"Taxes are a big concern of many small businesses," said Sen. Leonidas P. Raptakis (D-Dist. 33,Coventry, East Greenwich, West Greenwich).
“We talk about helping small businesses succeed and grow in Rhode Island, but we leave all sorts of impediments in the way,” Senator Raptakis continued. “For many small businesses, the margin between success and tough times is not that large. Every extra tax puts that much more strain on businesses owners.”
"The corporations tax that is imposed on Rhode Island businesses is one more example of the state taking in tax revenue without realizing the financial damage it may be causing to small businesses. It is imposed because the law says it can be imposed, without any thought given to the impact that tax can have on the success or failure of small companies.”
Under existing tax structure, each Rhode Island corporation is required to pay the state a tax equal to 9 percent of net income, but not less than a minimum of $500.
Legislation introduced by Senator Raptakis, 2013-S 0133, would help blunt that tax for the small companies that are now paying the $500 annual minimum. The bill provides that if a corporation’s annual gross receipts amount to less than the $500 minimum tax, any difference is to be refunded to the corporation by the state, provided the refund amount does not exceed $500.
“Start-up and small businesses often cut it very close to the bone on their gross receipts. A $500 minimum corporations tax can wipe that out,” said Senator Raptakis. “That is not what our laws should be doing. We should be finding ways to help cut costs to businesses, and this is another example of how we can do that. In cases like this, any tax loss to the state is far outweighed by the benefit of a small business staying in business, and using an extra $300 or $400 or $500 to help make payroll or cover other operating costs.”
The Raptakis legislation has been referred to the Senate Committee on Finance. It is co-sponsored by Sen. Marc A. Cote (D-Dist. 24, Woonsocket, North Smithfield), Sen. William A. Walaska (D-Dist. 30, Warwick), Sen. Frank A. Ciccone III (D-Dist. 7, Providence, North Providence) and Sen. Michael J. McCaffrey (D-Dist. 29, Warwick).
“If we want to move the needle, and have start-up companies and entrepreneurs start thinking about Rhode Island as a good place to do business, we have to prove that our laws and our tax structure will not be a significant burden on their growth,” he said. “A small adjustment in the corporations tax, which will help many small firms, is a good place to start.”