How Rhode Island Revenues Compare – 2007 Edition

On Monday, July 9, RIPEC will release its annual analysis of How Rhode Island Compares, a report which examines the State’s relative ranking position on various taxes and other revenues.  The report uses state and local government finances compiled by the United States Bureau of the Census for fiscal year 2005, the most recent year for which data are available.  Tax collections are examined on both a per capita basis and per $1,000 of personal income.

Rhode Island continues to have the highest tax burden of its neighboring states, ranking 7th highest out the fifty states.  By comparison, Connecticut ranked 11th and Massachusetts ranked 34th.  Further, the data show that Rhode Island continues to maintain its high tax status in the rankings. In FY 2004 the Ocean State was 7th highest, and was 14th highest in FY 1995.  

As in previous years, Rhode Island’s over-reliance on the property tax is the primary driver behind the State’s ranking.  In FY 2005 the State ranked 6th highest in the nation for property tax collections, one position below FY 2004 and FY 1995 rankings.  Property tax collections account for 40.0 percent of all state and local revenue tax collections compared to the national average of 31.0 percent. Property tax collections in the State are 44.0 percent higher than the United States average when measured per $1,000 of personal income. In contrast, Connecticut ranked 8th highest and Massachusetts ranked 16th highest for property tax collections.  

The only category in which Rhode Island did not have the highest tax collections compared to its neighboring states was individual income tax.  The State ranked 21st highest, while Massachusetts ranked 5th highest and Connecticut ranked 13th highest in the country.

Additional findings include:

  • In contrast to Rhode Island, both Massachusetts and Connecticut declined in the national rankings for total state and local tax collections, falling from 23rd to 34th , and 7th to 11th respectively between FY 1995 and FY 2005.  
  • Rhode Island’s total state and local tax collections increased from $117.32 per $1,000 of personal income in FY 1995 to $122.68 per $1,000 of personal income in FY 2005.
  • Total state and local tax collections declined from $112.90 in FY 1995 to $107.31 in FY 2005 in Massachusetts. Collections in Connecticut declined from $122.64 per $1,000 of personal income in 1995 to $119.17 per $1,000 of personal income in FY 2005.
  • All three states were above the national average of $24.80 per $1,000 of personal income for individual income tax collections in FY 2005. Massachusetts ranked the highest, with $36.16 per $1,000 of personal income, and Rhode Island ranked the lowest out of the three states, with collections of $27.21 per $1,000 of personal income.
  • Although property tax collections in Rhode Island slightly declined from $50.67 per $1,000 of personal income in FY 1995 to $49.60 per $1,000 of personal income in FY 2005, the State still ranks 6th highest in the country in FY 2005.  
  • Both Massachusetts and Connecticut went slightly up in the rankings, to 16th highest and 8th highest property tax collections in the country respectively, between FY 1995 and FY 2005.  
  • Sales tax collections in the Ocean State ranked as 37th highest in the country in FY 2005, capturing $23.01 per $1,000 of personal income, 15.0 percent below the national average.
  • Rhode Island ranked higher than the two neighboring states for general sales tax collections. In FY 2005 Massachusetts collected $14.52 per $1,000 of personal income (44th highest) and Connecticut collected $20.61 per $1,000 of personal income (38th highest).
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