Tax Cuts

Date: April 30, 2014

Related Content: News State Rhode Island

Estate
Tax? Corporate Income Tax? Sales Tax? Minimum Business Corporation Tax? Which
of these taxes or combination of taxes is likely to be reduced as part of at
least the House version of the FY 2015 state spending plan? New Speaker
Mattiello and his new leadership team no doubt want very much to reduce taxes
as part of their jobs and economic growth program. And Rhode Island certainly
needs jobs and economic growth. The state’s unemployment rate dropped to 8.7%
in March, the lowest jobless rate in Rhode Island since 2008.
From December to March, the state gained 4,600
jobs, and 4,293 more people were counted in the labor force, an indication that
more people are looking for jobs again.

 

But
the state unemployment rate nevertheless, remained a full 2.0% higher than the
national unemployment rate and Rhode Island is the state with the highest
jobless rate in the nation.

Rhode Island’s unemployment is much higher than other New England states –
Connecticut’s unemployment rate is 7.0%, Massachusetts is 6.3%, and New
Hampshire is 4.5%. Rhode Island’s unemployment rate has been higher than the
national rate since July 2005 and Rhode Island has regained only half of the
39,800 jobs lost during the Great Recession while the nation as a whole has
regained 95% of the jobs lost during the Great Recession.
As a result,
jobs remain the number one focus on Smith Hill and tax cuts as a spur to job
growth are very much a possibility.  

 

Mitigating
against tax cuts is the state’s revenue picture as the Department of Revenue
collected $27.6 million less than expected in March. Total revenue for the
month was $303 million – 8% less than projected. The total general revenue in
April will be an important factor in the fate of the tax cuts in the House
budget.

 

The
best current strategy for small business owners is to contact their legislators
stressing that any tax reductions should include the taxes paid by and
affecting small business owners so as to maximize the economic impact on job
creation. The following are among the taxes directly affecting small
businesses: income tax, sales tax, minimum business corporation tax, and estate
tax. Robust regulatory reform could also be equivalent to a tax cut form small
businesses. Rhode Island is a small business state and to grow jobs in Rhode
Island, policymakers must reduce costs through tax and regulatory
policies. 

Related Content: News | State | Rhode Island

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