In this co-authored op-ed, Laurie White, President and CEO of the GPCC, and Michael DiBiase, President and CEO of the Rhode Island Public Expenditure Council, discuss Rhode Island’s fiscal outlook and the potential impacts of proposals such as a “millionaire’s tax.” They highlight concerns about spending growth, tax competitiveness, and effects on small businesses, emphasizing the importance of fiscal discipline and long-term sustainability in state policymaking.
Rhode Islanders have to work hard and live within their means – and state government should, too. Businesses and working families deserve to live in a state that is affordable, predictable and competitive. Those goals are not in conflict, but they are put at risk when the policy conversation is derailed by a tax gimmick like a so-called “millionaire’s tax” that is once again being floated by state leaders.
Instead of addressing spending growth and improving efficiency, state leaders are once again looking for a get-rich-quick scheme that is going to erode our long-term prosperity.
Rhode Island has a spending problem, not a revenue shortfall.
State general revenue spending for fiscal year 2026 totals $5.81 billion, an 11% increase in just two years – far exceeding inflation over the same period. When spending grows at that pace, no narrowly targeted tax increase can help the problem. Just this year, the General Assembly enacted more than $100 million in new and enhanced taxes and fees on residents and business in an attempt to keep pace with runaway spending. Without meaningful spending discipline, a “tax the rich” policy is not a solution; it is a short-term gimmick that avoids the real problem.
Make no mistake, a “millionaire’s tax” is going to hurt the mom-and-pop businesses that make Rhode Islanders proud. Small businesses are job creators and the state’s economic engine, and a high-earner tax credit hits them hardest. More than half of higher-income filers in Rhode Island are reporting business income, and most small businesses are structured as pass-through entities. That means higher personal income taxes directly reduce the capital available for hiring, expansion and wage growth. A “tax the rich” policy is, in practice, a tax on many of the home-grown businesses that form the backbone of Rhode Island’s economy.
Rhode Island already relies heavily on a small group of taxpayers. In 2022, just 1% of filers – those earning $500,000 or more – paid 35% of the state’s total income tax liability. That is not evidence of an undertaxed wealthy population; it is evidence of a tax base that is highly concentrated and, therefore, fragile. Making the state even more dependent on this small group increases fiscal risk rather than reducing it.
It is also important to recognize that Rhode Island’s income tax system is already highly progressive. Among states, Rhode Island ranks 11th highest in income tax progressivity. In other words, those with higher incomes already pay a disproportionately large share. Layering additional taxes on top of an already progressive structure may be politically appealing in the short term, but it does little to improve long-term fiscal stability — especially if spending growthremains unchecked.
Meanwhile, Rhode Island is moving in the opposite direction of much of the country. Since 2020, 20 states have reduced their top income tax rate, including six that have adopted flat tax structures. As a result, Rhode Island remains uncompetitive. The state now ranks 40th — 11th worst — in overall tax competitiveness. If a new surtax had been in place, Rhode Island would have fallen even further. That is not the trajectory of a state trying to attract investment, talent and jobs.
These risks are compounded by troubling demographic trends. Rhode Island already ranks among the worst states in the country for domestic migration and research consistently shows that higher taxes accelerate the loss of top earners — people who contribute not only significant tax revenue, but also entrepreneurship, investment and philanthropy. Rhode Island won’t be a state that our kids and grandkids can come home to. The jobs, opportunities and affordablehomes will be in states with more reasonable tax rates.
This is not an argument to underfund essential services. It is a call to protect them by confronting spending growth honestly and focusing on accountability, efficiency and results. Every dollar saved through smarter government is a dollar that does not need to be raised through higher taxes.
Rhode Island can choose a better path. We need to stop looking for get-rich-quick gimmicks and focus on doing the hard work to tackle our spending problem and build a state that is fiscally responsible and genuinely attractive to businesses and families alike.
Governor McKee and the General Assembly should pledge to make the right choice this session and fix spending before raising revenue, because taxing higher earners will not fix the problem.