In recent years, more and more states have come to realize that they often receive little in return for the hundreds of millions of dollars in business tax incentives that they dole out. Rhode Island can now be counted among them. Earlier this month, the Democratic and Republican leaders of the state Senate jointly introduced legislation requiring the agencies administering upwards of $80 million in state tax incentives to compile annual reports detailing the number and quality of jobs attributable to those incentives.
While that legislation - and even more far-reaching companion legislation in the House of Representatives - holds promise, the state Division of Taxation is ready to deliver some measure of reform now. On Monday of this week, the Division proposed new rules that would clamp down on the state's film production tax credit... and with good reason. According to the Providence Journal, a production company that spent less than a month in Rhode Island filming the straight-to-DVD Hard Luck received a tax credit for $2.65 million, even though it spent less than $2 million on Rhode Island businesses and workers. In other words, Rhode Island probably could have saved money simply by employing those businesses and individuals directly. Given that the movie starred Wesley Snipes, this outcome probably isn't all that surprising.
For more on state tax giveaways and what can be done to combat them, see Good Jobs First's new blog, Clawback.