It takes a lot of hard work over an extended period of time to establish an abysmal state economic climate. Politicians in Rhode Island certainly managed to do it over the years.
On the SBE Council Small Business Survival Index 2007, Rhode Island ranks a dismal 48th, that is, fourth worst among the states and District of Columbia in terms of its public policy climate for entrepreneurship. To sum up, Rhode Island imposes very high personal income, corporate income, corporate capital gains and property taxes, an individual alternative minimum tax, a state death tax, a high state minimum wage, a very poor rating on eminent domain legislation, high unemployment and gas taxes, high electricity costs, and very poor rankings on government spending measures and highway cost effectiveness.
It should be no surprise then that the state currently faces rough fiscal waters. As reported in the November 17 New York Times, the state faces a $450 million budget gap next year.
Interestingly, Gov. Donald Carcieri is beginning to address this problem from the right direction. He is starting to reduce the bloated government payroll. According to the story, 153 workers got termination notices last week, another 330 were informed that their jobs would soon be gone, 168 contract employees were laid off on November 1, and 500 positions are going via retirement and attrition.
Of course, some people just don’t get it. An analyst from a liberal group in the state blamed the current woes on “a lot of tax cutting.” The clear implication – raise taxes.
In reality, the last thing that Rhode Island needs is even higher taxes. The state’s current burdensome levels of taxation have made it a hostile place for entrepreneurs to start up and/or run a business.
Rhode Island needs much smaller government, far lower taxes, less regulation, and therefore, greater freedom and opportunity for entrepreneurship to flourish – and with it, the state’s economy and private sector jobs.