0.0% Sales Tax States: How Do They Do It?

See Testimony at Special Joint Legislative Commission to study repeal:  http://ricaptv.discovervideo.com/show/watch?id=702&t=1

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Highlights

  • Non-sales-tax states have higher revenue per capita than Rhode Island in certain key areas, without necessarily taxing at a higher rate.
  • The overall tax structures of non-sales-tax states do not rely on high rates in multiple categories.
  • Despite Rhode Island’s high taxation in all available categories, revenue in non-sales-tax states proved more resilient than in RI during the economic crisis, falling less and recovering more quickly, at and above the national average.
  • Non-sales-tax states manage to spend more per capita on critical government activities than RI, such as infrastructure and education.
  • The exception, where non-sales-tax states reduce their spending relative to Rhode Island, is in social welfare/wealth redistribution.
  • Non-sales-tax states have all seen net taxpayer migration from other states to them; Rhode Island has gone the other way.
  • The employment situation is healthier in non-sales-tax states than in Rhode Island.
  • Studies show residents will cross borders to shop in states without sales taxes.
  • The high population density across Rhode Island’s borders is likely to amplify the benefit to the state.
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