Rhode Island House Bill H7385

Rhode Island 2026 Regular Session

• Introduced: 1/28/26
• Refer: 1/28/26

Caption

RELATING TO TAXATION - AGREEMENT TO PHASE OUT CORPORATE INCENTIVES, COMPACT ACT

Impact

The bill proposes to amend Title 44 of the General Laws regarding taxation, adding a new chapter focused on this compact. If enacted, the implications go beyond mere economic measures; they represent a significant shift in how states interact and compete for business. The enforcement of the compact will rest with the attorneys general of the participating states, who will ensure compliance with its provisions. This could lead to a more stable business environment where corporate incentives are consistent and predictable across state lines, potentially fostering better inter-state cooperation.

Summary

House Bill H7385, also known as the Agreement to Phase Out Corporate Incentives Compact Act, aims to establish a legislative compact among at least two states. The core intent of this bill is to prohibit the selective use of subsidies by any participating state to attract or retain specific industries or companies within their borders. It seeks to create a level playing field by preventing 'poaching'—the practice of incentivizing companies to relocate from one state to another through economic incentives such as grants, tax breaks, and favorable bonding statuses.

Contention

While the bill aims to curtail aggressive subsidy wars between states, concerns have been raised regarding its potential impact on local economies. Critics argue that limiting subsidies could hinder states’ abilities to attract major businesses, especially in economically disadvantaged areas. Proponents, however, believe stabilizing the subsidy landscape will lead to healthier economic competition without compromising state revenues significantly. The compact underscores a balance between fostering growth and preventing governmental overreach into market dynamics.