Jobs & Opportunity Index (JOI), March 2019: In Need of a Turnaround… Soon

Although its rank did not change, March was not a good month for Rhode Island on the RI Center for Freedom & Prosperity’s Jobs & Opportunity Index (JOI). With four of the 12 datapoints’ changing, RI is still 47th in the country, but slippage in employment and income brings a warning sign of things that might be yet to come.

Employment was down another 521 people from the first-reported number for Feburary, and the labor force dropped 1,234. Jobs based within the state showed an increase of 300, but the prior number has since been revised up, so the official news is no change.

The Bureau of Economic Analysis (BEA) released quarterly data for personal income in each state, and Rhode Island is the only one to show a decrease from the first-reported number for the prior quarter. We should note, however, that the numbers from last quarter have been revised down enough that the decrease actually shows as an increase in the official data.

We should also note that Rhode Island remains the only state that is unable to report estimates for monthly enrollment in the federal SNAP program (foodstamps). Until this problem is repaired, we will simply hold Rhode Island’s enrollment at the last-reported level, which is from February 2017.

The first chart shows RI remaining last in New England on JOI, at 47th. In New England, New Hampshire leads the region, in 3rd place, nationally. Vermont fell a spot, to 12th place, while Maine held steady in 18th. Massachusetts and Connecticut also held their positions, at 36th and 42nd, respectively

Rhode Island Jobs March 2019 New England Race To National First Place

The second chart shows the gaps between RI and New England and the United States on JOI, and the third chart shows the gaps in the official unemployment rate. RI’s gap improved slightly in all cases.

Rhode Island Jobs March 2019 New England Scores on Jobs & Opportunity Index
Rhode Island Unemployment Rate, Jobs March 2019, New England Jobs & Opportunity Index

Results for the three underlying JOI factors were:

  • Job Outlook Factor (optimism that adequate work is available): RI remained 24th.
  • Freedom Factor (the level of work against reliance on welfare programs): RI remained 42nd.
  • Prosperity Factor (the financial motivation of income versus taxes): RI remained 47th.
Despite a booming national economy, Rhode Island's economic outlook dropped back into the bottom-10 among according to Rich States Poor States by ALEC.

Progressive Policies Sink Ocean State Back into the Bottom-10

Providence, RI– How much bad news can our state absorb before its political leaders change course, asks the Rhode Island Center for Freedom & Prosperity? Fittingly, it is on Tax Day that high taxes once again are cited for sinking the Ocean State.

Despite a booming national economy, many recently published metrics show Rhode Island is heading in the opposite direction, underscored by today’s announcement that the Ocean State’s “economic outlook” dropped three-slots and back into the bottom-10 among all states, according to the 12th edition of the Rich States Poor States publication, produced by ALEC (the American Legislative Exchange Council). 

“Our state is squandering its opportunity to remain competitive and to increase prosperity for its residents,” says Mike Stenhouse, CEO for the Center, who participated in a national conference call last week to preview today’s ALEC release. “This report reinforces all of the research and projections our Center has conducted in recent years. The upcoming a census will likely deliver the worst news for the Ocean State, which is losing the population battle. As this report again highlights, states with free economies and lower taxes are likely to see an increase in population, while the unfriendly economies with high tax and spend policies, like Rhode Island, are seeing a relative decrease.”

According to the Center, Rhode Island, is falling behind by standing still. While state politicians crow each year about not implementing broad new taxes, the unfortunate truth is that by nickle-and-diming residents and by not implementing aggressive reforms Rhode Island will continue to lose ground, nationally. As other states have moved to increase economic freedom for families and business, Rhode Island is losing ground by standing still: to reverse course, it must work quickly to reduce its onerous tax and regulatory burdens.

However, there is no indication that any political leader in Rhode Island has the courage to steer the state’s ship in the right direction. Encumbered by blind-dedication to a bloated budget, which itself is the state’s primary problem (with all of its taxes, fees, and mandates), lawmakers have put forth no vision and are stuck in the rut of continuing the policies of stagnation. 

According to ALEC’s Rich States Poor States, top-10 states such as #5 Indiana and #6 North Carolina are the most dramatic examples of states moving up the rankings by reforming their tax codes, as just a few years ago each state was in ALEC’s mid-20s. Conversely, Kansas, which has raised taxes in recent years has fallen from the mid-teens to 27th. 

