Study: Mature firms in R.I. experience above-average tax burdens

MATURE FIRMS in Rhode Island experience above-average tax burdens, with six out of seven firm types experiencing among the third-highest burdens nationwide, according to a study by the Tax Foundation. / COURTESY THE TAX FOUNDATION
MATURE FIRMS in Rhode Island experience above-average tax burdens, with six out of seven firm types experiencing among the third-highest burdens nationwide, according to a study by the Tax Foundation. / COURTESY THE TAX FOUNDATION

PROVIDENCE – Mature firms in Rhode Island experience above-average tax burdens, with six out of seven firm types experiencing among the third-highest burdens nationwide, according to a study by the Tax Foundation.
The independent tax policy research organization, in collaboration with KPMG LLC, looked at tax burdens for mature and new firm types such as corporate headquarters, a research and development headquarters, retail store, capital-intensive manufacturer, labor-intensive manufacturer, call center and distribution center for the study, “Location Matters: The State Tax Costs of Doing Business.”
Mature firms are ones that are at least 10 years old.
When it comes to rates for mature firms, R&D facilities fared the best, with the 30th lowest rate at 12.7 percent. Corporate headquarters and capital-intensive manufacturing each landed at 39th for rates of 16.1 percent and 14.5 percent, respectively.
Labor-intensive manufacturing ranked the lowest at 50th with 14.9 percent. Call center, distribution center and retail store also were at the bottom, at rankings and tax rates of 49th and 30.7 percent; 48th and 41.8 percent; and 47th and 22.1 percent, respectively.
Wyoming ranks first in the country for its low rates for corporate headquarters and retail store at 6.9 percent and 6.6 percent.
New companies in Rhode Island stand to pay even more in taxes, according to the study.
The rate for a distribution center jumps to 55.2 percent; retail store, 49.3 percent; call center, 42.2 percent; R&D headquarters, 22.4 percent; and corporate headquarters, 19.1 percent. Only for firms involved in capital-intensive manufacturing and labor-intensive manufacturing did the rates drop, to 6.4 percent and 12 percent, respectively.
The Tax Foundation said KPMG tax specialists calculated each firm’s tax bill in each state, accounting for all business taxes: corporate income taxes, property taxes, sales taxes, unemployment insurance taxes, capital stock taxes, inventory taxes and gross receipts taxes. Additionally, each firm was modeled twice in each state: once as a new firm eligible for tax incentives and once as a mature firm not eligible for such incentives, the Tax Foundation said.
The study, according to the Tax Foundation, was created so that government and state officials can better understand their states’ tax positions when compared with the rest of the country, and to also help company officials evaluate the business competitiveness of states.
Hartley Powell, principal in the Global Location and Expansion Services practice of KPMG LLP, said, “Understanding a location’s unique tax landscape can help companies operate more efficiently and effectively in both their existing locations and in new ones they might be considering. The Location Matters report is a comprehensive calculation of real-world tax obligations in all 50 states that can better inform companies’ overall location decisions.”

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