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Wednesday, May 18, 2011

Tax the Rich

Our two State Representatives Larry Valencia (D-District 39) and Donna Walsh (D-District 36) are offering a pretty good alternative to raising the sales tax or making more draconian cuts to balance the budget. They propose increasing the state income tax on high earners by 4.1%.

The tax hike would apply to families earning $250,000 or more and individuals with more than $200,000 in income. Larry says that 95% of RI taxpayers would pay no additional tax.

This is Larry Valencia’s bill (Donna is a co-sponsor) which he calls the “95/5 Civic Responsibility Plan” (2011-H 6095). Larry’s campaign manager Robert Malin posted a lot of information on the bill on RI Future. The news release says his bill would reverse the Bush era tax cuts for the wealthy.

Personally, I think it’s a great idea to boost record-low tax rates on the wealthy and have made that argument on this blog before. I hope one of the several versions of this will pass this General Assembly. There is very little left in the state budget to cut and with reduced state payments to cities and towns, working families in Rhode Island have been hammered with property tax increases.

Rather than look back at the Bush tax cuts – which are one of the big reasons for our current federal deficit – Rhode Islanders don’t need to look much further than the “historic” tax cuts former Governor Donald Carcieri signed into law last June. The law condensed RI’s tax brackets from five to three, and cut the tax rate for the top bracket from 9.9% to 5.99%

This was supposed to boost the economy through the application of classic Republican "trickle-down" ideology  – cut taxes and you’ll generate more economic activity that will more than pay for the cuts. Right. Like we haven’t seen that movie before.

But it turns out the Carcieri tax cuts added even more to the state's economic woes. Carcieri's budget meisters sent faulty figures to the General Assembly prior to the bill's passage claiming the top 30 uber-rich tax payers would pay about 5% more under the new tax rate.

But after the bill was passed and signed, well, OOOPS, it turns out the super-rich got a tax cut instead of a tax increase. But instead of apologizing for scamming the General Assembly, Carcieri said “The tax reduction is bigger than we thought. That’s good….and if it winds up that [higher-income taxpayers are] getting a break, too, that’s good,” too. I’m not making this up.

And has it really been less than a year since Carcieri vamoosed to Florida? Seems like it’s been a lot longer.

Larry Valencia’s staff is hoping there will be a popular uprising in support of his bill, triggering an outpouring of letters to the editor, calls to talk radio and people at the State House. To that, I say Mazel Tov!

Larry’s been taking the issue on the road, though with some mixed results. He appeared on a panel with former Cranston Mayor and right-wing nut Steve Laffey. Ironically, the appearance was before what should have been a friendly group, Operation Clean Government. Larry was their executive director before winning as State Rep., but the largely pro-Laffey crowd screamed at him and demanded that he resign from the legislature. So if you can help out with a letter of support to the newspapers, that would be a good thing to do. 

If Larry’s bill doesn’t get enacted this year, and the other similar bills fail, too, there’s not only trying it again next year. How about the long over-due oversight investigation of how Governor Carcieri’s final give-away to the rich happened? And the House Finance Committee – where Larry is a member – is a good place for that oversight to start.

Whether we do it to reverse the Bush tax cuts or Don Carcieri’s Tax Scam of 2010, both or neither, raising taxes on the rich back to fair and reasonable levels is one of the last practical options Rhode Island has left.