Senate Finance Committee Chairman Dan DaPonte caused a stir last week when he told me he was “quite honestly confused at the liberal opinion that the 2010 personal income tax reform was a big giveaway to high-income earners.” Samuel Bell, Rhode Island coordinator for the Progressive Democrats of America, e-mailed this response to the chairman’s comments:
There is a very simple reason Senator Dan DaPonte says he is “confused at the liberal opinion that the 2010 personal income tax reform was a big giveaway to high-income earners.” That is not the liberal opinion. DaPonte is confusing the 2010 reform with the 2006 tax cuts for the wealthy – the flat tax – which were indeed a big giveaway to the rich.
As a package of technocratic changes, the 2010 reform had a fairly minor effect on the overall income tax code. The details are dull and unimportant: instead of allowing the top rate to fall from 6% in 2010 to 5.5% in 2011, as it would have under the law at the time, the 2010 reform froze the top rate at 6%. (Technically, the rate fell by 0.01 points to 5.99%.) So relative to the proposed 5.5% flat tax rate for 2011, the 2010 reform actually raised income tax rates on the wealthy extremely mildly. On the other hand, relative to 2010 policy, the changes represented a minuscule decrease in effective nominal tax rates for the wealthy (due to the complexities of the marginal rate structure). In short, it was a bureaucratic reform of little significance. If progressives opposed the 2010 changes, it was because they did not address the deeply unfair 2006 tax cuts for the wealthy.
Few red states have slashed taxes for the rich as deeply as Rhode Island did in 2006. When state lawmakers dropped the top rate from 9.9% to 5.99%, the General Assembly claimed they were creating jobs. What followed was a clear demonstration of the failure of Republican economics. There is only one difference between what happened in Rhode Island and what the national Republican party would like to do to America: in Rhode Island, many of the Republicans have Ds after their names.
The economic devastation we are facing does not call for the laughably tiny tweaks Chafee and the General Assembly are proposing. What we need is a jobs bill, one we can easily fund by rolling back the 2006 giveaways to the rich. So let’s not waste our time discussing the bureaucratic baby steps Smith Hill loves. Let’s actually fix the economy.
• Related: DaPonte: RI progressives are wrong about income tax changes (Jan. 18)