Bobby Nardolillo: RI Should End Corporate Tax for Small Business

COVENTRY, RI—Rep. Robert A. Nardolillo III (R-District 28 Coventry) wants Rhode Island to eliminate the $400 minimum corporate tax on small corporations.

He will submit legislation to eliminate that tax for companies with fewer than 50 employees. The aim is to help small businesses, he said.

Rhode Island ranks in the bottom 10 of U.S. states when it comes to tax climate, he indicated.

"According to The Tax Foundation’s State Business Tax Climate Index, compared to all fifty states, Rhode Island’s current tax system ranks forty-fourth in the nation, putting Rhode Island in the bottom ten," his office noted. "The absence of a major tax is a common factor among many of the top ten states. Property taxes and unemployment insurance taxes are levied in every state, but there are several states that do without one or more of the major taxes: the corporate income tax, the individual income tax, or the sales tax. Wyoming, Nevada, and South Dakota have no corporate or individual income tax."

Nardolillo said, “When I see that Rhode Island’s tax structure drains more money from business owners than in most all other states, I know there is something I need to do for our small business community, and that is eliminate the corporate tax so local business owners have a fighting chance to be more profitable. I hear from small business owners all the time who tell me that before they open their doors to the public, they are up to their eyeballs in taxes. This is not fair for someone just starting out. We cannot improve our business climate in this state if we over-burden business owners with taxes before they’re ever able to make their first dollar.”

As it stands now, under the state’s 2017 tax structure, all Rhode Island businesses will face a minimum $400.00 per year corporations tax, beginning from the date the business incorporates with the office of the Rhode Island Secretary of State. The tax applies to C corporations for federal income tax purposes and as pass-through entities, which are LLC’s, including single-member LLCs, subchapter S corporations, limited partnerships and limited liability partnerships.

Representative Nardolillo submitted similar legislation in 2014. The bill (2015-H 5549) called for eliminating the minimum corporate tax altogether for corporations with fewer than 50 employees.