Enough of this RI as tax-hell stuff

Does Rhode Island have a long way to go in improving its economic climate? No doubt.

Should we be alarmed by a recent Tax Foundation report that placed us last among the 50 states in evaluating the business tax climate? Perhaps not.

URI's Maureen Moakley beat me to the punch on A Lively Experiment last week in observing how four of the top five states in the foundation's ranking are not places where she (or, more importantly, many Northeast-based businesses) would choose to make her home:

1. Wyoming

2. South Dakota

3. Nevada

4. Alaska

5. Florida

Nonetheless, Edward Achorn this week calls Rhode Island's economic model a disaster. (A few days after N4N dubbed Rhode Island "the Gaming State," he also calls for changing the state motto to "Let's Make a Deal," but, hey, great minds think alike):

Taxes are not everything in determining whether a state will attract new business. Location (excellent!), quality of life (superb!) and public education (uh-oh!) also weigh heavily. But taxes are an important factor.

The numbers bear that out: Rhode Island ranked 50th — dead last — in job creation from 2003 to 2006 and 42nd in production growth, says Tax Foundation economist Curtis Dubay, citing data from the U.S. Bureau of Labor Statistics and the Bureau of Economic Analysis.

It ranked 49th in population growth, as the middle class (notably including retirees) fled for less punishing states. While the nation’s population has grown almost 3 percent, Rhode Island’s fell over half a percent

Its income growth was 48th. While America’s income grew almost 19 percent between 2003 and 2006, Rhode Island’s grew at just under 14 percent.

Its state and local spending per capita ranked 9th highest in the country.

Those are terrible, even scary, numbers.

Also writing Tuesday, in the ProJo's biz section, was Anthony J. DiBella, a professor associated with that radical pro-tax group known as the Naval War College, who equates Rhode Island's small size with a relatively high amount of taxes:

While we could lower taxes in Rhode Island, to think that we can lower our taxes relative to other states while maintaining essential services is, as they say in the South, whistling Dixie.

A major barrier to effectively managing our situation is the reluctance to understand (or accept) Rhode Island’s inherent limitations. We can’t be small and avoid relatively high taxes at the same time.

The immutable fact is that the bulk of a state’s revenue is based on scale or size. Unless we are going to merge with Massachusetts or Connecticut or become part of the United States of New England, we will always be at a relative disadvantage when it comes to tax liabilities. Even the governor’s experience as a corporate executive should tell him that operational efficiencies derive primarily from economies of scale.

Over at Anchor, Justin isn't taking this sitting down.

I don't care what you guys say. I'm not moving to those tax paradises known as Wyoming, South Dakota, Nevada, and Alaska. I'm not even that crazy about Florida.