Rhode Island’s Corporate Tax is an Income Tax
Effectively, for nine out of ten corporations. Source: Senator Steve Alves.
Let’s remember that the corporate tax (already $500 per year) is assessed regardless of profit generated by that corporation. If the corporation lost money, this tax must still be paid. So if, as Senator Alves asserts, 94% of corporations in Rhode Island are paying the minimum corporate tax, it’s a good bet that most if not all are losing money or at best, breaking even. That means that the owners of over 90% of Rhode Island’s corporations are reaching into their own pockets to pay this tax.
Reviewing once again Senator Alves’ comments at the Greater Providence Chamber of Commerce’s legislative luncheon:
Of the 45,840 corporations registered in Rhode Island, 94 percent pay only $500 in annual corporate income taxes to the state
The modifier “only” is inaccurate from the jump. Most Rhode Island corporations are not Coca Cola. So $500 is a lot of money. More importantly, it is grotesque for a legislator to imply that corporations are not paying their fair share when the basis of his accusation is a mandatory minimum tax payable regardless of profits. Essentially, Senator Alves is saying, “Look, they’re paying $500 (that we’re forcing them to pay). That must mean they can afford to pay more.”
Senator Alves has confused the tax gun with affordability. Just because someone is forced to pay doesn’t mean that they can afford to pay. Or that another waggle of the tax gun (“cough up more dough”) is the correct course of action for a state which does not lack for revenue and already ranks dead last for business tax climate.