Rhode Island – Small State, Huge Government Burden

Friday, August 14, 2009 1:00 PM by Monika Ciesielska

Rhode Island may be the smallest state, but that unfortunately cannot be said for the burden its government imposes on Rhode Island taxpayers.

In the Ocean State, the average worker has to work until August 14 to meet all costs imposed by government. In other words, out of 365 days in 2009, Rhode Islanders must toil 226 days until they mark Cost of Government Day (COGD), the day when they’re done paying off their share of government spending and regulatory burdens on the federal, state and local levels. For forty states, COGD 2009 arrives earlier than August 14, and only 9 other states have a later COGD than Rhode Island, placing Rhode Island 41st in our state-by-state ranking.

While one might think things could be looking up for Rhode Islanders considering that only two years ago their state was ranked 46th among states to mark COGD, the improvement in the ranking can only be temporary considering that for FY 2009 the Rhode Island legislature raised the tax burden on its residents by $50.2 million, and this year’s budget packed with tax hikes will only make things worse:

The tax hikes in this session’s budget include a $9 million gas tax hike, and a $23.6 million capital gains tax increase. What’s more, the state budget contains an unconstitutional “affiliate nexus tax” (“Amazon Tax”) that requires out-of-state retailers to collect and remit taxes for Rhode Island.

But wait, there’s more! The Rhode Island budget is not only riddled with tax hikes - it has also grown at an unsustainable rate of 12% in only one year.

Moreover, after factoring in inflation, state government expenditures between 2003 and 2007 have increases 14.7%, while population has declined by a net 1.38% as Rhode Islanders are voting with their feet. Unfortunately, the legislature does not seem to be getting the message.

(photo by G.E. Long)

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