Sheehan Calls for Startup Tax Relief

Sen. James C. Sheehan says it seems nonsensical to try to attract new businesses to Rhode Island, and then welcome them to the state by handing them a tax bill.

Senator Sheehan (D-Dist. 36, Narragansett, North Kingstown) has again this year introduced legislation that would suspend the imposition of the minimum business corporation (franchise) tax of $500, for a period of three years from the date a business incorporates with the Secretary of State.

Under existing state tax laws, all Rhode Island businesses are billed a minimum $500 per year corporations tax.

“This legislation is intended to help smaller, start-up companies, the kind that we have been trying to attract through various reforms and business initiatives that have been enacted into law the past few years,” Sheehan said. “Companies deciding Rhode Island is the place they want to do business shouldn’t, upon opening their doors, find a tax bill from the very state that urged them to do business here. That’s money a new company owner could better use to build that business.”

“I realize a tax reduction of this kind would result in less revenue coming into the state,” he said. “But I think we need to weigh the potential good that would come from extending a three-year moratorium on this fee to new businesses. Finding a way to boost start-up business, to help them grow into a success and a job creator, will have good long-term benefits for the state. If we can help companies grow here and help provide more jobs for Rhode Islanders, I think our economy will make up many times more than that $500 yearly charge.”

The Sheehan legislation, 2015-S 0113, has been referred to the Senate Committee on Finance. Co-sponsors are Sen. Leonidas P. Raptakis (D-Dist. 33, Coventry, East Greenwich, West Greenwich), Sen. William A. Walaska (D-Dist. 30, Warwick) and Sen. Roger A. Picard (D-Dist. 20, Woonsocket, Cumberland).

“Reducing the cost for small businesses – those that are placing their trust, and their investments, in Rhode Island as a good place to operate – must be a goal if we want to improve our state’s business climate. I believe my legislation is a reasonable step toward that goal,” said Senator Sheehan, who chairs the Senate Committee on Government Oversight and serves on the Education and the Health & Human Services committees.