The Economic Progress Institute opposes S-2052 which would repeal Rhode Island’s corporate minimum tax.
Repealing the corporate minimum tax would cost the state over $30 million in revenue each year, a major revenue loss at this time.
Although it may be the case that $400 per year could benefit the smallest Rhode Island micro business owners, repealing the corporate minimum would affect a much larger group. To start, in tax year 2022, 85.2% of corporate filers paid only the minimum, and the rate is 88.8% so far for tax year 2023. As Division of Taxation testimony provided to the May 2024 Revenue Estimating Conference shows, most Rhode Island businesses pay only the minimum.
Furthermore, the Division of Taxation’s Statistics of Income Report for Tax Year 2019 shows that thousands of corporations paying the minimum have gross receipts in the millions of dollars.
For such corporations, $400 each year hardly seems a burden that will make any major difference in operations. While $400 may relieve some stress at the margins, such a tax cut on the individual level will not result, for example, in hiring a new employee. For these reasons, we urge you not to advance this proposal to the full Senate.