Two-tiered tax plan…
My Turn: Nick Cicchitelli: Two-tiered tax plan needs more study
Providence, R.I., Providence puts a target on the East Side’s back. It’s a perennial fact.
The East Side regularly contributes roughly half of the city budget. In recessions, property values remain considerably more stable on the East Side than elsewhere. After the financial crisis, there was a major crash in property values around the city. The formula in place – the legal obligation to meet the city’s share of the municipal budget – effectively shifted the bulk of the tax burden to homeowners on the East Side. Residents on the East Side saw an overnight increase upwards of 75%, without prudence, fairness or warning. With a recovered property market, tax bills went up around the city in the latest revaluation, causing the recent stir.
Last summer, there was a last-minute attempt to institute a tiered-tax system. While the City Council did not have a lot of time to consider a response to Mayor Jorge Elorza’s budget, such a major change should have been undertaken with a deliberative, transparent and publicly-responsive process. Needing the General Assembly’s approval, the move ultimately failed in the House of Representatives for those reasons.
Some call the attempted tiered-tax scheme “progressive.” More practically, though, I argue, it would be a flat tax with a qualifying penalty. Make no mistake, there is only one reason why the council chose $350,000 as the benchmark for the owner-occupied exemption reduction, and it is geographic and replete with problematic assumptions that go with it.
The logic behind that benchmark (or the broader look to the East Side) is that, because there are people on the East Side who are willing and able to pay more, then that means the whole East Side can and ought to pay more. It’s a false logic.
Ward 1 is full of retirees, public servants and people on a fixed income.
Progressive taxes are designed to shift cost-of-living expenses away from those who can least afford them onto those who can better afford them. That scheme did not take such circumstances into account. Rather, it uses the weak proxy of a property’s value as a means to determine the occupant’s ability to pay.
All three candidates in the race for Ward 1 are talking about taxes. Nobody likes paying them. Tax reform is not an issue that can be dealt with in platitudes or lip service. Consulting my background in social science and experience in business management, here is my opinion on what the process needs to look like. We need to:
-Conduct robust comparative analytics of the sample of similar, small, postindustrial cities with legacy debt and resource shortages.
-Weigh econometrics, cost-benefit and cost-effectiveness analyses, and other political economic methodology.
-Interpret the data, adjust for Providence-specific characteristics, and package the information in a digestible manner that’s fit for discussion.
-Distribute information in a user-friendly manner, with a generous and considerate timetable.
-Incorporate feedback from stakeholders.
-Offer the vetted option for ordinance consideration.
To be perfectly candid with you, the answer lies in political economics, and not the promises of political hopefuls or amateur assessment. And even though I have substantial background and investigation in related fields, I do not pretend to be an expert in municipal taxation reform. But I am in a position to assist with the list above.
We need City Council members who understand the big picture, who have more than just recent experience in issue advocacy, and who can navigate the storm of lobbyists and interests in City Hall.
Nick Cicchitelli, self-employed and in real estate management, is a candidate for the Ward 1 seat on Providence City Council in the March 3 special election. He is president of the Fox Point Neighborhood Association, and serves on the Board of Directors of the American Red Cross, chairing its Philanthropy Committee. He holds masters’ degrees in political science and public administration from the University of Rhode Island, and a bachelor’s degree in political science from the George Washington University.