OP ED: Tax Incentive Bill Would Attract Employers to Rhode Island

By K. Joseph Shekarchi and James C. Sheehan

If Rhode Island wants to attract new companies to move here, and encourage existing companies to grow here, we must offer solid reasons that our state is an attractive place for business to operate. The fact, albeit unpleasant, is that the cost of doing business in Rhode Island is relatively higher than it is in many other places in the country. Also, we have developed a reputation as a difficult place to do business. Therefore, if we want to be successful at attracting companies here, we need to offer incentives for businesses to invest here. This is especially true because so many other states around the country offer incentives like this. With so many other states in the game, we can’t afford to sit on the sidelines.

While tax incentives can be effective in growing and attracting businesses, Rhode Island’s current toolkit of incentives is not competitive with neighboring states’ and many growing companies are not eligible.

It remains an unfortunate fact that Rhode Island has a high unemployment rate. The flip side of that situation, however, is that our state has many individuals seeking jobs. The goal of state government must therefore be to encourage job creation and develop programs that help re-train workers for those new jobs.

Again this year, we have introduced legislation that has the potential to be a formidable job creator in the state and that will work well with other legislation already enacted to improve Rhode Island’s business climate and overall economy. This is a bill the new Executive Office of Commerce can help shape and include in its arsenal to promote job creation in our state and encourage new companies to move here. In that way, it can be part of an overall plan for job creation, rather than the kind of piecemeal approach that has been taken in the past. We are working closely with Commerce Secretary Stefan Pryor, collaborating to create a final piece of legislation that places powerful tools in the state’s economic development toolbox.

The “Rhode Island New Qualified Jobs Incentive Act” would make tax incentives available to companies locating, expanding, and hiring in Rhode Island, with particular emphasis on high-wage employment —jobs that pay well in promising industries. These incentives will be more than competitive with those offered by neighboring states—because they have to be. Rhode Island has a long way to go to add back the jobs we’ve lost -- and to move our economy forward.

We will be smart about how we employ these incentives. Accountability and transparency are important in relation to any tax incentives provided by the state, so our legislation includes requirements for companies to provide annual employment reports to the Division of Taxation and for the Division of Taxation to provide annual reports to the General Assembly. We will monitor companies’ performance and end incentives if the promised jobs are not produced and maintained.

The overall effect of this bill will be an economic boost for Rhode Island. New employees will be paying income tax and buying houses, contributing to charities and spending money at Rhode Island establishments. The incentives will often pay for themselves by producing more revenue than the credits cost.

Given all the dire reports about our terrible unemployment rate and continuing sluggish economy, we need to be bold and creative about how we bring business to our state, how we help businesses to grow. Enacting this legislation will be good for business, good for job-seekers and good for the economy.

The legislation (2015-H 5116 and 2015-S 0222) is before the House Committee on Finance and the Senate Committee on Finance. Both bills have enormous bipartisan support in the legislature, with more than three dozen co-sponsors in the House and 27 co-sponsors in the Senate. We are confident this legislation can be enacted into law this year and that, in partnership with Governor Raimondo, we can boost our state’s economy.

(K. Joseph Shekarchi is the Democratic State Representative from District 23, Warwick. He is chairman of the House Committee on Labor. James C. Sheehan is the Democratic State Senator from District 36, Narragansett, North Kingstown. He is chairman of the Senate Committee on Government Oversight and a member of the Senate Committee on Health and Human Services and the Committee on Education.)