The arguments presented to Rhode Island's House Finance Committee for taxing the rich
"Poll after poll - across the country and in Rhode Island - demonstrate that proposals like H5473 win large majorities of support among constituents."
Before the hearing for bill HB5473 in House Finance on Tuesday, which would guarantee a fairer tax system by requiring the top 1% of highest earners in the state to pay a little more in taxes, at least 87 people submitted written testimony for and against the idea. Thirty-four people expressed clear support. Ten people expressed opposition. An additional 33 people sent a prefabricated form letter1 in opposition.
HB5473 would generate $190 million in annual revenue for Rhode Islanders by taxing the state’s top 1% of income earners with a 3% surtax on incomes above $625,000 (after all deductions). This would not affect the first $625,000 in income. This affects only 5,700 out of more than 500,000 tax filers — only the top 1% of all tax filers - and provides much-needed revenue for healthcare, schools, childcare, senior services, RIPTA, and roads and bridges.
You can watch the House Finance Committee meeting here.
The following is a sampling of letters in support:
“We’re facing a $220 million budget deficit, and hundreds of millions of dollars in careless, destructive cuts from Trump and Musk,” said Zack Mezera, RI Working Families Power Political Director. If our lawmakers don’t pass a fairer tax system this year, Rhode Island families will be forced to shoulder the full brunt of the burden: over 240,000 of us will lose Medicaid; hundreds of bus drivers, educators and care workers will lose their jobs; and working class families will be taxed further to help make up the gap.
“By guaranteeing the 1% pay their fair share in taxes, we can raise $190 million to help fund our healthcare, schools, roads, and bridges while helping protect Rhode Island families from Trump and Musk’s hostile playbook – without putting the burden on working people or small businesses,” continued Mezera. “Right now, our upside-down tax system has working people paying more than our fair share in taxes, while the wealthy pay less and less. Now that we’re facing a level of threat to our economy and our livelihoods, every Rhode Island lawmaker has to make a choice: pass a fairer tax system by asking the richest 1% of Rhode Islanders to do their part, or make the rest of us pay the price. We hope today’s hearing shows that our State Representatives have chosen to side with us.”
“Currently, the top 1% of income earners pay a smaller percentage of their income on state and local taxes than the lowest-income Rhode Islanders,” said Executive Director Weayonnoh Nelson-Davies of the Economic Progress Institute, one of the leading organizations of the Revenue for Rhode Islanders Coalition. “This legislation will affect only 5,700 of more than 500,000 tax filers. Also, it will not harm business because most businesses in Rhode Island are small and micro businesses whose owners do not generate more than $625,000 in annual income after all deductions, which means they would not be affected. The time has never been more right or urgent than now to enact this reasonable, democratic, fiscally responsible, and moral bill.”
“Rhode Island is facing a serious and growing budget deficit, worsened by the threat of historic federal cuts to vital programs like Medicaid and SNAP,” wrote Erica Hammond, Legislative Director at the Rhode Island AFL-CIO. “In this uncertain environment, the working people of Rhode Island, who kept this state afloat during a pandemic, economic crises, and ongoing cost-of-living pressures, are again told there’s not enough money to fund basic services. Cuts alone are not a viable or sustainable solution.
“Our members work in the sectors most at risk under austerity budgets. We’ve already seen job losses in the state workforce as a result of cuts by the Department of Government Efficiency (DOGE). Rhode Island Public Transit Authority (RIPTA) workers are staring down a $32 million budget gap that threatens service and jobs. Front-line healthcare workers face funding reductions in hospitals, nursing homes, and community health centers. These workers are the backbone of our state—and they are at risk if we fail to act.
“This legislation offers a responsible and fair path forward. It creates a 3% surtax on taxable income above $625,000, impacting only the wealthiest 1% of Rhode Islanders, or an estimated 5,700 tax filers. It leaves 98.8% of residents untouched. And yet, it would generate nearly $190 million in new revenue each year, revenue that could protect essential public services, invest in healthcare and education, and prevent job losses in key sectors.
“Rhode Island’s current tax structure is fundamentally unfair. The wealthiest residents already pay a smaller share of their income in taxes than working and middle-class families. HB5473 would begin to rebalance that injustice.
“This bill is about values: fairness, dignity, and shared responsibility. We can no longer afford a tax system that protects the ultra-wealthy while putting nurses, bus drivers, childcare providers, and teachers on the chopping block. We urge you to pass H5473 and build a state budget that reflects the priorities of the people who continue to keep Rhode Island moving forward.”
