A Providence Journal editorial, published yesterday, once again took as gospel Rhode Island’s ranking in the Tax Foundation’s State Business Tax Climate Index. The editorial was happy that our state moved from #44 in the rankings to #41. “But obviously,” says the editorial, “there is more work to be done.”
How terrible of the ProJo to ignore writing on its own pages that directly refutes the validity of the Tax Foundation (and other state rankings as well).
About a year ago, in response to last years Tax Foundation report, Economist Douglas Hall, director of Economic and Fiscal Policy at the Economic Progress Institute, wrote an oped explaining why these rankings are worse than meaningless and actually quite harmful.
Hall wrote, “The collective hand-wringing brought on by Rhode Island’s placing on the latest Tax Foundation’s ‘State Business Tax Climate’ is misguided at best, and at worst points to public policy choices that could undermine, rather than facilitate the Ocean State’s economic growth and recovery.”
Hall noted that three of the sates with the “worst business tax climates” are New Jersey, New York, and California, sates that are doing great in business. The top three states, Wyoming, South Dakota and Alaska all have robust fossil fuel extraction economies. That’s not something Rhode Island can emulate.
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In essence, these state rankings are useless and dangerous. Grading the States, a website that tackles the issue of these rankings and exposes their serious flaws, is a great resource to learn more about this problem. Their one line analysis of the Tax Foundation’s business ranking?
“Combining more than 115 features of state tax law into a single index number produces a state ranking that turns out to bear very little relationship to what businesses actually pay in one state vs another.”
Kowtowing to these business rankings perpetuates a race to the bottom which benefits no one but the one percent. The ProJo knows this, they have printed this in their own pages, but they continue to pander this lie to convince you that your interests and the interests of corporations somehow align.
Be wary of tax cuts suggested by anti-tax economic fundamentalists. They are not providing facts, they are selling you a fiction that will ultimately cost you everything.