SBANE RI Press Release
SBANE RI Urges the General Assembly to Improve the Business Climate and Not Raise Taxes
The Smaller Business Association of New England (SBANE) urges the leaders of the General Assembly to pass legislation that focuses on improving the business climate in Rhode Island and not increase taxes which could push the State into a further recession. SBANE is particularly concerned about a number of proposed bills that have been submitted that would reverse the personal income tax reform legislation that was passed unanimously by both houses in 2010 and is effective for the 2011 tax year.
The 2010 personal income tax reform legislation was an important step in making our tax system that was rated by almost every rating agency as being one of the worst in the nation. It was particularly bad for small businesses that filed as pass-though entities that paid their taxes at the high marginal personal income rates that topped out at 9.9%. When compared to Massachusetts at 5.3% (recently dropped to 5.25%) and Connecticut at 6.5%, Rhode Island was completely non-competitive. The change to a top marginal rate of 5.99% (in exchange for the elimination of deductions and tax credits) sent an important message to the rest of the country that Rhode Island was serious about changing its image and was going to be competitive in building a better business climate.
To witness some members of the RI House of Representatives submit proposed legislation in H 7729, which would bring back the 9.9% tax bracket for incomes above $250,000 not only reverses tax reform before the results of the first year of implementation is completed and tabulated, is extremely questionable. It puts our tax system in a worse position than it was before tax reform was enacted, because it would have the higher marginal tax rates without deductions and credits. What kind of message would Rhode Island be sending to the rest of the country? Basically we would be telling the world that you cannot trust Rhode Island to maintain a consistent dependable structure for even one year. Why would any business risk moving into Rhode Island, and why wouldn’t those that could move seriously consider moving. To see the number of representatives that have signed on as co-sponsors of this legislation is astonishing and disturbing. Do these representatives have any idea of the potential negative impact that this legislation would have on our already dismal business climate ratings?
The leadership of both the House and the Senate has taken some serious and courageous steps in recent years to turn around the national image of a negative business climate in Rhode Island. They have passed personal income tax reform, pension reform, and some regulatory reform initiatives. They have also worked hard to make cuts in government expenditures that will hopefully make the state government more efficient. We applaud their efforts recognizing that this is a long term process to change decades of problems. It is imperative that this process continue and not take steps backward. We urge all of the members of the General Assembly to work together in improving the business climate in Rhode Island so that we can recover from this great recession that has hit Rhode Island particularly hard. We need a consistent, long-term economic plan that encourages the growth of business and the creation of good paying jobs for our citizens.
For more information contact: Grafton (Cap) Willey: (401) 272-9080 ext 213
Smaller Business Association of New England (SBANE)
March 1, 2012.