Rhode Island Public Expenditure Council (RIPEC) reports the high cost of doing business in RI routinely puts the state in the bottom 10 of business climate rankings, but Rep. Robert D. Phillips (D-Dist. 51, Woonsocket, Cumberland) and Sen. Marc A. Cote (D – Dist. 24, Woonsocket, North Smithfield) aim to turn that around with a tax break tied to new hiring.
Phillips and Cote are proposing a tax incentive for new Rhode Island businesses that hire and retain two or more employees. The Job Creation Incentive Act would provide a 50 percent tax deduction for a business in its first three years after hiring two employees – excluding family members – followed by a 25 percent tax deduction for the next three years, according to a release from the Legislative Press Bureau.
“This is the year for focusing on Rhode Island’s fiscal recovery,” Representative Phillips said. “I think this bill could be the shot in the arm our state needs to really move us up to another level. It’s important to remove hurdles for our local entrepreneurs so that they’re less afraid to take risks and open up shop or expand.”
In order to receive the incentive, the business applicant must file with the tax administrator within 30 days after the business hires its second employee. Under the conditions of the tax incentive plan, new employees cannot be relatives of a controlling shareholder, officer or manager of the corporation, limited liability, partnership or any other type of legal business entity claiming the incentive.
Businesses using the hiring of employees as a means of obtaining another tax incentive outside the Jobs Creation Incentive Act would not be eligible for the deduction.
“It is clear from our national business rankings that people are skeptical of our ability to foster a proper environment for business growth right now,” Senator Cote said. “We must take very thoughtful, deliberate steps toward undoing that mentality. The Senate has been working hard on plans to tackle impediments in our economy. I think this bill could help with that.”
Cosponsoring the House bill (2013-H 5412) are Representatives Stephen M. Casey (D – Dist. 50, Woonsocket), Jared R. Nunes (D – Dist. 25, Coventry, West Warwick), Gregory J. Costantino (D – Dist. 44, Lincoln, Johnston, Smithfield) and Lisa Baldelli-Hunt (D – Dist. 49, Woonsocket). Senator Cote is slated to submit the companion legislation in the Senate.