2021 -- S 0046

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LC000286

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2021

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A N   A C T

RELATING TO TAXATION

     

     Introduced By: Senators Bell, Mack, Anderson, Calkin, and Mendes

     Date Introduced: January 19, 2021

     Referred To: Senate Finance

     It is enacted by the General Assembly as follows:

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     .SECTION 1. Title 44 of the General Laws entitled "TAXATION" is hereby amended by

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adding thereto the following chapter:

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CHAPTER 70

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AGREEMENT TO PHASE OUT CORPORATE INCENTIVES ACT

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     44-70-1. Membership.

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     Any state of the United States and the District of Columbia may become a member of this

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agreement/compact by enacting this agreement in substantially the following form.

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     44-70-2. Definitions.

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     As used in this chapter:

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     (1) "Company-specific grant" means any disbursement of funds via property, cash or

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deferred tax liability by the state government to a particular company.

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     (2) "Company-specific tax incentive" means any change in the general tax rate or valuation

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offered or presented to a specific company that is not available to other similarly-situated

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companies.

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     (3) "Corporate incentives" means any company-specific or industry-specific disbursement

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of funds via property, cash or deferred or reduced tax liability by a state or local government to a

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particular company or industry.

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     (4) "Located in any other member state" means any corporate headquarters, office space,

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manufacturing facility or other real estate development that is physically located in another member

 

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state, whether or not the company has other property in the member state.

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     (5) "Member state" means any state or the District of Columbia that has enacted a statute

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agreeing to this compact.

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     44-70-3. Findings.

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     The member states find that:

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     (1) Corporate incentives are among the least effective uses of taxpayer dollars to create and

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maintain jobs;

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     (2) Local and state leaders are in a prisoners' dilemma where it is best for all to create a

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level playing field for all employers without any corporate incentives, but each level of government

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has an incentive to subsidize a company, generating a race to the bottom;

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     (3) Governments should attract and retain companies based on general conditions

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(including, but not limited to, modern infrastructure, an educated workforce, a clean environment,

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and a favorable tax and regulatory climate), not based on a specific grant for a particular company;

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     (4) Corporate incentives fuel business inequality as only the largest businesses receive the

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vast majority of these funds;

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     (5) A reasonable first step in phasing out corporate incentives is an anti-poaching

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agreement among state governments prohibiting state company-specific tax incentives and state

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company-specific grants as an inducement for entities to relocate existing facilities;

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     (6) Creating a national board of gubernatorial appointees charged with finding consensus

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around improvements to this agreement over time in a phased approach will assist state and local

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governments in escaping from the prisoners' dilemma and implementing a level playing field for

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all employers.

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     44-70-4. Anti-poaching prohibition.

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     Each member state is prohibited from offering or providing any company-specific tax

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incentive or company-specific grant to any entity for a corporate headquarters, manufacturing

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facility, office space or other real estate development located in any other member state as an

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inducement for the corporate headquarters, manufacturing facility, office space or other real estate

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development to relocate to the offering member state.

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     44-70-5. Exclusions.

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     Workforce development grants that train employees are not subject to this agreement.

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Company-specific tax incentives or company-specific grants from local governments are not

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subject to this agreement, and state's company-specific tax incentives or state company-specific

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grants to entities for corporate headquarters, office space, manufacturing facilities or real estate

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developments located within that specific state are not subject to this agreement.

 

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     44-70-6. Withdrawal.

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     Any member state may withdraw from this agreement with six (6) months' notice and shall

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do so in writing to the governor of every member state.

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     44-70-7. Enforcement.

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     The attorney general of each member state shall enforce this compact. A taxpaying resident

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of any member state has standing in the courts of any member state to require the attorney general

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of that member state to enforce this compact.

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     44-70-8. National board to draft suggested improvements over time to the agreement.

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     A national board of the agreement to phase out corporate incentives act is established by

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this agreement. The governor of each member state shall appoint one member to the board. The

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board shall accept appointees from non-member states that wish to appoint a member of the board.

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The purpose of the board is to publish suggested revisions to this agreement in December of each

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year to continue to phase out those forms of corporate incentives that the board finds reasonable to

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include as suggested revisions to the agreement for member states to consider implementing. The

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board shall convene at least annually, elect officers from its membership, establish rules and

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procedures for its governance, and publish a report in December of each year that includes

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suggested revisions and improvements to this agreement. The board shall collect testimony from

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all interested parties, including organizations and associations representing state legislators,

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taxpayers and subject matter experts on how the agreement can be improved and strengthened.

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     44-70-7. Construction and severability.

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     This compact shall be liberally construed so as to effectuate its purposes. If any phrase,

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clause, sentence or provision of this compact, or the applicability of any phrase, clause, sentence

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or provision of this compact to any government, agency, person or circumstance is declared in a

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final judgment by a court of competent jurisdiction to be contrary to the constitution of the United

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States or is otherwise held invalid, the validity of the remainder of this compact and the applicability

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of the remainder of this compact to any government, agency, person or circumstance shall not be

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affected.

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     If this compact is held to be contrary to the constitution of any member state, the compact

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shall remain in full force and effect as to the remaining member states and in full force and effect

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as to the affected member state as to all severable matters.

 

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     SECTION 2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO TAXATION

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     This act would create an agreement to limit corporate incentives.

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     This act would take effect upon passage.

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