Scott MacKay Commentary: Why Can't RI Lawmakers Do More for Working Poor?

Jul 3, 2015

Work is the fulcrum of social mobility in our country. In Rhode Island, lawmakers have approved an increase in the minimum wage. RIPR political analyst Scott MacKay says that falls far short of what’s needed to help the working poor.

Rhode Island Statehouse
Credit RIPR FILE

Democrats claim to be the party of working people. Come campaign season, Democratic candidates boast at every turn that they care about ``working families’’ more than Republicans, the party Democrats brand as the tool of the rich and the one-percent.

So it might come as a surprise that Republican Gov. Charlie Baker of Massachusetts has called for more for struggling workers than the Democratic-dominated Rhode Island General Assembly.

Baker has proposed increasing a state income tax break for low-income workers known as the Earned Income Tax Credit from the Bay State’s current 15 percent to 30 percent.  By contrast, Ocean State lawmakers raised the earned income tax credit to just 12 and a half percent. At the same time, they cut taxes for social security recipients.

In an era of stagnant wages and the decline of labor unions, workers in Rhode Island need help. At the heart of the American Dream is that hard work pays off. Our citizens have long put up with income inequality so long as we believed that even the poor have the chance to rise.

A paycheck, as Franklin Roosevelt famously said, is better than any government social program in promoting a sound economy. A job that gives a worker reason to get out of bed in the morning provides self-esteem and a sense of belonging in our society.

President Obama has recognized the need to help workers. Despite pushback from some business leaders and conservatives, the president has put forward new rules that would make as many as 5 million more workers eligible for overtime pay. He is making this happen by ending a loophole through which businesses deem low-paid workers managers to get around the law that requires overtime pay after more than 40 hours per week.

Currently, salaried working getting as little as $23, 600 a year can be denied overtime if they are called supervisory or managerial employees. The president’s new regulation raises that threshold to a more reasonable $50,400 per year.

But Rhode Island’s Democratic lawmakers didn’t do much to help the working poor this year. Gov. Gina Raimondo proposed inching up the earned income tax credit to 15 percent. The state Senate supported that rate, but the House wouldn’t go along.

At the behest of House Speaker Nick Mattiello, D-Cranston, the House chose instead to give significant tax breaks to elderly Rhode Islanders who collect social security. Less than one in ten Rhode Islanders over age 65 live in poverty, while nearly one in four children in our state are being raised in impoverished households, according to data from Rhode Island Kids Count and the Economic Progress Institute.

Removing the state income tax from  social security benefits means that an elderly house hold with an income of $48,000 will reap an extra $221 next year. That same elderly household earning $78,000 will get an extra $786.

This is in sharp contrast to the paltry increase in the tax credit for low-income workers. At an $11,000 a year salary, a household would get an extra $44 a year. At $27,000, that same family would be eligible for $86. And at $48,000, that family would get $33.

State Senate President Teresa Paiva Weed said she wanted to raise the EITC higher than 12.5 percent, but that Mattiello blocked the initiative.

In calling for an increase in the earned income tax credit, R.I. AFl-CIO President George Nee noted that earned income tax credit dollars ``go right back into the economies of our cities and towns, creating a win-win for families and local businesses.’’

Ok, so we all know that many politicians care about reelection above all else. And that old people vote and children don’t. The politicians claim that cutting taxes on social security will keep more retirees from leaving the Ocean State. But, according to U.S. Census numbers, less than one percent of households aged 65 or over move out of Rhode Island each year.

Logic tells us that unless the Assembly can find a way to end January blizzards or move Red Sox spring training from Fort Myers to Fort Adams, elderly snowbirds will be leaving us for sunnier climes  and taking their tax breaks with them.

Rhode Island’s tax credit for working poor families is the lowest among New England states that levy income taxes, except for Maine. In a state that had a budget surplus of more than $100 million, shouldn’t our lawmakers being doing more to make work pay for people who toil long hours for low wages?

Scott MacKay’s commentary can be heard every Monday on Morning Edition at 6:40 and 8:40 and on All Things Considered at 5:44. You can also follow his political reporting and analysis at our `On Politics’ blog at RIPR.org