October 31, 2014
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My take on the news
Maybe it’s time to look again at broadening & lowering the sales tax
Lonnie Barham

IS OUR SALES TAX TOO NARROW? The Providence Journal’s PolitiFact column published some astonishing figures. In 2011, the most recent year with total statistics available, Rhode Islanders’ total income amounted to $44 billion. Of that, $11 billion - or 25 percent - was spent on items or services that required paying sales tax. Certainly, Rhode Islanders did not save or invest the remaining 75 percent of total income. That means that between 25-75 percent of purchases did not qualify for sales tax. This is certainly evidence that our sales tax is not nearly broad enough. There is discussion about eliminating the sales tax altogether. It’s a good idea! However, if that effort doesn’t bear fruit, we should at least broaden the sales tax to include currently non-taxed items and services so that the sales tax will be fair and the rate can be dramatically reduced. If only half of purchases not currently taxed were taxed, the overall sales tax rate could be lowered to around 3 percent.  We would then be much more competitive with Massachusetts.

TIME FOR SIEDLE TO LOSE HIS LICENSE: Edward “Ted” Siedle, the hired-gun investment “investigator” employed by the public service unions in Rhode Island (Council 94, AFSCME) to try to discredit the hard work done by General Treasurer Gina Raimondo that resulted in pension reform, has now complained to the U.S. Securities and Exchange Commission and is demanding it investigate Raimondo’s actions.

Rhode Island’s chief investment officer, Anne-Marie Fink, had this to say about Siedle’s so-called “investigation” report: it “contains stark inaccuracies,” and reflects a “misunderstanding of investments and general lack of knowledge of the Rhode Island pension system; “and it “resorts to incendiary language and gross misrepresentations to attack the work of the treasurer and the General Assembly.”

This is clearly another attempt by the state’s public service unions to convince voters that likely gubernatorial candidate Raimondo is unworthy of the governorship. It is a despicable and underhanded strategy designed to instill doubt in voters’ minds about Raimondo’s truly historic engineering of pension reform in this heavily union-supported state. Taxpayers should be irate that our tax money, funneled to these unions through abominably high union dues, is funding ridiculous accusations by a paid outside instigator whose credibility is toilet-worthy at best. Don’t fall for it, voters!

Because Seidle has, in essence, prostituted himself in order to rake in dollars from his union bosses, whatever finance industry license is held by this former investment banker should be revoked.

NO TAX RELIEF FOR ALCOHOL PURCHASES: When the General Assembly passed a law ending the sales tax on wine and hard liquor in Rhode Island effective this week, drinkers celebrated. No longer would they have to drive to Massachusetts to purchase tax-free alcohol. Or, so they thought!

As it turns out, Rhode Islanders will still pay the sales tax but it will be through a deceptive General Assembly work-around. After passage of the alcohol sales tax relief, the General Assembly raised the excise tax paid by distributors. And, it wasn’t a small increase! The tax on beer rose 8.6 percent; the wine tax went up a huge 43 percent; and the tax on hard liquor was increased a whopping 69 percent. And guess who pays for this excise tax increase? The consumer, of course. The distributors will insist on making the same profits they have always made and will pass the excise tax on to retail purchasers.

Some buyers will return to Rhode Island liquor stores thinking the lack of a sales tax will lower Rhode Island prices - but they will be wrong. Our anti-business legislators have made sure of that. The General Assembly, in its ever-vigilant quest to make sure it gouges us as much as possible in taxes, has made sure Rhode Island drinkers still get no bargain.

MORE RIPPING OFF OF TAXPAYERS: Ten years ago, during the tenure of Secretary of State Ralph Mollis as mayor, North Providence hired Stephen J. Campbell, Sr., as a firefighter. At the time of his hire, Campbell was already older than many retired firefighters and was sworn in before the results of his medical exam were received. During his short but lucrative ten-year career, Campbell logged five years worth of fully-paid sick time. Finally, on his second day back to work after the last of his lengthy absences, he “suffered a career-ending injury” when he supposedly aggravated an old injury he had suffered when “picking up a small bag.”  Although two of three doctors who examined him said Campbell did not qualify for disability retirement, the state retirement board voted to give Campbell full disability retirement worth $44,500 per year tax free.

Current North Providence Mayor Charles Lombardi is working hard to fix his city’s broken personnel system. State treasurer Gina Raimondo, head of the retirement board, needs to do likewise for the state’s broken disability retirement system.

