Scott MacKay Commentary: Beware of Fung, Feroce Tax Cut Promises

Apr 13, 2018

Credit Chris Potter / Flickr

It’s that time of year again: income tax filings are due. And candidates for governor are talking about cutting taxes. RIPR political analyst Scott MacKay says voters should be wary of political tax promises.

Two of the three declared Republicans running for their party’s nomination for governor have recently floated ambitious state tax cut proposals. First came former state senator and entrepreneur Giovanni Feroce.

Feroce proposed eliminating the state income tax and making Rhode Island corporate taxes the nation’s lowest. He also says he plans to eliminate inventory and asset taxes.

Getting rid of state income taxes would cost the state more than $1 billion in the money it takes to support schools, medical care, social services, the state police and keep the lights on in state buildings.

Then it was Cranston Mayor Allan Fung’s turn. He didn’t go as far as Feroce in starving the state budget. Fung says he wants to drop the state’s sales tax from seven percent to five percent over four years. That would mean a drop in revenue of about $70 million a year, or nearly $300 million over the life of his plan.

Neither candidate has stated specifically what programs he would cut or eliminate to make up for the loss of money. Fung has said he would consider chopping six figure jobs in middle management and trim the public relations staff that incumbent Democratic Gov. Gina Raimondo uses to peddle her agenda.

If you believe that state taxes can be slashed without pain to average citizens then you believe that a Rhode Island Red rooster can be taught to play the cello.

About 70 percent of state spending is in two major areas – education aid to cities and towns and state social and medical programs, notably Medicaid. Any candidate who claims he or she can substantially reduce taxes without touching any of those initiatives isn’t telling voters the truth.

The usual dodge for tax-cutting candidates is to say they plan to get tough on waste, fraud and abuse, as if that’s as easy as holding a news conference and voicing platitudes to a bank of cameras. Or they say they can’t talk about specific programs until they get into office and study the budget.

Guess what: There is plenty of time to study Raimondo’s budget proposal for the fiscal year that begins in July. The House Finance Committee holds budget hearings almost every day. You, the voter, might ask tax-cutting candidates why they don’t have time to give the proposed budget scrutiny and come up with some suggestions to save money. Don’t let them say they don’t have time; candidates always seem to find the time to raise campaign money and attend endless meet-and-greets.

If Feroce or Fung advanced a plan to cut needless spending without hurting anyone, either would surely be entitled to boast about it. Taxpayers would be pleased. Lawmakers might not like it but they would have to grudgingly acknowledge any reasonable ideas.

So let’s roll the tape back a decade ago to the Wall Street crash and the resulting recession. Don Carcieri, Rhode Island governor back then, and the Democrats who controlled the General Assembly refused to raise taxes to make up for a big loss in state revenue. The result was drastic cuts to city and town budgets, rising property taxes, increased state college tuition and the Central Falls bankruptcy. In Massachusetts, then-Gov. Deval Patrick and Bay State lawmakers took a different route. They raised the sales tax, avoiding big reductions in state aid to communities. Guess which state’s economy rebounded faster from the recession?

The state is not like the federal government. Rhode Island’s Constitution requires a balanced budget. No state can print money like the feds.

Rhode Island hasn’t raised either of the broad-based taxes – sales and income – since the credit union crisis of the 1990s. And the state has recently embarked on an ambitious plan pushed by Speaker Nick Mattiello, D-Cranston, to phase out the nettlesome car tax.

There are many legitimate issues surrounding the way Raimondo and the Assembly have chosen to spend your money.  Candidates should focus on state spending details rather than waste voters time with pie-in-the sky promises.

Scott MacKay’s commentary can be heard every Monday at 6:45 and 8:45 on Morning Edition and at 5:44 on All Things Considered. You can also follow his political analysis at our “On Politics” blog at ripr.org