In a move that he said could help small businesses create more jobs in Rhode Island, state Sen. David E. Bates (R-Dist. 32, Barrington, Bristol, Riverside) last week introduced a bill that would lower the state's corporation franchise tax for new and existing businesses.
“A $500 minimum corporation franchise tax [imposed under current state law] is a significant amount to many small, start-up companies and is money they could more wisely use to make payroll or reinvest in their company,” Bates said in a statement. "If we are serious about growing jobs in Rhode Island, and if we are serious about making it easier for entrepreneurs to start and grow businesses here, then reducing the cost for small businesses to operate should be one of our foremost goals.”
Bates's proposal would allow existing businesses to reduce their franchise tax by $100 per employee for up to four employees, effectively reducing the minimum amount to $100. For start-ups, Bates's bill would provide a three-year "grace period" before the tax would take effect.
“I realize that if enacted this bill would result in less tax revenue taken in by the state, but what is most important is that we provide a boost to small and start-up concerns," said Bates. "This bill is another example of how we can help cut costs for those businesses already here and make it more attractive and less expensive for new businesses to start and grow.”
Bates's proposal has garnered co-sponsorships from Sens. Louis P. DiPalma (D-Dist. 12, Middletown, Little Compton, Newport, Tiverton), William A. Walaska (D-Dist. 30, Warwick), Frank Lombardo III (D-Dist. 25, Johnston) and Senate Majority Leader Dominick J. Ruggerio (D-Dist. 4, Providence, North Providence).
It has been referred to the Senate Corporations Committee for a hearing to be scheduled.
What do you think?
Is Bates's proposal a good idea? Do you think it will help attract new businesses and allow existing companies to hire new workers? Or is a potential savings of $400 too small to make a difference? Have your say in the comments section below.