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David Evans: I’ll stay, unless R.I, hikes taxes again

01:00 AM EDT on Tuesday, April 8, 2008

Regarding the March 31 letter “Handouts for Ocean State über-rich”: For starters, I find it wrong and grossly misleading to use the term “handout” to describe letting taxpayers keep more of what they’ve earned. That suggests that the state has more of a right to our income than we do.

My background is that of an engineer, inventor, and lately, business owner. Our company manufactures electronic equipment and now employs 20 Rhode Islanders. The company started in 1996 and is located in East Providence. The company was built upon lots of sweat, long hours of hard work, and great personal financial risk.

Some in Rhode Island place great faith in tourism, casino gambling, and the like, but those activities ultimately depend on someone’s producing something useful. Manufacturing is the most important producer of real wealth we have.

When the General Assembly, not the governor, proposed the alternative flat tax, it was in recognition of these simple facts: 1) Manufacturing employment is critical to this state economy, 2) the neighboring states have lower tax rates, 3) business owners locate where they can maximize profits, and vote with their feet.

It is expensive to do business here. I live in Massachusetts, whose income-tax rate is a flat 5.25 percent. The maximum tax rate in Rhode Island is 9.9 percent. Consequently, yearly we pay many tens of thousands of dollars more in personal- and business-income tax as a result of our business being located in Rhode Island. The difference amounts to much more than the annual cost of rent, property taxes, and utilities for our factory.

I can assure you, it would make great sense to move a mile up the road into Massachusetts, and we could do it without inconveniencing a single employee. Indeed, it would be easier for me personally.

Lucky for Rhode Island, with the passage of the alternative flat tax, we won’t be moving. At the end of a transition period, still a few years off, the income-tax rate here will be similar to that in our neighboring states, and the motivation to locate elsewhere will be eliminated. We’re willing to wait, and trust the Assembly will keep up its end of the bargain.

DAVID EVANS

Seekonk