpayers in 2013. The top 1% of Rhode Islanders would receive over $50,000 in tax cuts, while the lowest 60% would receive a mere $429. Nationally, making these tax cuts permanent would almost double the long-term budget deficit, and lawmakers have threatened even more cuts to critical human services that lower-income families rely on to make ends meet.  Click here for a link to the national and Rhode Island-specific analysis on the impact of the Bush tax cuts.

RELEASE: Rhode Island needs better review of “tax spending” (May 11, 2011)
Rhode Island gave up  $1.67 billion in potential revenue in 2008 through tax credits, exemptions, deductions, and other preferential tax rates but little is known about whether these “tax expenditures” are benefitting Rhode Islanders or the state’s economy.  This release explains how analysis of this spending can be improved, and how Rhode Island’s tax expenditure reporting compares to other states across the country, according to a new national report by our partner the Center on Budget and Policy Priorities.

POSITION STATEMENT: A 21st Century Sales Tax: Why Governor Chafee’s plan to modernize the sales tax is necessary
The Governor's proposal to modernize the antiquated sales tax and lower the rate is necessary in order to maintain investments in the public services that improve our quality of life, protect our families and businesses, and help grow our economy. 

ISSUE BRIEF: Governor Chafee Corporate Tax Reform:  Steps in the Right Direction
Governor Chafee’s proposal to shut down corporate loopholes and eliminate unnecessary tax credit programs for only a handful of companies is a step in the right direction towards leveling the playing field between large and small businesses and improving the state’s long-term fiscal health.

POSITION STATEMENT: Eliminating the Motion Picture Tax Credit
The Poverty Institute supports the Governor's proposed elimination of the motion picture tax credit. By depleting our resources on tax credits and incentives we are missing opportunities to invest in proven economic development strategies like workforce development, education and high quality infrastructure.
Click here to read testimony from The Poverty Institute.
Related Media:
RI House panel hears arguments for and against film tax credit (Providence Journal, 3.25.11)
R.I. film tax credit on chopping block (WPRI, 3.24.11)

POSITION STATEMENT: Changes to Unemployment Insurance
While The Poverty Institute supports reforming the Unemployment Insurance program so that the state will have enough funds to support the program in the future, we are concerned about provisions in the Governor's Budget Proposal that will greatly reduce benefits. 
Click here to read testimony from The Poverty Institute. 
Click here to read testimony from the National Employment Law Project (NELP

REPORT: Rhode Island's Hidden Spending: Tax Expenditures (Tax Facts March 2011)
The state budget should provide a complete picture of the state's finances and spending priorities, but in Rhode Island it only tells part of the story. The budget shows the appropriations the state makes to support education, health care, public safety and a myriad of other services.  But another type of government spending comes in the form of the many tax breaks written into law, called tax expenditures.  Tax expenditures result in very large revenue losses to Rhode Island, costing the state at least $1.67 billion in lost revenue in 2008. 
Click here to visit the report page and learn more about tax expenditures and read about the findings from The Poverty Institute's analysis of the 2010 Tax Expenditure Report.

POSITION STATEMENT: Report claiming Rhode Islanders moving out to avoid estate tax is unmoving (Kate Brewster, 1.11)
The Poverty Institute has prepared a statement in response to the report released today, titled "Leaving Rhode Island," that tries, yet fails, to show that the estate tax is driving wealthy Rhode Islanders out of the state.

ISSUE BRIEF: Tax Incentive Disclosure and Accountability Reporting (12.10) 
Legislation was enacted in 2008 to require greater disclosure and accountability of six tax credits available to corporations.  Since these requirements went into effect, however, only the most basic information has been reported. Critical information about jobs, wages, and benefits has not been reported, leaving policymakers unable to evaluate whether these tax credits are cost effective tools for economic development. 
Click here to read more about this isse.

