The Cautionary Tale That Is The Giving Tree

There is a famous children’s book called The Giving Tree. Written by Shel Silverstein and first published in 1964, the story is a parable about a young boy who befriends a tree. As the boy grows up, he keeps asking the tree for things – first apples to sell for money, then branches to build a house, and finally, the trunk to build a boat.

The boy keeps taking and taking…

The tree, out of love, gives everything it has.

It’s a wonderful story that sounds eerily like how the state and the capital city are dealing with some critical issues. The fable is either a moving tale of a parent’s unconditional love… or a harmful, toxic depiction of a one-sided relationship promoting enabling behavior and unhealthy self-sacrifice.

The key lies in the interpretation, which shows how deeply divisive working through controversial issues can be, especially if you ignore the long-term ramifications. We have seen a steady stream of new taxes from parking to real estate, higher fees, and other proposals to squeeze more revenue from businesses, residents, and tourists. Recently, the “Taylor Swift tax” was enacted, imposing a surcharge on second homes of wealthy homeowners valued at over $1 million. The tax rate is set at $2.50 for each $500 of assessed value above $1 million, which for Swift is
$130,000 annually.

Wealthy second homeowners likely infuse proportionately more money into the state.  If Swift does, in fact, get married here, the event could bring in over $10 million in other revenue that directly supports local businesses!

Progressives have targeted the wealthy and are boxing in the Democrats. And now, Gov. Dan McKee is pushing a three-percent surtax on income over $1 million, which would raise the state’s top rate to 8.99 percent. This would eliminate one of Rhode Island’s few advantages over neighboring Massachusetts, which boasts a nine-percent top rate on millionaires – and they’re losing these residents at
an alarming rate.

And, add to that the fact that only Oregon has a lower estate tax threshold! It’s even worse in New York, California, and Washington, where the exodus of the very wealthy is causing more pain than gain. RI can’t afford to lose high-income residents. This could profoundly impact funding for schools, infrastructure, and social services. Charity is also a huge issue, with so many non-profits competing from a smaller pool to be able to fulfill their vital missions. It’s not just the tax.  It’s the message. “Tax the rich” is a very shortsighted rallying cry because it’s much easier for them to leave.

In Providence, the city council is intent on passing a rent control ordinance aimed at capping annual rent increases at four-percent for many rental units to enhance affordability. Included in the proposal, rents would remain regulated even when an apartment turns over, and the establishment of a nine-member board comprised of city staff, tenant advocates, and landlord advocates to oversee the new regulations. While Mayor Smiley opposes the ordinance, he may not have enough council support to override his veto.

Rent control does not work. Period. It hurts small landlords, especially minorities who have tried to use real estate to make their lives better. We can only imagine how the “fairness and objectivity” of the oversight board will work. Just look at the disability pensions in Providence as a guide.

And now the mayor, with apparent council support, is proposing to use funds from property sales to provide emergency rental assistance grants to those tenants. The plan also includes funding for eviction defense, housing repairs, and landlord-tenant education supported by a $25 million bond to create more income-restricted housing. We are supportive of the rental assistance grants. This at least provides an obvious benefit to those most in need, but only if there are strong guardrails in place to prevent misuse and fraud.

At the end of the story, the boy (now a very old man) returns. The tree says sadly, “I am sorry, but I have nothing left to give you... I am just an old stump.” The old man says, “Okay, I’m just tired.” The tree suggests, “You can still sit on my stump. It’s very comfortable.” And soon both he and the treeare happy.

The state and the city need to balance what’s fair without paying a higher price by forcing people to leave, only to end up sitting on a stump with nothing left to take. Before the state adds another tax on the wealthy or takes a flyer on rent control or other quick-fix solutions, let’s think through the unintended consequences of these decisions. They need to be fair to all sides to ensure a likely
happy ending for all.