| | Advanced Search

 

Rhode Island Foundation to Offer $25,000 Grants to Composers—The Rhode Island Foundation will offer MacColl Johnson…

Sojourner House Safety and Financial Issues - See the Breakdown—Sojourner House Safety and Financial Issues - See…

NEW: Mollis Questions McKee’s 38 Studios Connections—Secretary of State Ralph Mollis has issued the…

Carol Anne Costa: Say it Isn’t So, Renee—Costa: Say it Isn't So, Renee

LISTEN: Investigation: Convicted Sex Offender Lives Near Home for Battered Women—A home for battered women in Woonsocket is…

NEW: Red Sox Trade Lester, Gomes for Home Run King Yoenis Cespedes—NEW: Red Sox Trade Lester, Gomes for Home…

Worcester Art Museum Announces Free Admission During August—To celebrate the last month of summer, the…

Gregg Allman Coming to Newport Aug 10 – Talks to GoLocal—A true music legend, and one of the…

31st Annual Black Ships Festival Gala—The Japan-America Society and Black Ships Festival of…

BankRI Launches Seven Week Food Drive—Bank Rhode Island (BankRI) will host a 7-week…

 
 

Chafee Proposes Lower Corporate Tax Rate

Thursday, January 17, 2013

 

Perhaps the crowning achievement of his fiscal year 2014 budget, Governor Lincoln Chafee announced at last night’s State of the State address that, under his plan, Rhode Island would lower its corporate tax rate from nine percent to seven percent over the course of the next three years.

It’s a move that is expected to improve Rhode Island’s standing nationally from 43rd overall to 26th but, potentially more important, it would allow the Ocean State to fare better when compared to its New England neighbors as it would have the lowest corporate tax rate in the region.

Chafee’s proposal would front-load the bulk of the change as a one-percent decrease would automatically kick in for FY2014, making the rate eight percent, before gradually declining to 7.5 percent in 2015 and seven percent overall in 2016 and beyond.

The decision was widely heralded by many in attendance in the General Assembly and local business and economic experts.

“This rate has very little effect on small businesses and sole proprietors which make up over 90 percent of the businesses in Rhode Island,” said Edward M. Mazze, a professor of business administration at the University of Rhode Island. “Yet, it is still a good idea since it tells the world Rhode Island is open for business.”

“I also liked the proposed change to the corporate tax rate, even though this is not necessarily the best way incentivize business expansion because it focuses only on the rate and not on deductions,” said University of Rhode Island economist Dr. Leonard Lardaro. “It should, nonetheless, improve our national rankings.”

Under Chafee’s plan, the revenue lost by the shift to seven percent would be made up by eliminating the enterprise zone tax credit at a cost of $300K and by phasing down the value of the Jobs Development Act rate reduction by 25 percent in the 2014 tax year and by 50 percent after that. That should save approximately $2.4 million.

Some wonder if Chafee’s proposal goes far enough.

“The Governor is exactly right in his assessment that the corporate tax rate must be lowered to promote corporate activity,” said Rhode Island's GOP Chairman Mark Zaccaria. “In fact, doing so will increase overall state revenues.

So why wait three years? And why only go down two points?”

By and large, however, most supported the move and the positive impact it is expected to have on the standing’s business standing nationally.

“I think it’s important that we definitely look at the corporate taxes,” said House Finance Committee Chairman Helio Melo. “That’s something that we need to focus on. How we get there, we might have different ways but at the end of the day I feel that the results will still be the same and I think the governor’s numbers are very realistic and they can be attained.” 

 

Related Articles

 

Enjoy this post? Share it with others.

Comments:

Remember how he car tax was supposed to be phased out, or how a cap was put on property taxes only to be circumvented without much trouble? We're not good at phasing, just lower the tax in one swoop and be done with it.

Comment #1 by David Beagle on 2013 01 17




Commenting is not available in this channel entry.