“The Economic Progress Institute (EPI) supports Representative Karen Alzate’s H5473 to create a new 3% surtax for taxable income above approximately $625,000 in taxable income ($750,000 total income). This would impact approximately only 5,700 taxpayers. Furthermore, the 3% would apply only to taxable income above this amount. All income below it will continue to be taxed at current rates, according to the existing three-bracket system. This means, for example, that a taxpayer with taxable income of $630,000 would pay only an estimated $150 more per year, and a taxpayer with $620,000 would pay nothing additional. While new revenue from H5473 would not be attached to any specific purpose, the additional funds could help prevent cuts to critical services in child care and education, senior care, and public transit.”
Tax Fairness
“Although Rhode Island’s Personal Income Tax is moderately progressive, the state’s overall tax structure, including property and sales taxes, is regressive. This means that Rhode Island’s lowest-income earners pay a larger percentage of their income in state and local taxes than the highest earners. The bottom 20 percent pay 1.55 times as much as the top 1 percent (13.3 percent of income vs 8.6 percent), which would prove a modest measure in reducing this gap.”
Revenue Planning for the Future
“Although Rhode Island received a considerable amount of much-needed COVID-19 relief funds from the federal government, these funds were designed to provide temporary aid for short-term recovery needs and for one-time investments. These relief funds did not provide the ongoing revenue base to build for the longer term, to support the services that Rhode Islanders and Rhode Island businesses require to thrive.
“H5473 will raise an estimated $190 million in revenue per year. This will help with future planning, but we can also expect approximately half this amount to be available for the budget challenges we face for FY2026. With such funds, we can build upon the successes of our recovery investments in education and infrastructure.”
Racial Equity and Tax Fairness
“Decades of racist tax and other public policy, such as redlining for providing and denying mortgages, have resulted in large racial and ethnic disparities in both income and wealth across the country. Tax policies on the state and local levels play a role in maintaining or even worsening the existing wealth and income gaps. In Rhode Island, Black filers account for 5.8% of all filers, yet only 0.7% are in the top 5% of income. Latino Rhode Islanders account for 15.5% of filers, yet only 3.9% are in the top 5% of income. A tax on the Top 1% would improve the situation by decreasing racial and ethnic disparities.”
Good for Small Businesses
“Most small businesses simply do not have taxable income within the range of this tax. For 2018, the median income for self-employed Rhode Islanders with incorporated businesses was $53,794; for those with unincorporated businesses, the median income was $32,639. Not all the 5,700 taxpayers affected by this proposal would be small business owners.
“The vast majority of small business owners will see no change in their taxes. The proposed tax would only apply to business owners whose income after all expense deductions is above $625,000. For almost all small business owners, there will be no additional taxes. Small businesses thrive where there are robust public services, not simply low taxes for those with the most income.”
A Popular Proposal
“Although politicians worry that no one likes any increase in anyone’s taxes, this is not the case. Poll after poll - across the country and in Rhode Island - demonstrate that proposals like H5473 win large majorities of support among constituents. In a 2021 poll of Rhode Islanders, voters were asked specifically about creating a new tax bracket on income above the 1% threshold, and the results are striking: 72% supported a new top 1% tax bracket, with 51% strongly supporting it, and only 25% opposing it.
“On behalf of SEIU 1199 New England, representing over 7,000 healthcare and service workers across Rhode Island, we write in strong support of H5473, which would add a 3% income tax on earnings over approximately $625,000 - affecting only the top 1% of Rhode Islanders,” wrote Alex Moore, Political Director of SEIU 1199NE.
“This policy is both fair and urgent. Only about 5,700 people in the state make more than $625,000 a year. These individuals are already among the wealthiest, and yet, under a likely second round of Trump tax cuts, they are poised to receive even larger federal windfalls.
“And how will those tax cuts be paid for? Through deep cuts to Medicaid and other essential public programs—cuts that will have devastating consequences for Rhode Island’s healthcare system, which is already under tremendous strain.
“We cannot afford to leave Rhode Island’s future at the mercy of federal rollbacks. If we don’t act now to generate state-level revenue from those who can afford it, we risk the collapse of critical services like long-term care, hospital operations, and community-based healthcare programs that our members and their patients depend on every day.
“H5473 simply asks the wealthiest 1% to pay their fair share. It maintains the current three-bracket structure for everyone else, while adding one new top bracket that only applies to the highest earners.
“This is a smart, targeted way to protect Rhode Islanders from the fallout of federal austerity, without placing further burdens on working families.
“We urge the committee to support H5473 and keep Rhode Island on the path to fiscal stability, fairness, and compassion.”
