State Reps Want to Know Where Tax Breaks Went
Thursday, January 27, 2011
The state has given out $82 million in tax breaks—and now a group of state reps want to know how Rhode Island benefited.
To get some answers, state Rep. Donna M. Walsh is cosponsoring legislation with Rep. Jeremiah T. O’Grady, D-Lincoln and Pawtucket, that requires the disclosure of information about the salaries and benefits of jobs created by companies receiving any one of six tax breaks from the state.
“Without information about how many jobs have been created, how much they pay and how much their benefits are worth, we don’t really have any way of knowing whether these tax breaks are worthwhile. The idea behind them is that they’ll pump much more money into our economy than the state is losing on tax revenue, but we still don’t have any evidence to show whether they’re accomplishing that goal,” said Walsh, D- Charlestown, Westerly, New Shoreham and South Kingstown.
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The bill would amend legislation passed in 2008 that was meant to provide the General Assembly with information about whether the tax breaks were actually resulting in the good jobs they were supposed to create.
However, federal regulations prevented the Department of Labor and Training from releasing information about wages and benefits. To avoid that constraint, the new legislation would shift the reporting requirement to the Division of Taxation.
So far, the state has given out $49.1 million in tax breaks in 2008 and $33.1 million in 2009, for a total of $82.2 million. Walsh wants lawmakers to know whether the tax breaks are really creating enough good jobs to justify the cost to the state.
The legislation was introduced on Jan. 19 and is also cosponsored by Rep. Teresa Tanzi, Rep. Larry Valencia, and Rep. Lisa P. Tomasso.
Where did the tax breaks go?
These are the six tax incentive programs that the state offers, along with their current tax credit totals, as of December 2010.
Jobs Development Act: $21.3 million
RI Economic Development Corporation Project Status: $9.4 million
Motion Picture Production Tax Credits: $8.1 million
Distressed Areas Economic Revitalization Act — Enterprise Zones: $715,187
Incentives for Innovation and Growth: $200,000
Mill Building and Economic Revitalization Act : $0 (repealed in fiscal year 2010)
Over the past three years (fiscal years 2008-2010), 91 percent of all the credits ($122 million) went to only 10 taxpayers. The largest three recipient of credits were:
1. CVS Pharmacy: 43 percent ($52.2 million) of the credits reported.
2. FMR Corporation (Fidelity Investments): 15 percent ($18.6 million) of the credits reported.
3. Brotherhood Productions: 13 percent ($15.6 million) of the credits reported.
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