A tax tweak may have helped keep Rhode Island’s biggest bank from decamping for Massachusetts. House Speaker Joe Shekarchi found himself defending the new tax law, passed earlier this month, in an interview with WPRI’s Tim White and Ted Nesi that aired over the weekend. The change shifts the way state taxes for banks can be calculated to what’s known as a “single sales factor” — that is, the corporate taxes are based solely on a bank’s revenue in the state, and not also on how many people it employs or the property it occupies. Generally speaking, the single sales factor approach benefits companies with large in-state operations that do business in many states.
Massachusetts lawmakers enacted a similar change last year — across all kinds of industries — and it is set to take effect in January. Their counterparts in Rhode Island felt they needed to keep up, at least when it came to the state’s largest bank, after Citizens lobbied for the change. Citizens was also among the financial companies that supported the change in Massachusetts, along with State Street and BNY Mellon.
Lease and Relocation Talks
In that WPRI interview, White asked Shekarchi if Citizens representatives said, point blank, that it would leave if it didn’t get the “single sales” change.
“They didn’t say it as directly as that,” Shekarchi responded. “They told me Governor [Maura] Healey had two proposals on the table for them to relocate to Massachusetts. One was a deal in the Greater Boston area. One of them was anywhere in Massachusetts. That was clearly on the table and Governor Healey was courting Citizens to move to Massachusetts.”
Passing the bill, Shekarchi said, was about “tax parity” with other states that have similar policies.
Citizens already has a substantial presence in both states. The bank opened a big campus it owns in Johnston, R.I., in 2018, where about 2,800 employees work. Roughly two years later, the bank opened its second biggest New England office in Westwood, Mass., a leased office for about 500 employees. The bank also has smaller offices in Providence (its corporate headquarters) and Boston (at 28 State St., headquarters of its commercial bank).
A spokesman for Citizens declined to comment. And Healey spokeswoman Karissa Hand declined to share details about the administration’s offers to Citizens, other than to say: “Massachusetts is always competing for businesses to move to and expand in our state.”
Jon Chesto can be reached at jon.chesto@globe.com. Follow him @jonchesto.