Among the major factors cited by ALEC in Rich States Poor States leading to Rhode Island’s poor rankings are: 

  • High property tax burdens (47th)
  • High estate taxes (50th)
  • High Debt (46th)
  • High minimum wage (41st)
  • Workers Compensation costs (43rd)
  • Lack of workplace freedom (50th)
  • Unsustainable pension liabilities 

“Because of federal tax reforms, millions of good-paying new jobs are being created and trillions of dollars are being repatriated to US. But given RI’s hostile business climate, we are less likely to see major new capital investment or rapid job gains in our state,” concluded Stenhouse.

Legislation to Avoid SALT Cap Named Bad Bill of the Week

Rhode Island lawmakers continue to stick their heads in the sand when it comes to the stagnant Rhode Island economy and weakening jobs market. Instead of directly addressing the core issues that are producing these negative outcomes, which run counter to positive national trends, the political class prefers to divert attention to band-aid policies that perpetuate the problem.

It is for this reason that H5576, the so-called Business Corporation Tax legislation, has been named the Bad Bill of the Week by the RI Center for Freedom & Prosperity. The legislation seeks to provide small business owners with a dubious option to avoid the $10,000 SALT (State And Local Tax) cap, defined in the 2017 federal tax reforms.

Even the highly respected and nonpartisan Tax Foundation in Washington, DC, wrote a post on the wrong-headedness of this legislation, which seeks to circumvent federal tax laws.

Ignoring the fact that state and local taxes are too high in Rhode Island, driving many people and businesses out of state, the legislation instead seeks to help small business owners by reducing the their federal tax burden; in essence, denying the federal government its lawful share of pass-through revenues that are usually associated with S-corporations, limited partnerships, and sole proprietorships.

State lawmakers should not seek to blame the federal government for the high state and local taxes that they, themselves, have imposed on the private sector. Further, the IRS has publicly signaled that it will not take kindly to state-based efforts to interfere with taxes owed to the federal government.

To encourage entrepreneurship, pass-through entities were created to relieve small business investors of the burden of double-taxation, both at the corporate level and then again upon distribution of profits at the individual level. Instead, profits under a pass-through structure flow entirely to its investors, to be taxed only once at the individual level – both federally and by states.

The 2017 Tax Cuts and Jobs Act limited the amount of SALT deductions allowed on federal tax returns. In high tax states, such as Rhode Island, this means that certain people may not be able to federally deduct all of the taxes they are charged by their state and localities.

The proposed legislation in Rhode Island would allow pass-through businesses to pay “state” taxes on its profits at the ‘entity’ level (instead of passed-through to individuals). This scheme would effectively transpose a potentially non-deductible SALT tax into a fully-deductible business expense. A revenue-neutral policy at the state level, this entity level tax scheme will almost certainly be challenged by the IRS in that it would reduce federal tax receipts.

The proposed legislation in Rhode Island would allow pass-through businesses to pay “state” taxes on its profits at the ‘entity’ level (instead of passed-through to individuals). This scheme would effectively transpose a potentially non-deductible SALT tax into a fully-deductible business expense. A revenue-neutral policy at the state level, this entity level tax scheme will almost certainly be challenged by the IRS in that it would reduce federal tax receipts.

This legislation is objectionable for two main reasons. First, the IRS is unlikely to allow this sleight-of-hand to circumvent existing tax law. Second, and more importantly, the legislation avoids the actual core problem – high state and local taxes in Rhode Island.

As long as lawmakers refuse to deal with the real problems that plague our state, Rhode Island’s economy and the standard of living for its residents will continue to lag behind the rest of the country.

As the Tax Foundation concludes, and as the Center has long maintained, “States would be better off using their creative energy to reform their tax codes and alleviate the overall burden on taxpayers.”

This week’s “Progressive Land of Make Believe Bad Bills of the Week” are the so-called Fair Employment Practices legislation; House bill 7427 and Senate bill 2475. The legislation that could impose the most extreme employment burdens on Rhode Island businesses than in any other state in the nation.

March, 2019 – the Bad Bill of the Week: So-Called Fair Employment Practices Legislation is Immoral

Once again, politically correct legislation is being advanced in the General Assembly based on a progressive-contrived myth; legislation (H5659 and S0509) that could impose the most extreme employment burdens on Rhode Island businesses than in any other state in the nation – all for an imagined problem that does not exist!

Mandating equal income outcomes by advancing political inequality is immoral and un-American. Watch this video for more discussion and why this legislation is also not necessary:

Progressive lawmakers and activists pretend that a multitude of state and federal protections against wage discrimination, enforced by the federal Equal Employment Opportunity Commission (EEOC), do not already exist.

