H-5576: Pass-Through Entities Bill
Tax issues advocate Grafton “Cap” Willey, IV presented testimony on 5.1.19 before the House Finance committee on H-5576, legislation which would restore an important tax deduction that was changed through the 2017 Federal Tax Reform bill. The change put a cap on an entity’s utilization of the State and Local Taxes (SALT) deduction at $10,000, a cap that has hurt many small businesses in a high tax state such as RI. The bill would allow a pass-through entity to elect to pay the state income tax at the entity level the same as a C-Corp. and then deduct it from the federal income that is passed to the entity owners. It basically restores fairness in the treatment of income between smaller and larger entities. The legislation would also be revenue neutral to the state. RIMA submitted a testimony letter urging passage of the bill along with members of the RI Business Coalition. House Majority Leader Joseph Shekarchi, who supports and introduced the bill, led off the hearing and introduced Cap Willey to give a detailed explanation of the bill.
Continuing Contracts -Evergreen Bills: Continuing Contracts Legislation:
In recent weeks, both the Senate (S 0512) and House (H5437A) approved Continuing Contracts legislation, or “Evergreen” bills that would allow an expired municipal employee contract to remain in place and extend indefinitely while negotiations for a new contract continue. The package of bills, that would apply to police, fire, municipal employees and teachers, are considered a significant threat to the individual and business taxpayer and are opposed by the Business Coalition. Unfortunately, this legislation passed and the Governor signed one piece and let the other become law without her signature.
S-830 is a Senate bill that is strongly opposed by Beacon Insurance (workers compensation). The bill as proposed is a major concern relative to what is “acute pain” in a medical condition. The use of medical marijuana as a remedy with workers comp paying the bill would make Rhode Island an outlier to the rest of the country. According to Beacon this legislation would affect employers mod rate relative to your workers comp cost. RIMA has taken a strong position against this legislation.
As of this date, we have had no indication regarding the potential impact of the Medicaid bill, the service tax bill or any further discussion on the legalization of marijuana.