The Economic Progress Institute‘s 2022 Candidate Briefing Book outlines key economic issues affecting low-income and modest-income Rhode Islanders. The report will be provided to candidates seeking to serve as Rhode Island’s next governor and lieutenant governor. It’s also available as a free download to policy makers and the community as a roadmap to the concerns of everyday Rhode Islanders. It is a must-read for all candidates seeking public office in Rhode Island, not only for the policy recommendations it makes, but as an introduction to those programs that the state uses to help lift low-income and modest-income Rhode Islanders out of poverty.

“Knowledge is power,” says Economic Progress Institute (EPI) Executive Director Weayonnoh Nelson-Davies. “We want those who hope to lead our state to pay attention to important policies and programs that profoundly affect peoples’ lives. We want those who will be choosing the state’s leaders to be informed about these policies, since they carry the ultimate power – the power to vote.”

The Briefing Book provides important historical and policy context, as well as data, on a variety of issues relating to revenue and taxation, government supports to meet basic needs, the needs of working Rhode Islanders, and equity and policy concerns. It is also a useful tool for generating questions for candidates seeking your vote: Where do they stand on these basic economic issues?

Let’s get into the book.

On tax fairness and raising adequate revenue, the report is clear:

• Rhode Island’s overall tax system is regressive with the poorest Rhode Islanders paying a larger percentage of income than the richest when taking into account all state and local taxes. The personal income tax is moderately progressive.
• Black and Latino Rhode Islanders are overrepresented among those residents with the lowest incomes and underrepresented among those with the highest incomes.
• Currently, each dollar of income above $155,050 is taxed at one rate. Income over that amount is taxed at the same rate, even if you earned $10 million.
• Creating a new personal income tax bracket with a higher rate on income above $500,000 would make Rhode Island’s tax system fairer and more equitable, raising over $140 million in revenue each year.

As Rhode Island, like the rest of the country and even the world seeks to navigate an economy that is increasingly stratified as economy inequality explodes, understanding and funding the existing programs that can lift low-income and modest-income Rhode Islanders out of poverty is of primary importance.

One important way to help low-income families is through the Earned Income Tax Credit (EITC), a program designed to boost the income of workers with the lowest incomes. It is a federal program, but Rhode Island is one of many states that provide a smaller state tax credit on top of the federal EITC.

• The state’s Earned Income Tax Credit is 15% of the federal credit and benefits more than 80,000 workers each year.
• Rhode Island has the lowest state EITC of New England states with similar credits.
• For under $30 million, the state could double its EITC, providing meaningful assistance to tens of thousands of workers and their families.

Another aspect of tax fairness is the use of, and lack of oversight on, tax credits for economic development, like the money supplied to the Superman Building in Downtown Providence or the money given to the soccer stadium in Pawtucket. Tax credits are intended to “spur business and job creation, expansion and relocation,” notes the report, but in practice, “it can be difficult to distinguish between job creation, business development, and relocation spurred by tax credit incentives and job creation, business development, and relocation that would have happened without the prospect of these tax incentives.”

EPI summarizes the issue:

• The state spends tens of millions of revenue dollars each year on economic development tax credit programs, with the aim of generating economic activity, jobs, and state revenue.
• Economic development tax credit programs need to have clear goals, spelled out in statute, and evaluations must be done regularly to assess their success at meeting these goals.
• Per statute, the Governor should use evaluations of economic development tax credit programs conducted by the Office of Revenue Analysis to make budget recommendations on continuing or ending particular programs.
• The evaluations of economic development tax credit programs conducted by the Office of Revenue Analysis should be considered at hearings conducted by the House and Senate so the public is aware of the evaluations and due consideration can be given to whether the credits should be extended.

Government programs designed to help people meet their basic needs are also explained in the report. EPI notes that “families need income of more than twice the poverty level to meet basic needs. To net this income, a single-parent with two children needs pre-tax earnings of $66,057, and a two-parent family with two children needs $73,646.”

Because many families don’t make nearly enough, the government is attempting to fill that gap with programs such as SNAP, Child Care Assistance, Medicaid, and subsidized commercial coverage purchased through HealthSource RI.

The report summarizes each program in turn, and makes recommendations on how to improve the programs. The report also talks about the need for improving Rhode Island’s Temporary Caregiver Insurance (TCI) which “lets workers take time from their jobs to care for a newborn, an adopted or foster child, or a seriously ill family member.”

Regarding policy decisions that the General Assembly needs to be proactive on, the report has recommendations regarding the minimum wage and the tipped minimum wage, payday lending, and equity impact statements.

Minimum Wage:

• The minimum wage is meant to protect workers from exploitation.
• Rhode Island’s “cash wage” or “tipped minimum wage” is $3.89 per hour.
• The tipped minimum wage should be phased out and eventually eliminated.
• The minimum wage should be increased to at least $15/hour by January 2024 (not in January 2025 as currently scheduled) to keep Rhode Island competitive with Massachusetts and Connecticut.

Payday Lending, says EPI, “is a predatory practice that lures many people, primarily low-income people, into a cycle of debt, by offering cash advances for a fee that, in Rhode Island, has an effective interest rate of 260% APR.”

EPI recommends bringing Rhode Island in line with the other New England states by repealing the statute exempting payday lenders from regulations applying to other lenders.

Lastly the EPI report talks about Equity Impact Statements, an idea brought to the Rhode Island House by outgoing Representative Liana Cassar. EPI recommends that the General Assembly institute Equity Impact Statements for proposed legislation in Rhode Island for the following reasons:

• Equity Impact Statements are tools designed to help policymakers understand the implications and likely consequences of the bills they pass and expenditures they authorize.
• Equity Impact Statements and other equity assessment tools will help protect populations and neighborhoods often harmed, whether intentionally or unintentionally, by policy decisions, whether concerning finance, business, housing, the environment, criminal justice, education, or other issues.

“We all share the common value of fair treatment and economic prosperity for ourselves and our families,” says Nelson-Davies. “We want to live in healthy and vibrant communities where we can thrive. Elections remind us that policies have significant impact on the communities, people and issues we value.”