Currently, Rhode Island law clearly prohibits wage discrimination for “equal work” on “the same operations”. Who can disagree with this? However, the proposed legislation would blur this clear language and change the standard to “comparable work” under “similar working conditions”.

These fuzzy and divisive new regulations would be harmful to businesses, leading to frivolous complaint after frivolous complaint filed by employees against employers. Already with one of the most hostile business climates in America, Rhode Island should not impose more burdens on its valued job-producers.

Without documenting any evidence of systematic discrimination, not covered by existing law, this #Unfair2Employers legislation would set new, highly subjective wage-discrimination standards that are wholly unfair to job-producers. With ridiculous new definitions of acceptable wage determination practices, severe employer penalties will be devised and meted out by unelected government bureaucrats at the Department of Labor and Training.

Supporters of the legislation also pretends this is a “women’s rights” issue, when in fact a whole litany of politically-correct groups, favored by progressive politicians, are included in the new definitions. Existing laws cover these groups as well.

In the real world Rhode Island does not need more job-killing regulation … we simply need more education and better enforcement of existing laws.

Similarly, earlier versions of the bill in 2018 were named “Progressive Land of Make Believe Bad Bills of the Week” are the so-called Fair Employment Practices legislation; House bill 7427 and Senate bill 2475.

The Rhode Island business community is comprised not just of good business people, but also generous and fair employers. However, in the progressive land of make believe, Ocean State employers regularly practice discriminatory and bigoted compensatory practices against women and other politically-protected groups.

H5541 is the Bad Bill of the Week. The legisaltion would create a big brother Rhode Island health database to track information - without your consent.

Socialist “Big Brother” Database Bill Infringes on Our Privacy

The Rhode Island Center for Freedom & Prosperity today dubbed H5541 as its Bad Bill of the Week. The Rhode Island Department of Health wants to track sensitive information about you and your family – without your consent. In a state where government already has far too much control over our daily lives, big-brother should not be allowed to systematically track such information about our private lives.

Aimee Gardiner, founder of Rhode Islanders Against Mandated HPV Vaccines and a longtime advocate for medical informed consent, writes in her blog post about the many ways the proposed legislation (H5541) would infringe on our privacy. With the State of Rhode Island already collecting highly personal information about children and their families, the legislation would expand the government’s database to automatically include all adults … under the guise of tracking immunizations … without your knowledge or consent.

“Such an aggressive intrusion by government into our lives should not come as a surprise,” said the Center’s CEO, Mike Stenhouse. “Part of  the progressive-socialist agenda is for government to gather as much information as it can about its subjects, so it can someday decide who the winners and losers of its policy mandates should be.”

Further, a question raised by Gardiner asks whether or not this database-tracking is “dollar driven”, with the the Department of Health and/or doctors receiving a kick-back for every vaccination administered from big pharma vaccine manufacturers.

All in all, whether it’s a matter of government control or money, this legislation would violate our privacy without our permission! The medical community prides itself on the ethic of delivering services with “informed” patient-consent. This legislation would also violate that ethic.

If you do not want our state to take yet another step down the #RhodeToSerfdom, you are encouraged to send a note of opposition to your lawmaker, which can quickly and easily be done here: http://www.gaspeeproject.com/contact.

Suffering from retail store closings and low job numbers, Rhode Island could get a boost from an 'already-pulled' new trigger to reduce to 6.5% sales tax.

Legislation Pulls the Trigger on Sales Tax Cut to 6.5%

Bill Re-Defines Trigger to Statutorily Cut the State Sales Tax Already Pulled??

Providence, RI — Suffering from a slate of retail store closings and far fewer in-state jobs than the government once estimated, Rhode Island could get an economic boost from legislation that creates an ‘already-pulled’ new trigger to reduce the state sales tax. The bill was submitted by freshman Representative George Nardone (R, Coventry) one week after the Rhode Island Center for Freedom & Prosperity issued a policy brief calling for the state to comply with The Half-Percent Promise, its own statutory requirement to lower the state sales tax to 6.5% from its current level of 7.0%. 

To create the new trigger, the legislation (H5854) simply adds three words to existing state law (General Law 44-18-18) that mandates a cu to the sales tax rate, to read “upon passage of any federal law or court decision that authorizes states to require remote sellers to collect and remit sales and use taxes …”

“The newly defined trigger in this bill has clearly been met via a 2018 US Supreme Court decision,” said Mike Stenhouse, CEO for the Center. “However, this legislation should not even be necessary, as both the Governor and the Speaker were already given the authority in by the General Assembly 2014 to fulfill the government’s promise to the people. They can comply with state law simply by inserting the reduced sales tax rate into one of their budget lines.”

To create the new trigger, the legislation (H5854) simply adds three words to existing state law (General Law 44-18-18) that mandates a cu to the sales tax rate, to read “upon passage of any federal law or court decision that authorizes states to require remote sellers to collect and remit sales and use taxes …”

“The newly defined trigger in this bill has clearly been met via a 2018 US Supreme Court decision,” said Mike Stenhouse, CEO for the Center. “However, this legislation should not even be necessary, as both the Governor and the Speaker were already given the authority in by the General Assembly 2014 to fulfill the government’s promise to the people. They can comply with state law simply by inserting the reduced sales tax rate into one of their budget lines.”

The rationale for this law was to relieve Rhode Islanders of the additional burden of imposing a sales tax on a broader range of purchased goods, by easing the tax rate. The Center, in its 6.5% Sales Tax policy brief argued, while no actual federal law had been passed, that the original trigger threshold had effectively been met by the continued expansion of the sales tax, including remote sellers.

Doomed to lose a prized US Congressional seat because of its relative population loss,the Center’s larger “Freedom Agenda“, designed to attract more families and business to the Ocean State, stands in direct contrast to the regressive policies put forth by progressive-Democrats earlier this month. The Center’s agenda calls for specific tax and regulatory cuts, more healthcare choices, and protection of constitutional rights. A policy brief on raising the state Estate Tax exemption is expected soon.

In its Zero.Zero report many years ago, the Center’s extensive research and economic modeling calling for a full repeal, or reduction to 3.0%, of the state sales tax, as the most effective way to grow jobs, gained significant legislative interest.

Required Sales Tax Cut

Legally Required Sales Tax Cut Heads Center’s Legislative Agenda, as Counter to Progressives’ ‘Economic Justice Platform’

FOR IMMEDIATE RELEASE: March 11, 2019

THE HALF-PERCENT PROMISE Center Calls for Statutorily-Required Sales Tax CutFull Agenda in Stark Contrast to “Women’s Economic Justice Platform”

Providence, RI — With Rhode Island doomed to lose a prized US Congressional seat because of its relative population loss, and in direct contrast to the regressive policy plan recently put forth by progressive Democrats, which would only force more people out of state, the Rhode Island Center for Freedom & Prosperity today published its full “Freedom Agenda” for 2019, headed by a call for the state to comply with The Half-Percent Promise, its own statutory requirement to lower the state sales tax. 

Existing state law (General Law 44-18-18) specifies a “trigger” for a sales tax rate reduction to 6.5% (from its current level of 7.0%) if certain internet sales tax collection criteria are met. The rationale for this law was to relieve Rhode Islanders of the additional burden of imposing a sales tax on a broader range of purchased goods, by easing the tax: The Center, in its 6.5% Sales Tax policy brief cites the full statutory language and argues, for all intents and purposes, that this trigger threshold has been met.

“The State of Rhode Island passed a law in 2011 promising the people of Rhode Island, that if it started collecting Internet sales taxes, it would offset this broadened tax-base by lowering the tax-rate,” said Mike Stenhouse, CEO for the Center. “With major retailers suffering across our state, it’s time for government to fulfill its half-percent promise and provide some much needed relief to the hard-working taxpayers and businesses in our state.”

The Center’s larger “Freedom Agenda“, designed to attract more families and business to the Ocean State, stands in direct contrast to the regressive policies put forth by progressive-Democrats last week. The Center’s agenda calls for specific tax and regulatory cuts, more healthcare choices, and protection of constitutional rights. A policy brief on raising the state Estate Tax exemption is expected soon.

Conversely, the “Women’s Economic Justice Platform” is headed by legislation that would increase the likelihood that an employee might sue his/her employer on some  vague basis of wage inequality. Other progressive legislative items would place even more onerous mandates on businesses, increase taxes, limit healthcare options, and severely infringe on individual liberties. 

In its Zero.Zero report many years ago, the Center’s extensive research and economic modeling calling for a full repeal, or reduction to 3.0%, of the state sales tax, as the most effective way to grow jobs, gained significant legislative interest.