Millionaire Tax Flight is a lie told by millionaires and their enablers

...top tax rates and changes in top rates have never driven mass migration of the highest-income filers—not in Rhode Island and not across the country.

Andrew Farnitano was the Communications Director for the Raise Up Massachusetts Coalition

The Revenue for Rhode Islanders Coalition, representing over 30 organizations across the State, called on the General Assembly to pass H5473/S0329, legislation that would generate $190 million in annual revenue by creating a 3% surtax for the top 1% of filers (on top of the current top rate of 5.99%) on taxable income above $625,000. The legislation would not affect tax filers whose taxable income is $625,000 or less.

There are two main differences between the 1% tax and previous income tax proposals: the 1% tax generates more revenue to be reinvested back into the State, and it comes in a year when thousands of Rhode Islanders are expected to experience financial hardship due to massive spending cuts made by the federal government. According to the Center for American Progress, cuts from Washington, DC are projected to raise taxes on a typical Rhode Island family by $2,669 per year, force 68,000 of Rhode Island seniors to pay more for medicine, require 71% of Rhode Islanders to work longer before retirement, dock Social Security up to $8,900 in the first year, and leave 81,300 Rhode Islanders without health coverage.

In the context of a state budget gap and forthcoming federal cuts to SNAP, Medicaid, and many other social safety net programs, the additional revenue could help shore up critical services in such areas as childcare and early education, education (kindergarten through college), services to older Rhode Islanders, public transit, and others. The coalition emphasized that the bill would affect only an estimated 5,700 tax filers out of more than 500,000 filers while providing funding for crucial services that would benefit more than a million Rhode Islanders.

The facts show that Rhode Island’s highest-income residents have fared well, even during challenging times. The 2017 Tax Cuts and Jobs Act disproportionately benefited the highest-income households, and signals from Washington suggest that the highest-income earners may benefit from continued or further tax breaks at the federal level. Meanwhile, Rhode Island families face rising costs, stagnant wages, and state and federal threats to the essential programs that enable them to work, like affordable childcare, RIPTA, SNAP, and Medicaid (which provides health insurance for more than half of Rhode Island children). According to the Economic Progress Institute’s 2024 Rhode Island Standard of Need Report, 68% of single adults in Rhode Island, 78% of single-parents with two children, and 34% of two-parent households with two children cannot afford to meet their basic needs from wage income alone.

The event began with an in-depth presentation from Alan Krinsky, Director of Research and Fiscal Policy at the Economic Progress Institute. Krinsky systematically demonstrated that top tax rates and changes in top rates have never driven mass migration of the highest-income filers—not in Rhode Island and not across the country.

Here’s the video:

Alan Krinsky, EPI’s Director of Research & Fiscal Policy presented Moving Beyond the Mass Exodus Tax Flight Myth a policy brief debunking claims that increasing the personal income tax rates on millionaires and other high-income filers will result in a mass exodus to lower-tax states and thereby harm Rhode Island’s economy.

In short, there is simply no evidence — not in Rhode Island and not anywhere in the United States — linking changes in top tax rates with large-scale netmigration of higher-income residents or of interstate migration in general.

While shifts in tax rates may play some role for individuals in relocation decisions, including where to move once the decision has already been made, the evidence shows this happens only at the margins and that tax rates have never motivated large numbers of higher-income individuals to move out of or into a state. The policy brief shows:

• Millionaires and billionaires are not concentrated in no-tax or lower-tax states, and higher-income filers do not have greater interstate migration rates than other filers.

• Despite repeated claims that Rhode Island’s tax policies have been driving people away for decades, higher-income filers have been moving in more than they have been moving out, and net-migration rates have not been connected with changes in the state’s top rates over the decades.

• Interstate migration rates for the New England states follow a similar pattern, despite differences in top rates and in tax systems.

• The Fair Share Amendment approved by Massachusetts voters to assess an additional 4% personal income tax on millionaires and on their income above $1 million has been a windfall for the state, raising over $2 billion each year, including for public transit and education programs.

