The Campaign for Rhode Island’s Priorities has released a report to call attention to the corporate tax loopholes in Rhode Island and how they can be fixed. From the report, Tax Tricks: Corporate Income Tax Evasion in Rhode Island:
The report outlines the impact of two “tax tricks� – the Passive Investment Corporation (PIC) loophole and the “Nowhere Income� loophole – that are up for closure this year, as well as other loopholes that could be eliminated by instituting combined reporting. It notes that Wal-Mart, by taking advantage of the lack of combined reporting and other loopholes, paid just 2.0 percent of its income in taxes in 2002, while middle-income Rhode Islanders paid 10.7 percent of their income, and low-income residents paid 11.5 percent of their income. Members of the Campaign will team up with Rhode Island Jobs with Justice for an action outside the Providence Post Office on tax day, next Tuesday, April 17, at 3:45pm, to talk to fellow Rhode Islanders who are submitting their taxes about Wal-Mart’s tax avoidance strategies.
Other states have enacted legislation to close these loopholes. We can, too.
The Center on Budget and Policy Priorities outlined strategies for states to use in addressing the problem, stating that Rhode Island “could realize increased corporate income tax revenue by enacting laws modeled on those of Alabama, Connecticut, Massachusetts, Mississippi, New Jersey, North Carolina, and Ohio to shut down widespread, abusive, and costly tax-avoidance techniques. The Rhode Island General Assembly is currently debating passage of legislation to do just that, including prohibiting the use of passive investment companies that many large corporations use.
Sounds like a good idea to me. Rather than have all those profits go to shareholders, how about if corporations like Wal-Mart and Toys “R” Us do their duty and pay an equitable rate of tax? This would be the right thing to do.
Kmareka.com 
Based on a review of the Bill Status on the General Assembly’s web site, it appears that any legislation addressing issues such as the investment tax credit isn’t going anywhere. Legislation addressing the Corporation Tax filed in the state senate has been referred to the Senate Finance Committee without any scheduled hearings. Companion legislation has fared a little better in the house committee, but that’s not saying much.
As you may recall, last year I advocated such measures addressing corporate taxes and introducing some measure of equity in our tax structure. What I said last year is relevant to our financial and budgetary situation today. If one thing is clear, contrary to all protestations in opposition, corporate tax rates are not the prime determinant when a corporation decides whether to come to Rhode Island or to expand once here. Factors such as a developed infrastructure, affordable housing, and a trained workforce are all more important than the tax rate.
What’s interesting is that those who advocated parity with Massachusetts in the marginal tax rate for high income taxpayers are not advocating parity relative to the corporate tax rates. Not surprising, but interesting.
I just wanted to lend my voice in support of any effort to equalize the tax burden in Rhode Island and restore some semblance of sanity in the economic condition of the state.