If we want to create jobs and grow our economy, we have to make it easier to do business in Rhode Island. Right now, companies across the country are making decisions about where to grow and create jobs, and we need to compete to be included in these discussions. That means we need to innovate. We need to find areas where we can remove red tape, update our policies, and blaze the trail if we are going to encourage companies to consider Rhode Island as they expand.

Governor Raimondo and the General Assembly have been working to do just that, creating a set of powerful tools to help companies pursue research and development, train new talent, and invest in facilities. We need to continue to build on this momentum to bring more high-skill, high-wage jobs to our state.  

With that in mind, the Department of Business Regulation has partnered with the House Committee on Labor Chairman K. Joseph Shekarchi (D-Dist. 23, Warwick) and the Senate Committee on Commerce Vice Chairman William Walaska (D-Dist. 30, Warwick) to propose the first-of-its-kind “Premium Jobs” initiative. By leveraging the strength of Rhode Island’s renowned insurance industry, this initiative promises to attract new, high-quality insurance jobs to Rhode Island and strengthen our insurance industry as a whole – all at absolutely no cost to the state.

That’s worth repeating: This is an innovative change that Rhode Island can make this year to bring more jobs to the state with no budgetary impact. And we’d be leading the country as the first state to do this. 

So how would this work? The “Premium Jobs” initiative we propose links Rhode Island’s insurance premium tax rate to the number of jobs created by the insurance industry as a whole – the more jobs insurers create, the lower the rate the insurance industry pays.

We’ve put safeguards in place to make sure this is smart, and done right: This tax rate adjustment would take place only after the Department of Business Regulation, Office of Management and Budget, and the Division of Taxation verify the creation of sufficient net new insurance jobs and calculate an appropriate, revenue-neutral rate reduction. This verification process ensures that reduced tax revenues are offset by the personal income taxes these new jobs generate. The result is a “win-win” situation – insurers are encouraged to expand their business and grow their workforces by the promise of significantly lower tax rates and higher savings.

The scale of these savings – and as a result, the strength of this incentive – stems primarily from the interdependence of states’ premium tax rates. For Rhode Island insurers, who often write in multiple states, the different tax rates they pay in different states depend upon the rate in Rhode Island, their home state. Thus, by lowering our own premium tax rate, we can effectively force other states to tax our insurers at a lower rate as well, driving savings for the business they do all across the country. This arrangement would also have the effect of incentivizing large out-of-state insurers to move jobs or entire operations to Rhode Island in order to share in these savings – the more jobs they bring, the greater the savings, and the more powerful the economic boost to Rhode Island. 

Whether we successfully entice a large insurer to relocate within our borders, or promote job growth by existing in-state insurers – or both – we believe this is an innovative, fiscally responsible proposal to drive job creation and grow our economy.

It’s clear that Rhode Island has momentum – let’s keep it going by passing the “Premium Jobs” initiative and continuing to make our state a better place to do business.