Rhode Island Explores Tax Changes for High Tech

Eliminating all state taxes on long-term capital gains and providing incentives to encourage biotech start-ups and investment are among the recommendations advanced in The Competitive Edge: Rethinking Rhode Island Tax Policy for Success in the New Economy, the first report from the Tax Competitiveness Committee of the Rhode Island Economic Policy Council (RIEPC). Governor Lincoln Almond requested RIEPC review the state’s tax policy and recommend mechanisms for enhancing Rhode Island’s tax competitiveness in the New Economy.



The report identifies four specific recommendations for the state to consider to encourage high-wage, New Economy growth, including:

• Phase out taxes on all long-term capital gains.
• Adjust the corporate apportionment formula to double-weight for sales and phase in 100 percent weighting of sales for manufacturing.
• Extend the net operating loss (NOL) carry-forward from the current five-year limit to 20 years for start-up biotech firms.
• Modify exemptions to the sales and use tax to benefit the state’s biotech industry cluster, including amending the sales and use tax exemption for research and development equipment to include consumables and clarifying the tax code to incorporate pollution prevention devices in the exemptions to the sales and use tax.

Chaired by Edward Mazze, PhD, Dean of the College of Business Administration at the University of Rhode Island, the 15-member Tax Competitiveness Committee is composed of industry, labor, and public representatives.



The Competitive Edge: Rethinking Rhode Island Tax Policy for Success in the New Economy, is available on the Rhode Island Economic Policy Council website at: http://www.ripolicy.org