“Nellie Tax”? Gorbea defends plans to raise RI corporate tax as rivals attack

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PROVIDENCE, RI (WPRI) – Democratic gubernatorial candidate Nellie Gorbea is defending her push to raise taxes on businesses operating in Rhode Island, as rivals assault her for what has already been dubbed “ the Nellie tax”.

Gorbea presented the proposal on Tuesday when it began airing its first television commercial. Her campaign has said she has a four-part plan to raise taxes on businesses: raise the corporate tax rate from 7% to 8%; increase the tax rate for financial institutions from 9% to 10.5%; eliminate exemptions for hedge funds and dividend recipients; and closing a loophole involving offshore tax havens.

One of Gorbea’s opponents, former CVS executive Helena Foulkes, trained her fire Thursday on the idea of ​​raising the corporate tax rate, which lawmakers lowered in 2014. While the publicity of Gorbea suggests the tax change would only target “big business,” Foulkes said “the devil is in the details of his plan.

“The truth is, the Nellie Tax will affect thousands of businesses, including small businesses across our state — businesses like Big Blue Bug Solutions, Iggy’s, Chelo’s, Gregg’s and Del’s,” Foulkes said in a statement.

“Our small businesses have been devastated by the pandemic and are struggling to make ends meet due to the inflation crisis,” she said. “Small businesses deserve better than the Nellie Tax.”

Gorbea campaign manager Dana Walton pointed out that Gorbea wants to use the additional state revenue generated from the tax changes — estimated at more than $88 million a year — to expand government programs that will benefit voters.

“Of course, a corporate CEO thinks preserving corporate tax loopholes is more important than investing in our state,” Walton said. “Nellie believes businesses should pay their fair share so we can invest in affordable housing and expand early childhood education, which provides a solid foundation for businesses in our state.”

She added that Gorbea focuses on “small, local businesses.”

Under Rhode Island tax law, corporations must pay the state either 7% of net income or a minimum tax of $400, whichever is greater. The corporate tax rate of 7% is slightly lower than neighboring states, with a rate of 7.5% in Connecticut and 8% in Massachusetts.

Corporations and other general business taxes are expected to generate about $577 million in revenue for the state in the current fiscal year, which ends June 30, to help fund the budget for the state of $13.9 billion. (Federal funds cover a significant portion of the budget.)

Just hours after Foulkes released his critique of Gorbea’s plans, further criticism emerged from incumbent Gov. Dan McKee’s campaign, who was in Atlanta on Thursday to attend a Democratic Governors Association event for the candidates. . The two were nearly tied in a 12 News/Roger Williams University poll of primary voters last month.

McKee campaign manager Brexton Isaacs claimed Gorbea was making “empty promises in TV ads”. He pointed out that the announcement suggests business tax increases would fund both universal pre-K and housing construction, but the cost of universal pre-K alone is estimated at $120 million – far more than the $88 million that Gorbea estimates the tax hike would bring in. .

“Secretary Gorbea’s plan would put our progress in reverse and her numbers just don’t add up,” Isaacs said. “To tell voters that his tax-raising gimmick would both cover universal pre-K and ‘solve the housing crisis’ is an insult to the people of Rhode Island.”

“Either she doesn’t know the numbers or she is knowingly misleading voters,” he continued. “It’s irresponsible grandstanding, not real political ideas. Being governor is serious work and the people of Rhode Island have no time for flimsy proposals and empty promises.

Isaacs said McKee’s proposed state budget, which is set to become law next week, includes $250 million in federal funding for affordable housing, and the governor “also supports the expansion of the pre -K”. He suggested that the tax increases proposed by Gorbea are an economically harmful “trick”.

There was no immediate response to McKee from Gorbea.

Separately on Thursday, the Gorbea campaign released a 15 page plan to expand Rhode Island’s housing supply. Last month’s 12 News/RWU poll showed that 91% of Democratic primary voters think the rising cost of housing in the state is a serious problem.

“Housing affects all areas of life – education, job opportunities, public health and our economy,” Gorbea said in a statement. “That’s why housing is my number one priority.” She added that she wanted to be ‘the governor of housing’.

Gorbea’s plan calls for doubling production of new homes statewide. His other ideas include launching a $130 million bond to fund housing development; provide municipalities with public incentives to allow the construction of more affordable housing; and updating the loan products offered by Rhode Island Housing.

Two other Democrats, former Secretary of State Matt Brown and community activist Luis Daniel Muñoz, are also seeking the party’s nomination for governor. The primary is September 13.

Ted Nesi ([email protected]) is a Target 12 investigative reporter and a 12 News political/economics editor. He co-hosts Newsmakers and writes Nesi’s Notes on Saturdays. Connect with him on Twitter and Facebook

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