POISON PILL? CVS Caremark Corp., parent of CVS/pharmacy, says a tax-credit reduction would force it to reconsider plans for job growth in Rhode Island.
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By Patrick Anderson PBN Staff Writer
CVS Caremark Corp. is an outsized presence in its home state in nearly every way.
With 6,200 Rhode Island workers, it’s the largest for-profit employer in the state, employing more than twice as many people as the second-largest business. Its $55.5 million charitable arm is the largest company-sponsored nonprofit in the state. And its physical presence is noticeable from the headquarters campus at the Highland Corporate Park in Woonsocket to the 59 stores spread through nearly every city and town.
Since government financial incentives for large employers were popularized in the 1990s, CVS has become the Rhode Island leader in those as well. In the fiscal year that ended last June, CVS received $24.8 million in tax credits and incentives, according to the annual list published by the R.I. Division of Taxation.
The state meted out $34.5 million in fiscal 2012, meaning CVS collected 72 percent of all state credits and incentives issued for the year.
But with corporate tax breaks across the country under increasing scrutiny, Gov. Lincoln D. Chafee has renewed his campaign to scale back the Jobs Development Act, the state’s largest incentive program and greatest contributor to CVS’ Rhode Island benefit package.
“My impression is people are increasingly aware that a lot of these tax write-offs are going to large, prosperous corporations while the backbone of the economy is smaller businesses,” said University of Rhode Island political science professor Maureen Moakley.
Even in economic-development circles and among supporters of Rhode Island’s biggest businesses, the rapid expansion of corporate tax breaks by states looking to lure or retain large employers is being questioned.
“The incentive war between states is really out of control,” said former R.I. Economic Development Corporation Executive Director Marcel Valois. “In some cases, states are offering hundreds of millions to companies. Rhode Island, because of its size, really should not get in that game.”
Vice president of the private Rhode Island Economic Development Foundation, which runs the business park where CVS headquarters are located, Valois would not discuss the pharmacy giant specifically, but echoed others pushing for the state to improve its overall business climate instead of offering deals to individual companies.
Valois pointed to Connecticut, where Gov. Dannel P. Malloy has proposed adding $500 million to the state budget for a variety of job-creation programs, as an example of states escalating the incentive war.