FOR IMMEDIATE RELEASE: December 20, 2017
State Budget Will Benefit from Federal Tax Reforms
Economic Growth Will Boost Sales and Income Tax Revenues
Providence, RI – Ironically, Rhode Island’s political class, incessantly in search of new revenues, is criticizing the recently passed “Tax Cuts & Jobs Act,” which could generate more statewide revenues in a more responsible way than any other scheme they have devised themselves.
The Rhode Island Center for Freedom & Prosperity points out that because individuals and businesses necessarily reside in some state, that the economic growth – expected to result from the federal tax reforms – will lead to a boost in state revenues.
In Rhode Island:
- With about 80% of its residents soon to keep – and spend – more of their hard-earned paychecks … state sales tax revenues will increase
- With more businesses to keep more of their profits, more and better paying jobs will be created … resulting in more state income tax revenues
- With more businesses earning more profits and pass through incomes … more capital gains tax and normal income tax revenues will be collected, not to mention increases to individuals’ 401k or other equity positions
- And, best of all for Rhode Island, it’s the federal government that must deal with the positive or negative budget implications … meaning that the state revenue increases described above come with no strings attached and with no risk.
Further, the reality of the federal reforms, often the target of scorn by the Rhode Island’s political leaders, could mean that more businesses choose to relocate or become established in American, and in states like Rhode Island.
“It is alarming that state officials would deny tax cuts to families and businesses, just to advance their partisan class-warfare narrative,” commented Mike Stenhouse, CEO for the Center. “Because of these federal tax reforms, Rhode Island will no longer need to subsidize taxpayer-funded corporate hand-outs in order to see more and better paying jobs organically grow in our state.”
On the negative side, under the reforms passed today, because state and local income and property tax deductions (SALT) will be limited to ten thousand dollars per year, high-income households and high-value property owners may end up paying more in taxes. This unfortunate circumstance should not be blamed on the federal reforms but, rather, on the state and local governments who have been excessively imposing taxes on its residents … and which have unfairly relied on federal taxpayers in other states to subsidize their high levels of taxation.
The Center has long-maintained that Rhode Island’s corporate welfare based economic development strategy is not sufficient to spur robust economic growth and jobs creation. Instead, the Center has advocated that broad-based, pro-growth tax and regulator reforms – like those that just passed the US Congress – that will lessen burdens on every business and most families in our state – are the only means by which more and better companies will produce more and better-paying jobs.
According to the Center, it is organic economic growth, not corporate welfare schemes, that can alleviate the problems suffered by Rhode Island employers and families … as exemplified by bottom-10 national rankings in such broad-based indexes as: overall state business climate; Family Prosperity Index, Jobs & Opportunity Index; occupational licensing burdens; and the recently released poverty report.