ISSUE BRIEF: TAX TOPICS FOR 2010 (9.10)
Rhode Islanders understand that we make a collective investment in a safe, prosperous state by setting aside a portion of our income to pay for the kinds of public structures and services that enhance the quality of life for all of us. Due to the national economic recession, however, state revenues have plummeted, leaving us without the resources we need to support these essential public systems and structures. In order to get Rhode Islanders back on their feet, and to ensure that our businesses and our communities have the resources they need, we must take a balanced approach to solving our budget problems.

Comparing President Obama's Tax Plan and Senate Republican's Tax Plan (Citizens for Tax Justice Report)
State Fact Sheet and Analyses by CTJ.

Republican Approach to Extending the Bush Tax Cuts Would Result in $38,780 Break for Richest 1% of Rhode Island Taxpayers and Higher Taxes for Working Families, Compared to Obama's Approach  (Citizens for Tax Justice Report)
Analysis by CTJ of the impact of Federal tax policy on Rhode Islanders.
(National figures and more information available at www.ctj.org/pdf/bushtaxcuts2010.pdf)

Corporate Giveaways Costly to Rhode Island Taxpayers (3.10)
State leaders need to take a balanced approach to solving our financial problems. That means making sure each dollar we spend is a wise, efficient investment. It also means carefully reviewing our state revenue policies. As Rhode Island faces one of the worst fiscal crises in history, we must consider not only what we spend but also what we give away.   The Ocean State missing the boat by failing to enact combined reporting and decoupling from the federal “domestic production deduction” corporate tax break.

The Flat Tax Causing Steep Decline in Revenue (3.10)
Over the past decade, Rhode Island has given up hundreds of millions of dollars in revenue through a variety of tax breaks of questionable value to the economy.  The "flat tax" is one example of a tax break enacted in recent years that is costing the state tens of millions of dollars in forgone revenue.  It has no documented benefit to the state's economy and benefits a small number of high income households.

Two Steps Forward, Three Steps Back: Governor's FY2011 Proposed Tax Policies (2.10)
While the Governor proposes two revenue proposals that make sense (eliminating two costly tax credit programs)he also proposes two new questionable tax cuts will cost at least $21.5 million a year, while continuing to support the phase out of the flat tax. 

Who Pays? A Distributional Analysis of Tax Systems in All 50 States  (Institute on Taxation and Economic Policy Report, 11.09)
Who Pays? is a comprehensive analysis of state and local tax systems in all 50 states. According to the new study, low- and middle-income families in Rhode Island pay a far higher share of their income in state and local taxes than do the wealthiest families.
• FACT SHEET: Who Pays? Rhode Island Fact Sheet

Tax Incentive Disclosure And Accountability (Tax Facts September 2009)
The Rhode Island Department of Revenue recently released its second annual report documenting the cost of six tax credits and the corporations receiving them. The Poverty Institute provides highlights of this report, as well as a detailed description of the six credits.  The Institute points out that subsequent reporting on the number of jobs created and/or retained as a result of the credits is long overdue, making it difficult to evaluate the cost effectiveness of the credits.

Proposed restructuring of Rhode Island's Personal Income Tax (Article 38) is Expensive and Ineffective (5.09)

Phasing Out Rhode Island's Corporate Income Tax (Article 37) is Unaffordable, Unsound and Unfair Public Policy (5.09)

Improving Equity, Adequacy and Efficiency in Rhode Island's Tax Structure (Tax Facts #10, May 2009)
An issue brief on the importance of a sound tax system, with five recommendations on improving the equity, adequacy and efficiency of Rhode Island tax structure.

Improving Rhode Island's Tax Expenditure Reporting" (Tax Facts #9 April 2009)
 The Poverty Institute has issued a brief on current legislation that would improve the State’s Tax Expenditures Reporting, in hopes that new legislation would shine a brighter light on the costs and benefits of these expenditures.

Summary of Tax Incentive Disclosure and Accountability: Phase One (9.08)
During the 2008 General Assembly Session, legislation was passed that requires greater disclosure and accountability of tax credits received by corporations. The legislation required that information about these tax credits be released in three phases.  Phase One of the reporting, just released by the Department of Revenue, listed names and addresses of the recipients and the amount of the tax credits received during the previous fiscal year. This is a summary of this Phase One report.

