Time to Stop Being an Ostrich
When Ernst & Young, one of the Big 4 professional services firms, releases a study (PDF) that says Rhode Island is one of the worst in the nation for tax competitiveness when it comes to attracting new business, you’d better listen.
This study provides a state-by-state comparison of the tax liabilities that new investments in selected industries or types of economic activities would incur in each state, taking into consideration state and local statutory tax provisions and the financial and economic characteristics of the new investments. The analysis focuses on capital investments in industries that have location choices, such as factories or headquarters, rather than those that are tied to a specific geography, such as retailers or hotels. The estimated tax burdens on selected investments are combined to provide an overall measure of the business tax competitiveness of each state.
Rhode Island is #49, to be specific (only Washington, D.C. and New Mexico are worse. Maine–yes, Maine–is #1). What particularly seems to hurt Rhode Island are property taxes, especially the effective 5.36% tax on commercial equipment. (Massachusetts and Connecticut are at 2.71%).
The usual advocates can debate and reframe and reshape the debate all you want in an effort to raise taxes on the rich and “big business”. No matter how persuasive you may be, businesses don’t care. They aren’t coming here: E & Y have provided a first filter for them. And the businesses that are here may take a second look. They’ll leave. Because business people listen to someone like Ernst & Young. Will Rhode Island?