WPRI: Labor, liberals push income tax hike on wealthy in RI

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(Original Post)

Paiva Weed, Fox, Chafee skeptical about 7.99% rate

Updated: Tuesday, 12 Mar 2013, 10:07 PM EDT
Published : Tuesday, 12 Mar 2013, 5:25 PM EDT

    By Ted Nesi, WPRI.com Reporter

PROVIDENCE, R.I. (WPRI) - A coalition of political progressives and labor leaders renewed their uphill battle to raise affluent Rhode Islanders' taxes on Tuesday, arguing the General Assembly's ruling Democrats haven't gotten good results when they've lowered tax rates.

Rhode Islanders for Tax Equity, an ad hoc coalition, held an afternoon rally at the State House to drum up support for a proposal by Providence Rep. Maria Cimini and Providence Sen. Juan Pichardo to raise the income tax from 5.99% to 7.99% on any income Rhode Islanders earn above $250,000.

"The tax cuts for the rich in Rhode Island have failed, just like they did on the national level," Maureen Martin, secretary-treasurer of the Rhode Island AFL-CIO, told a crowd of about 60 supporters.

    Related:  Paiva Weed unveils 25 bills on RI economy
    Nesi's Notes: More coverage of the state budget

The measure backed by Cimini and Pichardo would raise $66 million in revenue for next year's state budget, according to figures the group cited from the Institute on Taxation and Economic Policy, a liberal think tank. The average tax increase for those affected would be $1,178 if they earn $250,000 to $404,000 and $12,078 if they earn more than that.

"There is a revenue problem in our state," Cimini told reporters. She said supporters of the idea are willing to negotiate the details of where the new higher rate is set.

Paiva Weed 'consistently opposed'

But Cimini and her allies ran into immediate opposition from one of the General Assembly's most powerful leaders: Senate President M. Teresa Paiva Weed. "I have been consistently opposed to increasing the income tax," Paiva Weed declared at a separate event Tuesday.

The Senate president argued it's too soon to tinker again with the income tax, which was lowered and tightened in 2010. "Even if you don't like the law or you think it's not perfect, what they're looking for from us is greater predictability," she said.

Paiva Weed, D-Newport, acknowledged there are arguments that Rhode Island has "wiggle room" to increase the income tax. "They may be right," she said. "But what I'm worried about is the message we send if we do that."

She later added: "We're not going to get out of this mess by just another tax cut. We've been down that road."

Last month House Speaker Gordon Fox told a neighborhood group in his district that he hasn't decided where he stands on the income tax bill, but he expressed reservations about whether it would make Rhode Island less competitive economically. "Redistribution theories are, I think, more appropriate on the federal level," Fox said.

Union lobbyist 'extremely frustrated'

Jim Cenerini, a lobbyist for Rhode Island Council 94, the state's largest public-sector union, urged Paiva Weed to keep an open mind and expressed frustration that legislative leaders haven't met with the bill's supporters to discuss its merits.

"It's been extremely hard to start the dialogue with this president of the Senate and this speaker of the House," Cenerini told WPRI.com. "They seem to, unfortunately, keep on just giving back whatever the Chamber tells them - no matter how many studies we present, no matter how much data we have to the contrary."

The Greater Providence Chamber of Commerce strongly opposes changing Rhode Island's income tax and its chief lobbyist, R. Kelly Sheridan, is an influential figure on Smith Hill. A recent study by the Institute on Taxation and Economic Policy found the top 1% of Rhode Islanders now pay  lower income taxes but higher property taxes than they did in 2002.

"We would urge them to stop replicating and accepting the failed policies that the Chamber of Commerce has continually advocated," Cenerini said. "Their strategies don't work. They are a dismal failure. ... They need to give us a chance. We're asking. Please."

Rhode Islanders for Tax Equity released an estimate by Tom Sgouros, the prominent progressive economic analyst, that former Gov. Lincoln Almond's 1997 tax cut and the flat tax created in 2006 have reduced state revenue by nearly $1.1 billion over time. The annual state budget is about $8.1 billion this year.

Backers hope for 'Lazarus effect'

Paiva Weed suggested supporters of the tax increase are setting up a false choice. "We can't pit human-services programs, quality-of-life issues, education financing, against the needs of the business community," she argued.

"We have to work together," Paiva Weed said. "We have to make sure that everybody is in this together. It can't be me or you asking ... who's ox is being gored. It's got to be us working together - everybody giving a little, everybody taking a little."

Cenerini dismissed the conventional wisdom around the State House that the income tax hike has no chance of passing since it lacks support from Paiva Weed, Fox or Gov. Lincoln Chafee, who has also said he doesn't want to raise the income tax.

"I've seen bills that have absolutely no chance at all and suffer from what I call 'the Lazarus effect' - so every bill always has a chance, no matter what, all the way until the last gavel comes down," Cenerini said.

Rhode Islanders paid the 13th-highest state and local taxes in the country compared with their incomes in 2010, according to Census data analyzed by the Massachusetts Budget and Policy Center.