BUREAUCRATS WANT TO CHANGE BI-WEEKLY PAY LAW: Taking a page from the Obama administration, Rhode Island bureaucrats are planning to issue regulations that will change the letter and intent of a law passed by the General Assembly. Just as Obama’s various administrative departments routinely issue rules and regulations that circumvent the intent of Congress - and sometimes the intent of the Constitution, Rhode Island’s Department of Labor and Training wants to require that businesses be “re-certified”” every two years in order to continue paying their employees bi-weekly rather than weekly. It’s just another example of state bureaucracy gone wild! The General Assembly clearly intended for qualifying businesses to have the liberty to make permanent changes to their payroll systems to become more cost-effective. It did not intend for bureaucrats, whose primary intent is making more rules in order to ensure their jobs are secure, to weaken the legislation by adding anti-business rules.

Kelly Rogers of the Rhode Island Public Expenditure council described the DLT’s attempt to emasculate the General Assembly’s intent this way: “Two steps forward, one step back.” It’s hard enough to get the General Assembly, with its pro-union leanings, to pass pro-business legislation; when it does, the legislation needs to be implemented as intended. When an administrative department is allowed to implement the General Assembly’s laws by reversing a large part of it, then we are indeed taking one step back for every two steps forward.

Administrators are not law makers! As a society, both at the national level and at the state level, we must insist that bureaucrats stop “making law” through their improper imposition of contravening rules and regulations.

QUESTIONS REMAIN ABOUT PAYING 38 STUDIOS INVESTORS: Again and again, the question arises in Rhode Island asking whether or not the state should pay the $90 million to investors who sank their money in moral obligation bonds sold by the state. The latest comments were published in a Providence Journal editorial last Sunday. The paper opined that, “It seems obscene to force the taxpayers, who had no say in the matter - and need that money for more important public services, such as roads, bridges, education and aiding the needy - to fully fund this ludicrous gamble.”

There are, of course, a myriad of reasons why a moral society should honor moral obligations. That notwithstanding, the Journal editorial was dead wrong when it said the taxpayers had no say in the 38 Studios debacle. Of course we had a say. We had a say when we elected the politicians who pushed the deal through and who appointed the board that formalized the agreement. We had a say when we elected a governor who refused to help the company survive simply because he had been opposed to the deal before he was elected. That’s how government works. The taxpayers elect their representatives to do their bidding. When things go terribly wrong, the taxpayers have the option of throwing the scalawags out of office next election. But don’t say we have no say in the actions of those we elect.

To say the taxpayers had no say in the 38 Studios loan is like saying we had no say in Obamacare, when we elected the politicians who enacted the now highly-disrespected law.

QUOTE OF THE WEEK: Taken from this week’s Providence Journal column by Dr. Stanley Aronson, his quote from George Bernard Shaw: “The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore, all progress depends on the unreasonable man.” So, next time someone proposes something outlandish and seemingly impossible, remember it is that kind of person who pushes man-kind forward.


Comments
3 comments on this item

Agree with level the taxes or get rid of them. Same for income tax, just make it one percentage for everyone.

On Raimondo/Siedle Mr. Siedle wrote his article in Forbes before being hired by the unions. There are "experts" on both sides, let SEC investigate, sort it out tell us, the voters.

Firefighter hiring. Can the city even discriminate against age? Age Discrimination in Employment Act 1967. You say he was sworn in before his medical exam results were seen, but you don't mention if he passed or not.

Couldn't agree more about the bureaucrats making "regulations" this is taxation without representation.

38 Studios I think we are and should be on the hook for this. Wake up voters, anytime politicians are wanting to back a private company with your money, given special tax rates or variances of any kind a resounding NO should be heard from the population. There is private money that will always invest at the opportunity to make more money. As for business laws and regulations if they're no good, get rid or change them.

It was Dapper Don,not Gov. Chafee that pushed this ridiculous deal with Schilling. Mr. anti government,Schilling, gets turned down by the banks,and every private investment firm,turned down by Massachusets, but gets first position funding by R.I..Chafee was right not to put good money after bad. Pay the bonds,but the State should never loan money to a business that private industry has rejected.

Let's keep an eye on the wind project. If you don't own a boat chances are you know someone that does. Talk to them about the maintenance of anything on the water. This wind project will not be cost efficient.

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