Building Back Delaware’s Competitiveness: It Starts With Our Elected Officials
By: Jane Brady, Chair, A Better Delaware
Delaware is proud of its role in forming our democracy – “The First State.” For many years, which was true of Delaware’s social and economic standing in our country as well. Sadly, those days seem to be behind us. We are ranked 47th among states in the Nation’s Report Card for our ability to educate our students. They are simply not learning in the current structure of public education. They can learn. We know that because many private, charter and parochial schools in Delaware create results that far exceed public school student performance, many times with students who literally live in the same neighborhood as those who are failing.
We rank 38th in our Economic Outlook, according to the ALEC/Loffler State Economic Competitiveness Index, and 50th in several categories, including our state liability system costs and our right to choose the terms of our work environment. All the categories measure our economic freedom, that is, the ability of each of us to choose how we spend our own money, by measuring the burdens that taxes, fees and bureaucracy place on our options. We rank in the 40s with regard to our personal and corporate income tax rates, putting us in the top 10 worst in the nation for that tax burden. Our overall ranking would probably be worse, but, ironically, because we have no sales tax, we are ranked No. 1 for that category. Of course, that ignores all the “hidden” excise taxes, gross receipts taxes transfer taxes on real estate, cars, boats, etc. and fees the state and cities impose that exact a tremendous tax burden. These fees and taxes affect the lowest income citizens the most, because, unlike an income tax that increases as your income increases, they cost the same no matter what your income.
So, what are our state leaders doing to create a more worker-friendly, more competitive work environment for our citizens? Well, the report is not particularly favorable, especially for those low-income families. Although the proposals include increasing the state income tax burden for higher earning families, they also include increasing fees, such as for state parks, tolls on the highway and increasing taxes on a gallon of gasoline.
What should we be doing to make our state more competitive, to bring good paying jobs to Delaware and to improve our citizens’ economic freedom?
We should eliminate the gross receipts tax, which is a burden for everyone who sells or buys a product in Delaware. The small business owner who sells anything from a handmade piece of jewelry to a haircut, has to pay a tax on all the money they bring in – before deducting the costs of rent, supplies and employees. The customer pays more because the owner has to pay that tax. Then, the owner has to pay an income tax on any profit they make. And picture that process back up the supply chain. The business or individual who provides the supplies to the owner of the small business also has to pay that tax on what they sell, then on whatever profit they make, and the business or individual who provides the raw materials for the supplies has to pay tax on the sale of those raw materials and then tax on whatever profit they make,….you get the idea. Give our economy some freedom – many states have done it – we would not be first here either – eliminate the gross receipts tax!
We should spend our money well. The previous budget authorized the expenditure of $250,000 to support restriction of cell phones in schools. We don’t know yet exactly how the money was spent, or if it was effective, but the new budget calls for another $500,000 for more of the same. Let’s just have all the kids put their phones on the table in the front of the classroom when they enter, like they do in other schools, and be done with it. Or, if a student has their phone out, confiscate it and call it contraband (like Smyrna does, apparently) and return it after school. And, with student performance so dismal in so many schools (17 of our public schools in Delaware have a student performance at grade level in Math and English of below 10%) let’s make learning a priority in our public schools.
There are many other initiatives Delaware should undertake. We should reduce the bureaucratic and tax burden on starting a business. We should reduce the corporate tax rate to keep and increase the businesses that choose to incorporate here. We should improve our underlying data systems to assure accountability in how the State uses and tracks our tax dollars, creating efficiencies and reducing errors, fraud and waste. Our vision should be hard set on the Number 1, and we should all work hard, and demand our government support our effort to get back to being “The First State.”
Jane Brady serves as Chair of A Better Delaware. She previously served as Attorney General of Delaware and as a Judge of the Delaware Superior Court.