Based on U.S. Census Bureau data, Rhode Islanders’ personal income has climbed at a rate higher than that of the national average. In the 1999 edition of its “Tax and Spending Data Book,” the Rhode Island Public Expenditures Council – using U.S. Census Bureau data compiled from 1995 to 1996 – reports that the average personal income in Rhode Island climbed 7.9 percent, above the national growth rate of 6.9 percent. Such growth placed the state 12th highest in the country in terms of per capita personal income growth.
But the numbers also show that Rhode Island continues to rely heavily on its property taxes – more so than most other states.
RIPEC’s annual report sheds light on state and local tax burden, property taxes, individual income taxes and other expenditures.
Among the report’s conclusions:
In Rhode Island 11.5 percent of personal income was collected by state and local taxes compared to the national average of 11.3 percent. The state ranked 20th highest among the 50 states in the percentage of personal income collected by state and local governments. Rhode Island’s ranking is an improvement from 14th place in fiscal year 1995, when state and local taxes collected represented 12 percent of personal income.
Rhode Island’s total tax collections were $114.85 per $1,000 of personal income, 1.6 percent above the national average of $112.99, placing Rhode Island 20th highest, a drop from 14th place in 1995.
On a per capita basis, state and local taxes in Rhode Island were $2,738. This was 5.4 percent above the national average of $2,597 – ranking Rhode Island 13th highest in the country, down from 12th in 1995.
The report offers the following conclusions regarding property taxes:
Rhode Island’s property tax collections were $48.75 per $1,000 of personal income. This was 41.9 percent above the national average of $34.35, making Rhode Island 5th highest among the 50 states.
On a per capita basis, Rhode Island’s property tax collections were $1,162. This was 47.3 percent above the national average of $789, also placing Rhode Island at 5th highest in the country.
“It was the one category where we did not see any change from 1995 to 1996,” said Robert Carey, RIPEC’s director of research.
In terms of individual income taxes:
Rhode Island’s individual income tax collections were $24.60 per $1,000 of personal income. This was 2.2 percent above the national average of $24.08, placing Rhode Island 28th highest among the 43 states that collect a personal income tax.
On a per capita basis, Rhode Island’s individual income tax collections were $586. This was 5.8 percent above the national average of $554, making the state 20th highest in the country.
The RIPEC report also provides information on expenditures by state and local governments. Among the findings are:
State and local spending per $1,000 of personal income in Rhode Island totaled $236.51. This exceeded the national average of $229.20 by 3.2 percent. Rhode Island ranked 20th in state and local government spending per $1,000 of personal income, compared to a ranking of 14th the previous year.
State and local government spending as measured on a per capita basis totaled $5,638 in Rhode Island. Using this measure, Rhode Island’s spending was 13th highest among the 50 states and 7 percent above the national average of $5,268.
Carey said that a nearly 8 percent growth in personal income was substantial when compared to other states. But the RIPEC numbers clearly show that Rhode Island continues to rely on its property taxes. Property taxes, according to RIPEC, continued to be the most significant source of revenue for Rhode Island governments, with $48.75 per $1,000 of personal income going toward property taxes, nearly 42 percent above the national average.
Carey said that an ideal scenario would find sales, income and property taxes distributed somewhat equally.
“The general conclusion is that the state as a whole relies more heavily on property taxes than other states, and continues to do so,” said Carey.