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SB 107

AN ACT RELATING TO TAXATION -- SURPLUS FUNDS TAX CREDIT ACT

2025 Regular Session Introduced by Elaine Morgan and 4 co-sponsors

Rhode Island bill creating tax credits for businesses and individuals with accumulated surplus funds, potentially reducing state tax revenue while encouraging capital retention.

05/29/2025 Committee recommended measure be held for further study
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Bill Summary · SB 107

Legislative bill overview

SB 107 establishes a tax credit mechanism for businesses or individuals that accumulate surplus funds above specified thresholds. The bill allows taxpayers to claim credits against their state tax liability based on retained earnings or capital reserves. This represents a significant shift in Rhode Island's tax policy toward incentivizing capital accumulation rather than penalizing it.

Why is this important

The measure directly affects state tax revenue and corporate financial planning in Rhode Island. It could influence business investment decisions, retained earnings strategies, and ultimately the state's ability to fund public services through income tax collection. The policy signals a philosophical position on whether accumulated capital should be tax-advantaged.

Potential points of contention

  • Revenue impact: Unclear how much tax revenue the state would forgo; could strain budgets for education, infrastructure, and social services without offsetting savings
  • Fairness concerns: May disproportionately benefit larger corporations and wealthy individuals with capital to accumulate, raising equity questions
  • Implementation complexity: Defining "surplus funds," establishing thresholds, and preventing abuse through accounting strategies could create administrative burdens and litigation
  • Economic efficacy: Unclear whether tax credits actually drive productive investment or simply reward companies for practices they would pursue anyway

Compiled from official sources — confirm details with the bill’s official record.

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