“On behalf of the Immigrant Coalition and our 38 member organizations, I ask this Committee to support H5473, which would tax the top 1% of income earners in Rhode Island by creating a 3% surtax on income above $625,000,” wrote Juan Pablo Ocampo Sheen, Coordinator at the Immigrant Coalition of Rhode Island.
“We need Rhode Island’s leaders to be proactive, not reactive. Rhode Island relies on federal funds for 35.8% of the state budget, and federal funding cuts have been proposed. This would make our budget deficit worse. The federal cuts from DC threaten critical programs in Rhode Island that we need, such as Medicaid, SNAP, and Head Start.
“All Rhode Island kids need more, not less, and the United States Department of Education is threatening to withhold federal funding if states refuse to abandon diversity, equity, and inclusion initiatives. We know there is more than $116 million in congressionally mandated financial support annually in Rhode Island. We need you to step up and approve this bill so our kids have a chance to thrive.”
“Members of Cranston Forward see in our community how basic needs - affordable housing and homelessness prevention, public transit, and school facilities, staffing and playgrounds, to name just a few- are perpetually underfunded in an artificial climate of resource scarcity, while a small percentage of citizens and businesses are allowed to accumulate inconceivable wealth without being required to contribute their fair share to the common good,” wrote Karen Rosenberg, who chairs Cranston Forward.
“Now, this situation is being dramatically compounded by the Trump administration, which, despite inheriting a strong economy, has set about smashing and looting federal programs in a way that is about to make the financial needs of our state and local governments and our low and middle-income families much, much worse.
“Americans - including Rhode Islanders - are coming to understand that this crisis atmosphere is not inevitable, but is the result of an economy and tax system that is increasingly rigged to benefit the wealthiest at the expense of the common good.
“Things have become dangerously out of balance when our bridges and schools are falling and more and more families are struggling to afford shelter and food, and the response of the federal government is to eliminate education, infrastructure, and safety net programs to fund massive tax cuts for billionaires and large corporations.
“Rhode Island must step up and join our neighbors like Massachusetts to restore balance. H5473 is a modest step. Requiring the wealthiest Rhode Islanders to contribute their fair share will at least partially offset the hit to our state and municipal budgets and our most vulnerable citizens caused by the disastrous Trump administration policies.
“We urge you to approve this bill.”
Here’s the form letter:
“I am writing today express my strong opposition to H5473, which seeks to increase personal income tax rates. Higher taxes will hurt everyone - from small businesses to the non-profits that rely on philanthropy to the single mother who can’t find a well-paying job.
“The proposed increase in H5473 is aimed directly at small “mom and pop” businesses that pay taxes as a pass-through entity. Higher taxes will only serve to burden successful small businesses, making it harder to create jobs and contribute to the local economy.
“Furthermore, increasing taxes will make Rhode Island less competitive compared to other states. Businesses are constantly evaluating their options when it comes to location, and higher taxes can be a significant factor in their decision-making process. If Rhode Island becomes less tax-friendly, businesses may choose to locate or relocate to states with more favorable tax policies, taking jobs and revenue with them.
“In order to promote economic growth and prosperity in Rhode Island, it is crucial that we maintain a business-friendly environment. I urge you to oppose H5473 and work towards policies that businesses and encourage investment in our state.”
The form letter opposes the bill, so it deliberately neglects to mention that the tax raise isn't across the board. It may be written to scare people into thinking that their taxes will go up, so quick! write and oppose! Like Nancy H., I wonder who prepared the letter.
On a larger issue, this type of tactic seems to be common. I received a screaming scare e-mail urging me to oppose the ethnic studies bill. So I looked up the bill, which contains NOTHING that the e-mail claimed it did. I had some issues with the bill, and I wrote to my representative (who is terrific) who is one of the sponsors. But it was another "oppose this horrible bill that's going to destroy society" scare. What if. . . what if. . . and this state did this. . . and this state did that. . . (one of these states, in fact, addressed many of the issues the scare tactics raised, but that doesn't count, I guess).
My gratitude again to Steve for his thoroughness and accuracy.
Wish I could have been there to testify, but had another hearing. Glad the speakers made the case for taxing the rich. The one thing that never gets enoufgh notice is that taxoing the rich is highly correlated with better economic outcomes for the community, with reductions in poverty going along with reducing the sky high wealth of the few. When those with the least do okay, get by, have a roof over their heads and enough to eat, the entire societty benefits, with reduced expenditures for violence and emergencies as well as reduced expenditures for social services, and this always translates into more commerce. You would have thought the educated rich would have figured this out considering how often it has proven to be true, but the rich still do not seem to want to get it. Capitalism works best when the rich are reined in.