New RIPEC Report Claims Economic Risk of Millionaire’s Tax Hike, Foulkes and McKee Keep Pushing Increase

New RIPEC Report Claims Economic Risk of Millionaire’s Tax Hike, Foulkes and McKee Keep Pushing Increase

Using new federal data, research from the Rhode Island Public Expenditure Council (RIPEC) finds that a proposed increase to Rhode Island’s top income tax rate may accelerate outmigration and weaken the state’s economic competitiveness.  

 

Both Democratic candidates for governor are pushing the millionaire’s tax hike as a central theme in their economic policies.

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Ironically, as Governor Dan McKee pushed tax hikes, he chairs the Rhode Island Commerce Corporation, which regularly parcels out targeted tax breaks to corporations.

 

And, Helena Foulkes, McKee’s Democratic primary challenger, was formerly the President of CVS, and no Rhode Island company has received more tax breaks and incentives than her former employer. 

 

“Governor McKee’s proposal marks a key turning point for Rhode Island,” DiBiase said. “It comes at a time when state income tax policy is diverging nationally and carries a significant risk to Rhode Island’s ability to retain and attract businesses and residents. Rhode Island already has relatively high levels of domestic outmigration and its economic growth has considerably lagged the U.S. over the past decade.  Given the experience of Massachusetts and the positive net migration of Bay State residents to Rhode Island over the last several years, it would be particularly risky to adopt a top income tax rate that could undermine this trend.” 

 

The proposal, included in the governor’s FY 2027 budget, would increase the top income tax rate by 50% from 5.99% to 8.99% on income over $1.0 million. This would place Rhode Island among the top 10 highest marginal state income tax rates nationally. 

 

“Given that states compete for residents and businesses, and Rhode Island’s economy is already lagging, this proposal carries real risk for the state’s economic future,” said Michael DiBiase, RIPEC President and CEO. “Rhode Island relies heavily on a small number of taxpayers to fund a large share of services. Policies that make the state less competitive risk shifting the burden onto other Rhode Islanders over time,” he continued.

 

DiBiase added, “Taking on this risk is even more unwise given the recent news that state revenues will be $233 million greater than expected. There is no need to raise taxes—instead the state should focus on fiscal discipline and growing the economy.”