“…this plan does not return to taxpayers the ability to control that which was theirs in the first place. It does the opposite: It invites a wealthy few to stick their hands into the state budget and unilaterally pick winners and losers among projects and programs that impact all Rhode Islanders.”
Since it was built in 1928, the Superman building has been an iconic part of downtown Providence. For the past seven years, it’s also been a pain in the ass for local leaders as they struggle to find the landmark tower a tenant.
In the Boston Globe, Dan McGowan has a scoop on the latest effort to restore the building to its former glory with a combination of public funds and private philanthropy. Sounds promising, right? But there’s a catch:
One option that state leaders have discussed is the possibility of drafting legislation that would allow wealthy, aging Rhode Island residents to earmark their estate taxes for a specific public project, rather than moving to a state that doesn’t impose an estate tax at all.
In order to qualify, residents would also have to commit to making a substantial donation to a public project. In other words, an individual could choose to have their tax dollars set aside instead of going into the general fund, but they’d also have to make a separate investment. It’s unclear if a gift could be made prior to the person’s death.
The plan, and the process that seems to have inspired its development, are a veritable Christmas tree of good but alarmingly misguided intentions.
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Let’s start with the low-hanging ornaments: Despite the hand-wringing from state leaders, there’s not much evidence that the wealthy are moving en masse to low-tax states. The estate tax is among the most progressive and common-sense revenue sources available to state lawmakers, and it should be strengthened, if anything, not riddled with loopholes.
But, all things considered, that’s just a quibble.
The real issue lies with the assertion that the plan allows the wealthy to choose where to direct “their” estate taxes, as if our pre-tax income and assets belong to each of us. This doesn’t just miss the point; it careens past it and veers dangerously off course. Taxes don’t take from people what they already own, because the idea of a pre-tax anything exists only in our imaginations. Taxes are the keystone of our economy. No taxation means no government, no functional economic system, no income and no assets. A wealthy Rhode Islander has as much a claim to “their” estate taxes as I have a right to march into the Department of Administration and demand they change how they procure office supplies.
So, then, this plan does not return to taxpayers the ability to control that which was theirs in the first place. It does the opposite: It invites a wealthy few to stick their hands into the state budget and unilaterally pick winners and losers among projects and programs that impact all Rhode Islanders.
In fact, McGowan reports, the plan is aimed at granting this lopsided power to a single person. Barbara Papitto, one of the state’s wealthiest residents, is apparently interested in donating cash to save the Superman building, but is also weighing other options. The estate tax tweak would significantly sweeten the deal by supercharging Papitto’s gift and offering her unique individual control over public resources which would otherwise be the purview of the democratic process. Of course, others would likely take advantage of the incentive, too – anyone over a certain age with an estate valued over $1.5 million would be welcomed to take the reigns of their own set of public funds, according to reporting on the still nascent proposal.
We can debate whether attempting to engineer the perfect mousetrap of financial and tax incentives is the best way to gather funds to restore the Superman building. It’s even possible that the answer is yes: We may only muster the needed resources by combining tax revenue and enormous private donations, and an estate tax earmark may be the way to go. Indeed, as Tom Sgouros points out, tax deductions for charitable giving operate on a similar, albeit far more limited, premise by granting individuals control over otherwise public resources in exchange for a donation that at least purportedly benefits the public.
But let us not lose sight of what this bizarro Superman estate tax plan means for our economic democracy. It extends extraordinary privilege to the already privileged, wresting the power of the purse from the people and placing it in the hands of a select few. At a time when the public overwhelmingly feels the wealthy have too much influence over government, state leaders are contemplating inviting this very group under the hood to play mechanic with state funds.
Perhaps Rhode Islanders believe that’s a price worth paying for the restoration of a historic and culturally significant property. But it’s a price we face nonetheless, and it cannot be ignored.