“I’m here to report that the Massachusetts Fair Share Amendment is a resounding unqualified success,” said Andrew Farnitano was the Communications Director for the Raise Up Massachusetts Coalition. “Our fair share amendment is very similar to the policy being considered here: a tax on only the top 1% of the state’s residents. It created a 4% tax on the portion of a person’s income above a million dollars. So anything less than a million was untouched. Anything above a million received an additional 4% tax. It was passed on the ballot by voters in November, 2022. For legal reasons, it had to be done as a constitutional amendment rather than as traditional legislation. It’s now a permanent part of our constitution.

“During the campaign to pass fair share, we heard many of the same concerns about Millionaire Flight, about whether the money that was raised would materialize, about whether programs that we talked about, like education and transportation, would receive the investments that were being promised. We predicted the Fair Share Amendment would generate 2 billion annually, but opponents said we were crazy. They said the money would not show up because multimillionaires would flee the State en masse rather than pay the new tax. And they were flat out wrong.

“The Fair Share Amendment generated $2.4 billion in its first full fiscal year of tax collections,” said Farnitano. “And our State Department of Revenue is now projecting that in each of the first three years of the Amendment’s existence, it will generate at least that much revenue. The millionaires’ tax has consistently exceeded the state’s expectations, generating surpluses that legislators have available to spend on transportation and education and it’s already making an enormous difference for the people of Massachusetts. Fair Share is delivering real savings for our state’s families and making a real difference for affordability for working in middle class people across the State.

“It’s funding universal school meals for every student and breakfast and lunch in every school in the state. It’s funding free bus service with expanded routes, weekend service, and expanded childcare for more children in our State. There are now 7,000 more seats at childcare providers across the state. It’s also in higher education funding, free community college, and expanded scholarship options for middle class students that have generated substantial enrollment growth at our state’s colleges and universities after a decade of declining enrollment. It’s improving our public services and strengthening our infrastructure. It’s funding school building repairs and state aid to local schools, as well as supporting road and bridge repairs in every city and town in the State. It’s enabling a significant investment in the Massachusetts Bay Transportation Authority (MPTA) to finally bring it into a state of good repair, upgrading commuter rail tracks, upgrading subway trains, and there’s been no evidence of any substantial migration from multimillionaires as the revenue data shows they are staying and paying the tax year after year.

Weayonnoh Nelson-Davies, EPI’s Executive Director: With a Rhode Island State budget deficit and the federal government slashing funding for critical social safety net programs like Medicaid, SNAP, and many others, enactment of Representative Alzate’s and Senator Murray’s bill represents Rhode Island’s best chance during this legislative session to protect Rhode Islanders from profound harm. Our current tax system is heavily skewed in favor of the highest-income Rhode Islanders, who pay a much lower percentage of taxes as share of their annual income compared with low-income and modest-income filers. Especially now with the funding crisis that’s being caused in Washington, DC, the highest-income Rhode Islanders should contribute to the wellbeing of Rhode Island like everyone else.

Nina Harrison, EPI’s Policy Director: According to EPI’s 2024 Rhode Island Standard of Need report, 78% of single parents with two children cannot afford to meet their basic needs without assistance. And as many of you know, right now, federally, the very assistance that Rhode Islanders rely on to be able to meet their basic needs, Medicaid, SNAP, childcare assistance, is being threatened with funding cuts of over $800 billion for Medicaid, and similarly large cuts for SNAP and other programs that Rhode Islanders need to function. And so this isn’t business as usual. This year, we’re facing unique threats, and Rhode Island has an acute need that this bill could help resolve. One of the reasons that this bill polls so well among constituents in Rhode Island is because the community is feeling that struggle. They are struggling, want a solution, and know that the solution can make a meaningful difference in their lives.

