Posted by: Providence Chamber of Commerce | April 1, 2011

Yesterday’s testimony against tax hikes!

Chamber leaders spent the afternoon testifying before the Senate Finance Committee in opposition to proposed tax changes that would hurt our business community. The message delivered was clear and sobering.

Today, states compete fiercely for businesses and jobs.  Most states are implementing reform to attract business and spur long term job creation.  The elimination of the Jobs Development Act and the implementation of combined reporting are inconsistent with the reform measures adopted by other states to achieve these objectives. The Chamber views the Governor’s proposal as detrimental to business investment and job creation. 

A strong business climate and a strong business community will make the potholes disappear! Count on it.

The Jobs Development Act has the potential to differentiate Rhode Island when competing nationally for business; therefore, its continuation and promotion is vital to sustain and fuel Rhode Island’s economy.  The Jobs Development Act is sound tax policy because corporations earn a benefit only after creating and maintaining quality Rhode Island jobs that provide healthcare coverage and retirement benefits.  Additionally, recipient corporations stimulate significant additional job creation, economic activity and tax revenues by creating demand for vendors, suppliers, services providers, construction contractors, hotels, restaurants, gas stations and numerous other businesses.  A fair assessment of Rhode Island’s return on this expenditure must take into account not only the jobs directly created, but also the broader economic impact that results from a recipient corporation’s choice to invest in and expand its business operations in Rhode Island.  Ultimately, the elimination of the Jobs Development Act will have far reaching negative effects on the Rhode Island economy.  

Similarly, the implementation of combined reporting would be detrimental from an economic perspective.  Studies repeatedly show that combined reporting does not create jobs and is administratively burdensome, expensive to administer and unpredictable from a tax revenue perspective.  Recently, the Maryland Business Tax Reform Commission, after analyzing the impact of combined reporting over a 3 year period, recommended that Maryland not adopt combined reporting due to its volatility and ultimately negative impact on state tax revenues.  It is important to note that Rhode Island has already implemented add back statutes that close “corporate tax loopholes.”  Without certainly as to job creation or enhanced revenue, the negative effects of combined reporting on the economy are likely to far exceed any benefit.

Rhode Island must remain economically competitive, not only on a regional basis, but nationally. Instead of eliminating the Jobs Development Act and diverting resources to implement combined reporting, the Chamber recommends that Rhode Island focus its resources on promoting its Jobs Development Act on a national scale to attract additional business and increase its tax base. Rhode Island’s failure to differentiate itself from other states not only results in an inability to attract new business but also risks the loss of existing businesses and jobs.

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