Bills Introduced to the Rhode Island House (Business Regulatory Focus), January 18-20
Significant Rewrites with Statewide Impact
| H5100 | Repeals the state’s franchise tax. |
| H5101 | Sets conditions under which Bureau of Criminal Identification reports may be used in employment decisions. |
Targeted Changes with Statewide Impact
| H5026 | No charging fees or asking for fingerprints, when a bank customer presents “a valid instrument” to withdraw funds. |
| H5032 | “Any landlord who rents or leases premises to a tenant who is engaged in the cultivation of medical marijuana shall be indemnified against any claims arising out of the tenant’s cultivation of medical marijuana”. (Comment: I had to look up “indemnify” in an online dictionary. It means “Secure (someone) against legal responsibility for their actions.”, which I think is the sense in which it is being used here.) |
| H5040 | Landlords don’t have to rent to someone who wants to grow medical marijuana. Also, the landlord can ask a potential tenants in advance if they intend to grow medical marijuana. |
| H5060 | Sets a minimum corporate-tax in RI, based on percentage of gross-receipts (Comment:Anyone with experience want to tell us if this is a good deal or bad deal, for the different income brackets that are defined?) |
| H5062 | “No person or business entity who sells real property shall charge, collect, receive, or be entitled to a fee based solely on the subsequent resale or transfer of said property…” (Comment: Can someone put into real world terms what activities are being prohibited here?) |
| H5077 | Automobile insurance rates cannot take into account credit score. (Comment: Should I be listing this as a local bill, since the first three Reps listed as sponsors all represent Johnston?) |
| H5082 | Fees and fines collected from enforcement of the food establishment sanitation code are to be treated as restricted receipts, for the purpose of hiring up to 12 new food inspectors. |
| H5084 | Increases fines for violation of the food establishment sanitation code, from a maximum of $500 to a possible maximum of $5000 |
| H5086 | “Food establishments which prepare potentially hazardous foods” must have a “certified food safety manager” present at all times during the preparation of foods. |
H5062 “No person or business entity who sells real property shall charge, collect, receive, or be entitled to a fee based solely on the subsequent resale or transfer of said property…” (Comment: Can someone put into real world terms what activities are being prohibited here?)
My guess. I have heard that in other states Condo developers are reserving a “fee” on resale so that they can participate in profits from a future sale. This has led to some “title problems” when no one could still be found to execute a discharge of the lien. (sounds like the foreclosure problem rattling around in the Mass. courts)
H5077 Automobile insurance rates cannot take into account credit score. (Comment: Should I be listing this as a local bill, since the first three Reps listed as sponsors are all from Johnston?)
Haven’t heard of it in automobile insurance, but a credit report is a given in many large fire and liability policies. You can bet they check your credit score before paying off, even on a homeowner’s policy. Hard pressed by credit cards, how about a little fire on the rear deck?
On H5060: First off everyone should know that S-corp. income is taxed at the individual level. All profit is reported as earnings directly and proportionally by the shareholders. The mislabeled minimum corporate income tax on S-corps is nothing more than a fee assessed for the privilege of doing business in the state. Reducing it for many employers with $2.5mm or less in sales is good (it is now at $500). But it should be $0 as these firms’ owners ARE ALREADY PAYING INCOME TAXES on anything the business earns. Jacking the rate up for larger small businesses is just a money grab to offset the reduced fees. The number of firms realizing a reduction will far outweigh the number seeing an increase. But S-corps employing north of 20 employees or so will see a hike. This segment, by the way, is typically the leading edge of an economic recovery in job creation. But the shareholders/owners represent a small portion of the “small business owner” population (i.e. much smaller voting constituency). Many lawmakers will view a pizza shop with 15 part timers identically to a growing manufacturing firm with 75 full time benefitted employees. Thus a fee reduction affecting 90% of “business owners” is acceptable, even if the hike on the remaining 10% is targeted at exactly the firms needed for the next hiring expansion. Assuming it is a flat $3,000 fee and not a 0.03%, my fee may increase by a factor of 6 for this year from $500 to $3000. The structure also is set up for transition to a Value Added Tax or Gross Receipts Tax. It would be a mess even IF it replaced ALL OTHER BUSINESS TAXES, but all income in an S-Corp IS ALREADY TAXED ONCE! What is 0.03% in 2011 will soon become 3%… Read more »
Roland writes:
“If the transition to VAT occurs, though, this could have enormous and potentially job killing affects.”
If you want to see this in real life, check out British websites. The VAT on a car is about 15%.