Welcome to Rhode Island by Taber Andrew Bain is licensed under CC BY 2.0
For decades, one-party control by Democrats in Rhode Island has enabled unchecked government growth and spending. With Democrats having total legislative control since 1959 and the governor’s office since 2014, fiscal restraint has taken a backseat to ever-growing budgets. Now, to plug yet another hole in their budget, Democrats are turning to their typical playbook: raising taxes instead of reining in wasteful spending.
Chief among these tax hikes is the creation of a new surcharge on non-primary residences worth over $1 million, unofficially branded as the “Taylor Swift Tax.”
The nickname stems from pop star Taylor Swift’s 2013 purchase of a $17 million home in Watch Hill, Rhode Island. The high-profile sale drew national attention to the state’s luxury coastal real estate market and highlighted a broader shift in Rhode Island’s housing market. Under Democrats new proposed tax, Swift’s property, classified as a non-primary residence, would be subject to an additional $136,000 in annual property taxes.
While framed as a tax on the wealthy, the tax could have far-reaching implications for retirees, seasonal homeowners, and middle-class families who happen to own valuable inherited or second properties. Democrats are gambling with the future of the state’s tourism economy by pushing for these added taxes. Tourism comprises 13.7% of private sector employment, and the real estate sector comprises the largest portion of the state’s GDP. Compared to the rest of New England, Rhode Island has a stronger reliance on tourism and real estate for economic activity. If this partisan tax policy is implemented in Rhode Island, there is tremendous potential for wealthy property owners to sell their properties in the Ocean State in favor of somewhere else. This outflow of wealth and investment in Rhode Island’s most valuable property areas would significantly hamper the state economy and plunge the legislature into an even larger fiscal imbalance.
This is not the only egregious tax hike in this bill. Gas taxes are increasing while sales taxes are expanding to new transactions, including parking. Perhaps one of the most concerning tax hikes in this bill is the 63% increase in the real estate conveyance tax. In conjunction with the “Taylor Swift Tax”, existing and potential homeowners will surely feel the pressure of a cripplingly expensive housing market. The Rhode Island Association of Realtors is sounding the alarm because of the drastic negative effects this will have on the housing market for all Rhode Islanders, not just the wealthy. The tax hikes in this bill are so absurd that even left-wing Governor Dan McKee chose not to sign the bill, blasting fellow Democrats for going too far. He wouldn’t veto the bill, but he surely did not want his name associated with it.
Rhode Island Democrats don’t need to write their own breakup song with wealthy property owners. If they are really worried about fiscal responsibility, they should be focused on cutting spending and finding ways to incentivize further investment from wealthy individuals and businesses. There’s no need for bad blood between the government and its constituents.
