April 23, 2013
To ensure Rhode Island uses its available resources in the most effective way possible, it’s time to subject tax breaks, that cost the State over $1.7 billion a year, to the same scrutiny given to money spent through the state budget.
Like other states, Rhode Island increasingly writes into law provisions that allow people or businesses to reduce their taxes if they meet certain criteria. But Rhode Island is among the states that pay the least attention to whether tax breaks for businesses achieve their stated goals, according to a recent study by The Pew Center on States. The reputable research organization listed Rhode Island among 26 states that are “trailing behind”—Pew’s lowest ranking—because the State met none of the criteria for the scope or quality of evaluation key to determining whether tax breaks are worthwhile policy.
Pew found that while no state “regularly and rigorously tests” whether tax breaks for businesses are benefiting a state, 13 states are “leading the way” in generating answers about the effectiveness of their state’s tax breaks.2 Rhode Island should follow the lead of the exemplary states, including neighboring Connecticut, that are taking important steps to more carefully examine some or all of their tax breaks, particularly those enacted with the goal of creating jobs.