Chamber Action: The Chamber continued to be an advocate for a reduction of the state’s personal income tax rate to 5.5 percent by 2011.  This historic tax policy reform was passed last year in an effort to align Rhode Island’s tax rate with that of neighboring states. Taxpayers in Massachusetts and Connecticut face rates of 5.3 percent and 5.0 percent respectively.

Result:Chamber lobbyists, staff and members worked diligently with General Assembly leaders to successfully preserve this tax policy change by once again demonstrating a link between the marginal income tax rate and Rhode Island’s ability to grow our economy.  Legislation and floor amendments to freeze or repeal the flat tax were defeated. 

 

Issue: Historic Tax Credit

Chamber Action: The Chamber, as part of a larger business coalition, ardently advocated for preservation of the state’s historic tax credit. A program that is widely regarded as achieving multiple statewide objectives, including expanding our economy, revitalizing neighborhoods, cleaning contaminated brownfield sites, stimulating job development, generating additional tax revenue and creating economic vitality in all 39 Rhode Island cities and towns, the tax credit was threatened by short term fiscal concerns.

Result: Despite a last minute push to reduce the current credit from 30 percent to 20 percent, the Chamber, as part of the Coalition for Neighborhood and Economic Renewal, was able to successfully champion for the continuation of the historic tax credit program at its current rate.

 

Issue: Passive Investment Companies 

Chamber Action: Chamber lobbyists, staff and members worked with House leadership and local financial institutions to preserve the use of Passive Investment Companies (PIC) in Rhode Island.  In order to address nationally reported abuses, the Assembly drafted legislation which limited the use of captive PICs. The Chamber drafted two amendments to the legislation which preserved the use of PICs in states with comparable corporate tax rates and allowed a tax credit to the extent taxes are paid by the affiliate in another state.

Result:The PIC budget article was enacted with the Chamber’s amendments included.

 

Issue: Real Estate Investment Trust

Chamber Action: Chamber lobbyists, staff and members worked with House leadership to defeat legislation which would have repealed the existing tax exemption for real estate investment trusts. As with PICs, the Assembly did consider alternative legislation which restricted the use of REITs by affiliate corporations to evade taxation.  

Result: The Chamber was successful in preserving the tax exemption for real estate investment trusts with the modified language.

 

Issue: Charitable Giving  

Chamber Action: The Chamber, in conjunction with a coalition of Rhode Island’s non-profit organizations, drafted and sponsored legislation which prohibits the Division of Taxation from considering charitable giving to Rhode Island institutions in evaluating the domicile of a taxpayer. Under Rhode Island income tax code, as interpreted by the Division of Taxation and the State Supreme Court, the Division of Taxation can impose income tax liability on individuals who have relocated to another state, if such individuals have maintained ongoing ties and contacts within the State. Among the factors which were previously considered was whether the former resident continues to contribute to Rhode Island charities.

Result: This important change, which was signed into law in March, will now encourage people who now live outside of Rhode Island to continue to give generously to local charities without fear of being “penalized.” 

 

Chamber Action: The Chamber, continuing to advocate for tax reform, introduced a small business tax relief package which included a proposal to reduce the state’s franchise tax, preserve the job development fund and reinstate the Small Business Administration Guarantee Tax Credit.

Result: As a result of current budget constraints, the three proposals, which if implemented would have had a fiscal impact, were held for more study. Going forward, the Chamber will continue to work in connection with local business and policy organizations to push for comprehensive tax modernization for the state’s small businesses.

 

Chamber Action: The Chamber brought the voice of our members to the House Oversight Commission to Study the Ramifications of the Fire Safety Code. As a result of the Commission’s work, a measure was introduced that would among other items entitle certain small businesses to a tax credit of up to $10,000 for safety improvements totaling up to $100,000. The tax-credit proposal would be retroactive to 2003, although a business owner could not claim it until 2009.

Result: The draft proposal, which came out of committee late in the session, was held for further study. The Chamber will continue working on this issue.

 

Issue: Health Care Affordability for Small Business

Chamber Action: The Chamber worked for over eight months with House Finance Chairman Steven Costantino, brokers, small businesses, the Health Insurance Commissioner and the health plans to assess the existing health insurance market for small business.  As part of this effort the Chamber surveyed its member companies with 50 or fewer employees on their health insurance offerings.  The Chamber eventually crafted legislation authorizing an innovative basic benefit health plan to be marketed to small employers who do not currently offer health insurance.  The basic benefit plan premium will be roughly one-half the cost of most products currently offered to small employers. 

Result:The Chamber-backed legislation passed the Assembly and was signed into law by the Governor in early July. 

 

Chamber Action: Working in collaboration with the Rhode Island Retail Federation and other business organizations, the Chamber testified and worked against legislation that would have mandated that Rhode Island’s largest employers meet certain arbitrary thresholds for their health care costs.

Result: The Chamber was successful in defeating the passage of the “Fair Share” Health Care bill.

 

Chamber Action: The Chamber continued to monitor proposed Identity Theft legislation, which would have established additional standards for identity protection and penalties for its violation. Last year the Chamber worked with the Rhode Island Attorney General to establish such standards.

Result: The Chamber was successful in lobbying against the proposed bill, which would have increased regulations on local companies.