Rhode Island May Consider a Millionaire Tax to Close Budget Gap

Rhode Island's governor has said he is open to a public-union proposal for a three-percentage-point surcharge on households with more than $1 million in income as the state faces an estimated $100 million budget shortfall.

Governor Daniel McKee has signaled openness to a public-union proposal to add a three percentage point income-tax surcharge on households earning more than $1 million. The state is reported to face roughly a $100 million shortfall for the coming fiscal year and officials say spending rose substantially since the pandemic. Rhode Island's current top marginal rate is 5.99% on income over $186,450, and the proposed surcharge would move top rates nearer those in neighboring states. Recent revenue projections have improved because of stronger capital gains, though those receipts can vary with market conditions. What is reported: - Governor Daniel McKee said he is open to a public-union proposal for a three-percentage-point surcharge on households with more than $1 million in income. - The state projects about a $100 million deficit in the coming fiscal year and reports spending has increased more than 50% since the pandemic. - Rhode Island's top personal income tax rate is currently 5.99% on income over $186,450; the proposal would raise top rates closer to Massachusetts' level. - Income-tax collections have been stronger than earlier forecasts because of buoyant capital gains, which has narrowed the projected deficit since six months ago. - The article reports that many of the state's top earners are small-business owners with pass-through income, and that higher personal tax rates could affect their decisions. Summary: The reported proposal would raise the state's top effective tax rate and shift Rhode Island's position relative to neighboring states, and the discussion highlights revenue volatility tied to capital gains. Undetermined at this time.