Study Provides Positive PR Opportunity for Providence

There’s always bad news to talk about around here–fish in a barrel. So when good stuff comes down the pike, we’ve got to be able to take advantage of it. KPMG recently did an international survey and analysis (PDF) of business tax costs around the world. Part of the survey included a ranking of U.S. cities, and the good news is that Providence landed at 15th out of 73 surveyed cities (the top three were all in Louisiana, interestingly enough). According to the Providence Business News:

KPMG compiled the ranking using total tax index, a measure used to compare tax burden by comparing the total actual tax cost in U.S. dollars for each jurisdiction.
Providence had an overall total tax index of 85.8, with 100 being the baseline. Cities with lower scores had more favorable tax structures for businesses than cities with higher scores.
Boston ranked No. 35 on the comprehensive list of U.S. cities with a TTI score of 91.9.
Comparatively, Baton Rouge, La., which ranked first on the U.S. cities list, had a TTI of 66.5 and San Francisco, which ranked last, had a TTI of 106.6.
Overall, Providence posted a 25.1 percent corporate income tax rate, a 6.6 percent rate for “other corporate taxes,” a 20.8 percent rate for statutory labor costs and a 52.5 percent total effective tax rate.
Among the U.S. cities, Providence ranked ninth for corporate income tax rate, 13th for its other corporate taxes rate, 59th for its statutory labor costs and 15th for its total effective tax rate.

While it’s not surprising that Providence’s labor costs are higher, it is certainly a positive that KPMG found that the city’s comparative tax rates are lower than several other U.S. cities. KPMG also looked at specific business sectors and found Providence ranked 9th in the “digital sector” (though that may be questionable given that the grade was based on an analysis of two types of businesses, one of which was a video game production studio!). That ranking feeds into an already established campaign to tout Providence as a technology center.
The only caveat is it is unclear to me (but I didn’t sleep at a Holiday Inn last night) if the study adequately accounted for state level business costs. Regardless, this is a “usable study” for Providence. Yet, the methodology and caveats are less important than the bottom-line findings. The point to be made is that the city (and state) should take advantage of this report and promote Providence as a “TOP 15 Business Friendly City” and a “Top 10 Digital Innovation City” or something like that. Finally, we have a study that can be used for positive public relations. We need it and hopefully, someone will take advantage of it.

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Justin Katz
Justin Katz(@justin)
9 years ago

I don’t have time to work through it, but I wonder if there’s something in the methodology that doesn’t account for the peculiar badness of RI’s economy. It appears that they calculate an effective rate at an assumed level of corporate income that’s the same for every city. So, for hypothetical, it may be that the special deals that big companies get on an individual basis around here skews the data. Or perhaps all of the large tax-exempt organizations do so. It’s odd that there’s not a word about how they dealt with companies of different sizes (that I caught on a quick search).
Whatever the case, it isn’t usually corporate taxes that reformers have targeted (except the foolish $500 minimum).

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