According to Rep. K. Joseph Shekarchi, the General Assembly made a commitment to focus on improving Rhode Island’s economy and he believes his latest legislation will do just that.
The Shekarchi-sponsored legislation would establish the “New Qualified Job Incentive Act of 2013” and provide tax cuts to local businesses of all sizes that hire qualified, and well-paid, new employees.
“This is my single, most number one priority,” said Shekarchi in a recent phone interview.
The Job Incentive Act does already exist and Shekarchi says that it works, but “the program is very narrow.” He explained that the program provides tax cuts for large businesses but medium and small businesses are left out.
His legislation would change that.
Shekarchi explained that the percentage of tax incentives off would remain constant regardless of business size, but the number of necessary hires to qualify for the cuts would be different.
A press release from the General Assembly detailing the bill explains that large companies would see a .25 percentage cut per 50 new employees, while small businesses see the .25 percentage cut per 10 new employees. Large businesses would see a cut on their corporate rate, while small businesses would see the cut on their personal income tax.
Shekarchi believes these tax cuts will encourage new hires and make Rhode Island a more attractive state to do business in.
The Warwick representative acknowledges that the tax incentives could mean a reduction in taxes collected by the state, but that will be made up when the new employees pay income taxes, start buying homes in the state, contribute to Rhode Island charities and spend money at local businesses.
He also believes companies will reinvest the savings from the cuts into growing their businesses.
Shekarchi says there are also requirements in the bill businesses need to meet to qualify. There is a cap on the number of employees you can hire through the act, and the cuts can only be applicable after new employees have worked for a full year.
Should the legislation pass, only employees hired after July 1 of this year could be counted toward the tax incentive.
The employees also need to be “qualified” full-time employees with a salary of $55,000 per year or higher.
In addition, the bill requires companies to provide annual employment reports to the Division of Taxation, who in turn would provide annual reports to the General Assembly.
“What we need is to assist all businesses, including the many small and medium sized businesses that represent the majority of employers in our state,” said Shekarchi.
Shekarchi said that Governor Lincoln Chafee has proposed cuts to the original program in his FY2014 budget, but the representative is hopeful his bill will make it through.
“I am hopeful the bill does move forward, or at least the meat and potatoes, the intent, gets incorporated into the budget,” said Shekarchi.