Cut franchise tax to attract more start-up businesses to RI
With an all-out push for policies and strategies that attract new business to Rhode Island, it doesn’t make sense that the state would want to welcome new firms here by handing them an annual tax bill.
Under existing tax structure, all Rhode Island businesses face a minimum $500 per year business corporations (franchise) tax. This year, I have introduced legislation that would suspend the imposition of the annual franchise tax of $500 for a period of three years from the date a business incorporates with the Secretary of State.
The legislation is intended to help small, start-up businesses in our state, the kind that we have been trying to attract through the various reforms and initiatives that have been enacted into law the past few years. If we are putting out the welcome mat to new companies, the last thing those firms need is to find a bill tucked under it, charging them $500 just so they can open their doors and stay open every year. That’s money a new company could better use to build their business.
I realize that proposing a tax reduction of any kind results in less revenue coming into the state, but I think we need to weigh the potential good that would come from an action such as this. Finding a way to provide a boost to new, small, start-up businesses has greater long-term benefits for the state, I believe, than a $500 tax payment. If we can help companies locate here and grow here, we can help provide more jobs for more Rhode Islanders and both of those actions will mean an improvement in our state’s economic picture, overall. I think my legislation is a reasonable step to making Rhode Island more business-friendly, and I believe there is strong support for such action throughout the legislature.
Reducing the cost for small businesses to operate and eliminating fiscal impediments for individuals considering opening a business here should be our goal.
James C. Sheehan is the Democratic State Senator from District 36, Narragansett, North Kingstown. He is a chairman of the Senate Committee on Government Oversight, co-chair of the General Assembly’s Joint Economic Development Committee and secretary of the Senate Committee on Health & Human Resources.