Gubernatorial Forum on Taxes and Economic Growth: Candidates' Stances and Rhode Island's Regressive Tax System

The Greater Providence Chamber of Commerce held a gubernatorial forum on Thursday morning, less than a week before the September 13 primary which will choose which Democratic and Republican candidate for governor will be featured in the November 8 general election.

Democrats, including former Secretary of State Matt Brown, former CVS executive Helena Foulkes, Secretary of State Nellie Gorbea, incumbent Governor Daniel McKee and Dr. Luis Daniel Muñoz were on stage with Republican candidate Ashley Kalus.

Republican candidate Jonathan Riccitelli and independent candidates Elijah Gizzarelli, Zachary Baker Hurwitz, and Paul Rianna were not invited.

“We’ll be focusing on business and economics today,” said Greater Providence Chamber of Commerce President Laurie White, who moderated the forum. “Candidates have been through a ton of debates in the last couple of weeks where lots of topics have been explored but today, given the Chamber’s priorities, we’re going to keep the topics fairly narrow.”

Following the Uprise RI format, each question is written out as asked by the moderator, followed by video of each respondent’s answer. Unusually, I’m featuring the questions out of order.

Taxes

“I’m going to start with taxes and the reason I’m going to start with that is because everybody is very familiar with the rankings – the Tax Foundation, CNBC – and one of the primary drivers of those rankings is the way our tax code is structured,” said Laurie White.

“We support a fair and equitable and predictable tax system that promotes private sector growth and makes Rhode Island more competitive. We believe people should keep more of what they earn and oppose any broadband taxes on corporations, individuals or industry specific taxes,” continued White. “This is especially true now with so much historic and significant federal money sloshing around in our coffers.”

White summed up her comments by asking, “How close do you come to sharing the Chamber’s position?”

Before getting into the candidate’s answers, let’s take a look at tax policy in Rhode Island, using the excellent research provided by Rhode Island’s Economic Progress Institute in their 2022 Candidate Briefing Book.

Rhode Island’s tax system is regressive, meaning that when you take into account all the taxes paid at the state and local level, the poor pay a higher percentage of their income in taxes than the rich, with those in the lowest income brackets paying 14.1% of their income in taxes while those in the top tiers pay 9.1% of their income or less, with those in the top tier paying 8% of their total income in taxes.

Moreover, the system is skewed racially, as, “Black and Latino Rhode Islanders are overrepresented among those residents with the lowest incomes and underrepresented among those with the highest incomes.”

So when the Greater Providence Chamber of Commerce talks about being opposed to raising taxes on the richest Rhode Islanders, they are saying that they favor policies that benefit rich white people at the expense of low-income and/or BIPOC communities.

What about the state rankings?

In her build up to her question about taxes, Laurie White mentioned state economic rankings, put out by right-wing media like CNBC and conservative, ideological think tanks like the Tax Foundation.

These state rankings are questionable pseudo-science created to influence policy against the poor and in favor of corporate interests and the rich. The website Grading the States from economist Peter Fisher is worth exploring, but the basic issue with these business rankings can be summed up with this line from the website:

“There are serious problems with the four business climate rankings reviewed here, partly because of problems inherent in the use of composite index numbers, and partly because they are ideologically driven and promote policies of doubtful value in creating growth.”

That said, let’s get into the candidate responses:

Matt Brown:

Ashley Kalus:

Luis Daniel Muñoz:

Part way through the candidate responses, Laurie White provided new context for her question:

Nellie Gorbea:

Helena Foulkes:

Daniel McKee:

Blue Economy

Laurie White next asked if the candidates would be in favor of appropriating $100 million in federal funds and an equal amount in state matching funds for the “Blue Economy” which is defined as “the economic sectors with a direct or indirect link to Rhode Island’s coasts and ocean” in the University of Rhode Island report URI’s report The Value of Rhode Island’s Blue Economy.

The Blue Economy is talked about in terms of marine trades, tourism and recreation, fisheries, aquaculture, ports and shipping, and offshore renewable energy, but this is less than half the story. The biggest industry that advocates for a so-called Blue Economy are schilling for is the defense industry. At $3.16 billion, the defense industry is nearly equivalent to all other Blue Economy industries combined.

No doubt Rhode Island could benefit from the careful nurturing of various ocean industries, especially in the areas of off shore wind development, fishing, and aquaculture. But there is a moral argument to be had about the expansion of the war economy in Rhode Island, one that our elected leaders are unwilling to have. But even putting the discussion aside for a minute, is expanding the Blue Economy possible without increasing the state’s dependence on military contracts?

Because the answers from the candidates were brief, we present them in one video:

Going back to the forum’s first question, Laurie White asked candidates were to imagine giving a TED Talk one year from now about how their administration has made Rhode Island “one of the very best places for business and for people.”

White’s next statement equating “best” with “most profitable” was an eye-opener:

“The criteria, of course, will be the typical criteria where Rhode Island is a place where businesses can be profitable, where [businesses] are able to attract talent, and also where they can be productive citizens like those that are here today.”

Matt Brown: