Earlier this year, Carcieri seemed a very likely bet for reelection, a tilt that seemingly built momentum for his overall budget program. A recent Rasmussen poll showed the two candidates neck-and-neck, however, and the governor, who is usually superb at political communication, has been off his game at times in recent months, starting around the time when he committed the local gaffe of wanting to shut satellite Department of Motor Vehicle offices.
Meanwhile, a stream of disgruntled constituent groups have made a path to the State House, venting their displeasure over Carcieri’s proposed cuts. As Maureen Moakley, chairwoman of the political science department at the University of Rhode Island, says, “It’s a particularly vulnerable time for the governor, and I think that benefits Charlie. Once the budget is passed, and the legislature goes out of session, it will be interesting to see the dynamics.”
No doubt. Part of the related intrigue is whether the Democrat-controlled House backed tax cuts for the rich — the kind of initiative more typically associated with Republicans — due to political maneuvering or because of a sincere belief that they represent good policy. While the legislature’s prevailing social conservatism may help to explain the situation, it seems just as likely that representatives want to preclude Carcieri from being able to paint them as obstinate liberals.
Are upper-margin tax cuts good policy?
A running battle has played out on the op-ed page of the Providence Journal in recent months, as supporters and opponents have steadily debated the wisdom of cutting the income tax rate paid by the wealthiest Rhode Islanders.
GAME ON: The rhetorical debate over the budget and tax cuts is the backdrop for a tightening gubernatorial race between Carcieri and Fogarty.
The debate took off after Democratic House leaders, in February, unveiled a proposal for a flat-rate income tax that would largely benefit Rhode Islanders who make more than $250,000 a year. (The proposed package also included a two-day sales tax holiday, an increase in the earned-income tax credit, and an increase of the car tax exemption.) House leaders touted the tax-cut measure as a step to promote economic growth, by attracting affluent people and encouraging them to create jobs here. (The Senate reacted coolly to the tax-cut proposal, putting forth an alternate plan to reduce the city and town 5.5 percent tax levy cap to 4.0 percent by the year 2013 and require approval of a community’s voters at a special election to exceed the cap in any given year. For his part, Carcieri has emphasized limiting growth in state spending and “laying the foundation for tax cuts.”)
Tax-cut proponent have seized on figures provided by the state Economic Development Corporation, showing, for example, that “the income of Rhode Island’s top one percent fell 17 percent, from $911,000 to $757,000, from 1995 to 2002,” as Merrill W. Sherman, CEO of Bank Rhode Island, wrote in an April 28 op-ed in the ProJo. “For the same period, Massachusetts’ residents in the same income category saw their average incomes increase from $762,000 to $1,383,000, an 82 percent jump. For the same category across the US, the increase was 35 percent, from $801,000 to $1,081,000. This is not a question of whether we think it ‘fair’ that these people earn this amount. It’s a practical issue: we are hemorrhaging our wealthy.”