PROVIDENCE, RI -- General Treasurer Seth Magaziner today renewed his call to reform the state's tax credit programs by eliminating the role of politically connected brokers in tax credit deals.
"Brokers and private investors are not necessary for Rhode Island's tax credit programs to work," Treasurer Magaziner said. "By reforming the system, the state can bring down the cost of tax credit deals, have more to spend to support development projects, and strengthen confidence in public investments to grow our economy."
Rhode Island's four tradable tax credit programs promote job creation and economic development by providing a tax break to historic preservation projects, movie productions and other projects that create jobs and help grow the economy. No expense of public dollars is made unless construction, job creation and other milestones are satisfied.
By making tax credits 100 percent refundable, House bill 7936 eliminates the need for brokers by enabling projects to receive the full value of their credits from the state regardless of their tax liability in Rhode Island. Because projects will not need to sell their tax credits to receive their full value, brokers will no longer be needed to match projects with private investors seeking to lower their state tax liability.
As a result, 100 percent of every tax credit issued by the state will contribute to a project and support economic activity, rather than a percentage going to politically connected brokers who stand to profit from tax credit deals despite taking on no risk.
Twenty other states provide some form of refundable tax credits.
Treasurer Magaziner's legislation also improves the transparency of the state's tax credit programs by requiring the Division of Taxation to publish the date and price of all tax credit sales.
The legislation has the support of a diverse coalition of private and public sector stakeholders, including the Rhode Island Commerce Corporation, BuildRI, Rhode Island Building & Construction Trades Council, Teamsters Local 251, Cornish Associates, Peregrine Group, AS220, Pawtucket Foundation, Economic Progress Institute, and the Rhode Island AFL-CIO.