To raise funds to fill a "budget hole," Governor Carcieri of RI proposes to repeal several business tax breaks, change income tax filing requirements for business owners and eliminate tax breaks for businesses that invest in nine of the state's enterprise zones, according to a recent Providence Journal article.
The governor also has proposed raising the annual minimum corporate income tax and the franchise tax for businesses, and has proposed requiring business owners who don't live in the state, but have a business in the state, to pay state income taxes. And, he's recommended that the tax credit a small business receives when it applies for an SBA loan be repealed.
Where will the money go: a capital gains tax cut for specific types of companies that create high-paying jobs, a marine research center, economic development projects, infrastructure improvements at Quonset, and a fund that invests in young companies.
The government says the tax breaks and credits cost the state much more than they return, but how much will losing those tax incentives hurt business? Ironically, RI was ranked 49th by Forbes in June 2003 as one of the Best Places for Business and Careers. If the new proposal goes through, RI's business friendly reputation just might suffer a bit.
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