Tax Expenditures Report Analysis (Tax Facts #8, June 2008)
The 2008 Tax Expenditures Report is produced by the Division of Taxation and documents the estimated cost for 211 tax credits, deductions, and exemptions that reduce the tax liability of selected firms or individuals.   This report analyzes the Tax Expenditure Report and finds that much is still unknown about the costs (and outcomes) of tax expenditures.

Rhode Island Cannot Afford Recently Enacted Tax Cuts (Tax Facts #7) (January 2008)
This issue brief discusses why Rhode Island should repeal two recently enacted tax cuts:  the reduction of the capital gains tax and the alternative flat tax.  These two tax cuts will cause the state to lose more than $62 million in the coming fiscal year. Given Rhode Island's severe budget crisis, the state cannot afford to continue these two policies

The Other Side of the Ledger: Options for Raising Revenue (Tax Facts #6)
The Poverty Institute's report which proposes several areas where the state could start to address weaknesses in the revenue side of the ledger.

FY08 State Budget Wrap Up (8.07)
Includes highlights of the General Assembly's decisions regarding state revenues and expenditures for the coming year.

FY07 Budget Wrap Up (11.06)
Analysis of the FY07 state budget and its impact on low-income programs.

TABOR in Rhode Island?  A Fiscal Nightmare for the Ocean State (Tax Facts Issue #5) (7.06)
A one-page brief ooutlining the severe problems with a proposed ballot question that asks voters whether the Constitution should be amended to include a tax expenditure limit.

2006 Tax Expenditure Report Analysis (Tax Facts Issue #4) (4.06)
An analysis of the report that documents the purpose and cost of tax breaks, incentives, exemptions, and other expenditures.

Rhode Island's Disappearing Corporate Income Tax (Tax Facts Issue #2) (3.06)
Read about how RI's corporate income tax collections are the lowest in the country.

Rhode Island's Personal Income Tax (Tax Facts Issues #2) (3.06)
Rhode Island should not cut personal income taxes of top earners in the state as it is unnecessary and unaffordable.

Capital Gains (Tax Facts Issue #1) (3.06)
Rhode Island cannot afford to eliminate taxes on Capital Gains.

FY06 Budget wrap up (10.05)
Analysis of the enacted FY06 state budget and its impact on low-income programs.

Governor Carcieri's FY06 Budget: Implications for low and moderate-income Rhode Islanders (7.05)
An analysis of the FY06 budget.

K-12 Education Financing in Rhode Island (5.05)
An analysis of the proposals aimed at redressing Rhode Island's education finance system.  RI ranks 4th nationally in dependence on local property taxes, which amounts to a regressive burden on poor residents.  Proposals include amending the state constitution, introducing a statewide property tax, and employing a foundation formula to ensure dependable and adequate funding. 
Read the executive summary of the above report.

Rhode Island's Tax Ranking (12.04)
An analysis of how RI ranks on certain taxes.

Principles for Economic Development (4.04)
An overview of job quality and accountability standards that RI should aspire to when proposing economic development policies. 

A Reality Check on Budget Rhetoric (4.04)
The analysis refutes complaints by policymakers that Rhode Island's spending is out of control. 

Is RI a High Tax State? (2.04)
Different organizations use different methodologies to rank state tax burdens.  The Poverty Institute refutes the fact that RI is the "4th highest taxed state in the country." 

Where did the Money Go? (5.03)
This report documents how changes in Rhode Island's tax policies have resulted in budget shortfalls.  Recent budget deficits cannot be blamed on the recession alone, but also cuts in the personal income tax, reductions in the auto excise tax, and a significant decline in corporate tax collections relative to the state's economy. 

Some Options for Increasing Revenue (5.03)
The Poverty Institute offers options for revenue enhancements and savings in response to the estimated FY03 and FY04 shortfalls.

Tax Expenditure Budget Analysis (4.02)
This report outlines mechanisms for improving Rhode Island's Tax Expenditure Report to be a more meaningful tool for oversight and evaluation of the impact and effectiveness of tax expenditures.