The Intangibles of Rhode Island
With taxpayers — especially business taxpayers — beginning to get uppity, one often hears the invocation of Rhode Island’s Political Knot. Nothing objectionable is anybody’s fault; it’s all a natural construct that can’t be changed… at least by the person to whom one would turn for relief.
Take the “tangible tax.” I know of at least one local business owner who complained that the “tangible property tax” collected by the town was doing palpable harm to his business and whom the Tiverton Tax Assessor informed that the town has no choice: State law compels him to assess and collect the tax. Presumably, he’s referring to Rhode Island General Law 44-3-1:
Real and personal property subject to taxation. – All real property in the state, and all personal property belonging to the inhabitants of the state, whether individuals, partnerships or corporations, and all tangible personal property located in the state belonging to nonresidents, are liable to taxation unless otherwise specially provided.
Exemption of office equipment used for manufacturing or commercial purposes. – (a) The city or town council of any municipality may by ordinance wholly or partially exempt from taxation for a period of up to twenty-five (25) years any items of office equipment, which include, but are not limited to, computers, telephone equipment, and any other items of personal property used in an office and/or any leasehold improvements which are not exempt and are used for manufacturing or commercial purposes and may by ordinance establish the procedures for taxpayers to avail themselves of the benefit of any exemption permitted under this section.
In other words, the town could opt to gut the tangible property tax on business if it chose to do so. Note, also, that the law places no requirements or limits on the rate. My understanding is that a town or city could set its tangible property tax rate to 0%, effectively eliminating it.
Now that we’ve cleared up the confusion, town councils across Rhode Island can feel free embark on business-saving changes to local tax codes.
According John, in the comments, RI law prevents a town from charging a greater than 50% higher rate for any class of tax than any other, so zeroing one rate would require zeroing them all.
That factor does not appear to affect the possibility of exempting businesses from tangible property taxes for a period of 25 years.