Now that the General Assembly has adjourned for the year, a look back on some of its actions reveals a mixed bag of accomplishments.
The General Assembly passed some tax reform by lowering the corporate tax rate from 9 to 7 percent and by capturing taxes on out-of-state corporate activities related to their in-state business.
The legislators raised the estate tax threshold to $1.5 million and amended the existing law which recaptured all of the tax — not just the overage if an estate exceeded the threshold amount. Some poverty groups claim that there is no proof that people flee the state because of the estate tax. Any lawyer or CPA who does estate work can regale the disbelievers with numerous stories of clients who left and brought their philanthropy with them.
There were also modest proposals for job training. It remains to be seen whether these initiatives are efficacious or whether the grants go to the same crowd of politically-connected people who do not make a dent in employment training.
Elimination of the master lever. ‘Nuf said.
The Solons capitulated to S&P by including the next payoff to 38 Studio bondholders. In the Sunday New York Times business section, journalist Gretchen Morgenson wrote about the numerous lawsuits initiated by pension funds that trusted the rosy credit ratings of S&P and Moody’s. The disconnect, of course, is that these very same pension funds continue to rely on these credit agencies for further purchases. The defense of these credit ratings entities is that they are protected under the first amendment since all they are doing is free speech by merely “offering an opinion” and nothing more. This is quite an eschewal of their expertise. The pension funds, of course, argue that these companies are liable for malpractice just as accounting firms and other experts in this field are.
Perhaps, as the article suggests, pension funds could vote with their feet by using the other, smaller 7 ratings agencies or by doing their own credit analysis. At a minimum, our congressional delegation should be leaning on the Securities Exchange Commission (SEC) to promulgate the rules proposed 3 years ago to curb the conflicts of interest by these credit agencies.
In a sop to unions, the Democrats, in particular, on Smith Hill derailed teacher evaluations in any meaningful way. Similarly, while some fine-tuning was apparently necessary regarding the waivers for students who failed NECAP or other benchmark exams in order to graduate, the Democrats punted the benchmark down the road for at least 3 more years. In effect, they chose to step in and override the expertise of the professionals at the education department. This is a very poor precedent.
The increase of the minimum wage from $8 to $9 may or may not ultimately be a good step. My sense is that a one dollar addition will not cause the Rhode Island economy to collapse. As I mentioned in a prior column, the policy issue as to whether minimum wage is supposed to be a livable wage is a debate long overdue.
So, reader, there you have my assessment. What do you think?