And the truth is there may be some opposition from the business community, but that is not universal. We do also have support from the business community. We have the support of the Rhode Island Black Business Association and the Rhode Island Business Development Institute. The reality is businesses cannot thrive in a state that doesn’t have stable infrastructure, a stable workforce which requires solid public education and adult education programs and requires people to be able to get to those jobs via roads and bridges that work and public transportation that’s reliable and comprehensive and all of which Rhode Island will struggle to do with a nearly $300 million budget deficit and the impending threat of substantial federal cuts to all of the programs I just mentioned. And so the rest of the people you’ll be hearing from today will talk to you about this policy and what this bill could do for them specifically and for Rhode Island more generally. And so first, I’d like to invite Reverend Dwayne Clinker up here to speak about the moral aspects of this bill and what it would mean for fairness and equity in the State of Rhode Island.

Reverend Duane Clinker, Open Table of Christ Church, Providence: "We have both an economic and a moral obligation to make Rhode Island work for everyone, not just the top 1%. All faith traditions are called to care for one another and to create communities where everyone can thrive. This legislation represents a step toward the common good and is urgently needed when a kind of moral cord, a certain human and social obligation — always frayed in the best of times — has snapped.”

Amy Mullen, Vice President of NEA Rhode Island: Our schools face critical staffing, resources, and infrastructure shortages. The additional revenue from this modest tax on the highest earners would allow us to invest in every child and educator in Rhode Island. Quality education requires adequate funding, and this legislation provides a path forward without burdening middle and working-class families.”

Representative Karen Alzate: H5473: Rhode Island already faces a deficit, and Washington, DC, is threatening to withhold hundreds of millions in funding for Medicaid and other key supports. Working families are struggling enough already — we cannot continue to balance our State budget on their backs. We can’t delay any longer.

Senator Melissa Murray S0329: This is the year to act. We’ve seen the success of similar measures in neighboring states, most notably Massachusetts, where revenue has exceeded expectations without driving away residents. With federal tax cuts disproportionately benefiting the wealthy and potential further cuts on the horizon, we must ensure Rhode Island has the resources to support all its residents, not just the top 1%.

Liza Burkin: Liza Burkin, Organizer of the Save RIPTA coalition: Public transportation is a lifeline for the tens of thousands of Rhode Islanders who rely on it to get to work, school, medical appointments, and essential services. Without adequate funding, RIPTA faces service cuts that disproportionately impact our most vulnerable residents. The revenue generated by H-5473/S-0329 is our single best chance at helping stabilize and improve our transit system and moving our State’s economy forward.

Patrick Crowley, President of the Rhode Island AFL-CIO: They say that we have to have the tax policy we have because it benefits job creators. We say we can’t solve tomorrow’s problems with yesterday’s tax policy. They say we have to be competitive with our neighbors. Who benefits from that? What kind of competition? It doesn’t benefit working class people. It doesn’t benefit poor people. It doesn’t benefit people who rely on public services to survive. They say it’s just Economics 101, that this is just how the system works. We say we have options, and there are different kinds of policies.

What it comes down to is that we need to think boldly. We need to have imagination. We need to think about tomorrow. The working class in Rhode Island has shouldered the burden to get Rhode Island to where it is today. We can’t do it on our own. It’s time for everyone to take part. It’s time for everyone to contribute, and that’s not what’s happening now.

You know what I imagine? I imagine thousands of co-op housing units over on the 195 land. I imagine public transportation, not just on the main streets of Rhode Island, but in every rural neighborhood across the state. I imagine a public school system that doesn’t have to scrape, scramble, and save to have the basics. I imagine a public school system where every kid in the state can access every possible resource. That we have a 21st 22nd Century education system. It will take all of us to shoulder the burden. As we think about our different options, the most important one is to build a fair tax system. And this legislation gets us here. I hope that Representative Alzate, Senator Murray, and all of your colleagues, do everything you can because we will be 100% behind you 100% of the time. Let’s get this done.

Patrick Crowley, President of the Rhode Island AFL-CIO