THE GOOD SHIP Rhode Island is listing ever deeper into deficits, making it agonizingly hard to get the state righted, safe above water.

New numbers show that state tax revenues in July and August fell far below what lawmakers budgeted.

Cigarette-tax proceeds were part of the disappointing results. That may be seem surprising, since the state boosted taxes on cigarettes in April by a whopping dollar, to $3.46 a pack — hammering, in particular, lower-income folks who in disproportionate numbers find solace in the nasty addiction.

After hiking the tax, the politicians expected (or said they expected) to reap $26.3 million in cigarette taxes over July and August. Instead, they took in $23.5 million — up from last year’s $20.5 million, but still $2.8 less than forecast.

In other words, the pols hiked cigarette taxes by 40 percent, but only increased revenues by 15 percent, far below projections.

This is only a tiny drop in the great sea of state deficits, which could reach a terrifying $1.2 billion, according to former House Finance Committee member Carol Mumford. But the story of the cigarette tax may be instructive.

The simpler minds on Smith Hill preach a static model of economics. Raise taxes by 40 percent, get a big windfall.

But real life does not work that way. People act out of perceived self-interest when it comes to their own money.

Higher taxes change people’s behavior.

Instead of shelling out the extra dollar, many Rhode Islanders seem to be picking up cheaper cigarettes in neighboring states.

Once there, they may be getting their gasoline, candy bar, milk or lottery tickets at the out-of-state convenience store. (Thus, that 40 percent hike may turn out to be reaping even less than 15 percent, since it could be depleting tax revenue from other sources.)

Some people may even be quitting their habit rather than pay the tax — not a bad thing, except for the state’s bottom line.

Such behavior is not confined to Rhode Island. It is universal.

I was once editor of a Massachusetts newspaper on the New Hampshire border. The Granite State’s lack of a sales tax effectively killed off retailers on the Bay State side, since people were willing to delay their purchasing until they got just over the line, in Salem, N.H., and other border communities.

Similarly, jobs and communities boomed in southern New Hampshire as people fled “Taxachusetts.”

Rhode Island’s economic troubles are the cigarette tax writ large.

Its high taxes and regulatory climate render it uncompetitive with neighboring states, never mind those in more robust regions of America. The politicians create a vicious circle, as businesses and people move out for less punishing locations, and officials try to make ends meet with ever-higher taxes (particularly at the local level).

All this might seem the barest common sense, but many legislators and local officials do not seem to grasp this basic economic concept. They think that hiking taxes means hiking revenues. They fail to even consider the long-range costs in fewer jobs, depleted opportunities for citizens, stagnant tax revenues, less civic vitality — ultimately, less money to spend on government services that help the poor and provide a civilized environment. You want to maximize taxes, in other words, without concurrently driving out business and ruining the economy.

All this is a big reason Rhode Island — despite its superb advantages of location, beauty, cultural amenities, ocean research and institutions of higher education — has the second-highest unemployment rate in America.

Some in the General Assembly and the social-services industry still scream about the need to “tax the rich” more in Rhode Island. That might be a fine idea if the rich would just sit still and take it. But, as relatively free agents, they have a tendency to pick up and leave when things get too bad.

Tax the rich too much, and you get fewer rich paying taxes — and you need those people, since they pay the lion’s share of society’s costs and invest in the businesses that create jobs.

I think House Speaker William Murphy and House Finance Committee Chairman Steven Costantino get it, but I wonder how many of their colleagues do.

If we truly do want to help the poor — rather than savor the emotional high of taking the rich down a peg — we need to strike a cool-headed balance: Tax people as much as possible without destroying economic vitality and eroding tax revenues.

Whatever wishful thinking politicians might want to engage in, the iron laws of economics (based on humans acting out of self-interest) ultimately catch up. High-tax Rhode Island is now suffering the horrors of high unemployment, frightening budget deficits, and bleak prospects.

A new nationwide survey by HIS Global Insight predicts when 50 major American markets will come out of recession. Two cities in low-tax Texas — Austin and San Antonio — will be first, followed by Dallas and Houston in 2011. At the very bottom of the list, not expected to struggle out of recession until 2015, are five sorrowful places: Cleveland, Detroit, Hartford, Milwaukee and Providence.

You don’t need to smoke a cigarette to know which way the wind blows.

Edward Achorn is The Journal’s deputy editorial-pages editor ( eachorn@projo.com)