A plan to revive Rhode Island’s economy
To the Editor:
To get companies to expand or relocate in Rhode Island, the state and local communities usually give these companies tax breaks or low interest loans. In addition, some states, to increase the number of shoppers at local businesses, significantly lower their sales tax rates on certain days of the year. I think that Rhode Island should redesign its tax code to take advantage of the above strategies.
First, to draw more shoppers to Rhode Island's business outlets, Rhode Island should lower its present sales tax rate from 7% to 3% and put a 3% sales tax on clothing items. This new 3% sales tax on clothing would not be onerous on low-income families because of the 4% reduction of the present state sales tax rate. Because of the high price of gasoline, driving to Massachusetts’s stores would not produce a significant savings on clothing costs.
This new sales tax policy would greatly increase the number of shoppers at all of Rhode Island's business outlets. Business profits would increase, business employment would increase, sales tax revenue would increase and income tax revenue would increase.
To give all businesses in Rhode Island a significant reduction in their property taxes, I would have the state pay the salaries and benefits of all public school employees in Rhode Island. State broad-based taxation is the fair way to pay for the services of these employees. To accomplish this goal, 50 pecent of all meal tax revenue, hotel room tax revenue and gambling revenue should be dedicated to fund Rhode Island's public education costs.
Because of this strategy, every local community in Rhode Island would be able to significantly lower their property taxes. Many businesses would expand and many new businesses would relocate in these communities to take advantage of these new low property taxes. Many well-paying jobs would be created. This business expansion would lead to a huge increase in Rhode Island's income tax revenue.
Property tax relief would also provide all of Rhode Island's homeowners with access to hundreds, if not thousands, of dollars each year that they could spend on goods and services. This would further increase Rhode Island's sales tax revenue.
Lastly, low property taxes would increase the demand for homes in Rhode Island. More money would be available to meet the monthly mortgage payments and more money would be available to make any needed repairs. Many more people would be able to meet the requirements of the various lending institutions. This tax policy would begin to end Rhode Island's housing crisis.