Sen. Bates, who was the lead sponsor of the three-bill package, said the legislation is intended to create a more business-friendly environment in the state.
“Improving the economy has been at the top of everyone’s priority list,” Bates said. “These three proposals offer concrete ways for small businesses to lessen their tax obligation.”
Senate Minority Leader Dennis L. Algiere, (R-Dist. 38, Westerly, Charlestown, South Kingstown), said Senate bill (2014-S 2070) is designed to attract new investors to Rhode Island businesses.
“This bill would provide a capital gains tax exemption to new investments made in Rhode Island businesses,” said Algiere, a cosponsor of all three bills. A taxpayer would be exempt from tax on 100 percent of the gains from the sale of a capital asset beginning in 2017, provided the asset represents an ownership interest in a business incorporated in and has headquarters based in Rhode Island. To qualify for the exemption, the asset must be worth at least $10,000 and represent a new interest in the business.
Senate bill (2014-S 2062) would exempt new businesses from paying the state franchise tax, which can be up to $500, for the first three years of its incorporation. The legislation would also give a $100 credit toward the franchise tax for each employee the business has, up to $400.
“Unfortunately, there are some large corporations that would automatically benefit from this exemption, but it will have a much more important effect on small businesses who are just starting out and those who are adding employees to their payroll,” Sen. Bates said.
The third bill in the package, (2014-S 2065) would exempt the first $921,655 of a person’s estate from the state’s death tax. Currently, estates valued at less than $921,655 are exempt, but those exceeding that limit will be taxed on the total value of the estate. Bates’ bill would apply the tax only to the amount over $921,655, instead of the entire value.
“There are a lot of corporate owners and high income people that left RI because of our current estate tax,” Sen. Bates said. “Unfortunately, this results in lower tax income tax collections for the state.”
All three bills have been referred to the Senate Finance Committee for consideration. Senators Ottiano and Walaska co-sponsored all three bills.