CRANSTON – Rhode Island business leaders recently met with Gov. Daniel J. McKee in their bid to derail his proposal to tax Paycheck Protection Program loans greater than $150,000 and on Monday urged affected companies to continue lobbying lawmakers to oppose the tax.
John Hazen White, chairman of Taco Comfort Solutions, said during a rally-like event held by the R.I. Business Coalition that he and other business leaders met with McKee last week to discuss business-related tax proposals now before the General Assembly.
“We had some passionate moments about the PPP loan tax,” he said. “We also had some civil discourse, and it was really wonderful.”
White said business taxes make the state less appealing to companies looking to relocate or set up shop here. “We need to make this a place that people want to come to,” he said.
Dave Chenevert, director of the R.I. Business Coalition, as well as executive director of the R.I. Manufacturers Association, joined the meeting with the governor and echoed White’s sentiments. Business leaders, he said, are “drawing a line in the sand” on the issue of taxation on businesses.
“We had a dialogue in [the governor’s] office,” said Chenevert. “I said, ‘Look we can agree to disagree. I don’t believe this is the right route to be taking to have 10% of the businesses filling a budget hole. It makes no sense to me.'”
Chenevert added: “I think he [the governor] is listening.”
McKee’s office did not immediately respond to a request for comment on the meeting and where he now stands on the proposal.
McKee has previously said publicly he is not in favor of four other bills in the legislature opposed by the coalition that would add an income tax bracket for state income taxation. One of the bills would add a new bracket with a rate of 10.99% on taxable income over $475,000, effective Jan. 1, 2022. The state’s current top rate is 5.99%.
But McKee has repeatedly said publicly that he thinks taxing the forgivable PPP loans is the right thing to do, because it applies to relatively few businesses and that many others have managed to survive the pandemic without seeking the loans.
Karl Wadensten, who sits on the R.I. Commerce Corp. board along with Chenevert, and is CEO and president of Richmond-based VIBCO Vibrators, also joined the meeting with McKee. He held up a sign at Monday’s coalition event in a warehouse space at Dean Warehouse, noting that business acted in good faith by using the PPP loans for payroll. “Now government needs to do the same,” he said.
“Employers did their part – they kept people working,” said Wadensten. “That was the goal with the PPP.”
Wadensten said that taxation of the PPP loans greater than $150,000 is an inappropriate use of federal funds. “It violates the spirit of the law,” he said. “The money was meant to be spent on people.”
Wadensten urged the crowd in attendance to stand up, before leading them on a chant of, “We love Rhode Island.”
Business coalition spokesman John Simmons, who is the former CEO and president of the Rhode Island Public Expenditures Council, said that about 3,900 companies would be impacted by PPP taxation, amounting to about $67 million over two fiscal years.
Chenevert said 2,500 of the businesses that the PPP taxation would impact have 50 or fewer employees.
After the meeting, spokesmen for House Speaker K. Joseph Shekarchi and Senate President Dominick J. Ruggerio issued a joint statement that seemed to echo McKee’s defense of the proposal in recent weeks.
“The issue of taxing PPP will be considered as part of the budget deliberations,” they said. “The proposed state tax on PPP loans only applies to a very small number of companies that received forgivable loans over $150,000 and recorded a profit. Those companies that did not record a profit would not be taxed.”
Cassius Shuman is a PBN staff writer. Contact him at Shuman@PBN.com.
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