A couple of weeks ago, the Washington, D.C. – based Small Business Survival Committee’s sixth annual ranking of states with respect to their climates for small business and entrepreneurship placed Rhode Island dead last.
We found such results to be appalling – and still do. But both House Finance Chairman Antonio Pires and Gary Sasse, executive director of the Rhode Island Public Expenditure Council, suggested the SBSC’s numbers were in some cases inaccurate, because in those cases the comparisons made were not balanced.
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In response to the SBSC survey, researchers at the Rhode Island Economic Development Corporation make several valid points, among them:
The study used the highest possible rate for corporate income tax, 9 percent, but did not factor in that many companies that reach job-creation levels, pay at an actual tax rate of 3 percent.
Rhode Island has a piggyback tax structure, so that any exemptions on the federal rate are also part of the state rate – and were not necessarily factored into the study.
Businesses enjoy tax treaties with many communities as well as incentives like the exemptions on a manufacturer’s machinery and inventory.
In terms of sales tax, Rhode Island has a higher rate – but does not tax food and clothing.
Rhode Island scored poorly in crime rate, but the state has several communities with high crime rates only in the summer, when population has swelled. Newport, for example, has a high crime rate partly because of noise violations. The violent crime rate is among the lowest in the country.
Those are all valid points and it might well have been a more accurate survey had the SBSC considered them. But Rhode Island should still perform better on such a survey measuring the climate for small business and entrepreneurship.
