PROVIDENCE – General Assembly leaders showcased stark policy differences over state government operations and the taxes that fund them during the Greater Providence Chamber of Commerce’s 2026 Legislative Luncheon Wednesday at the R.I. Convention Center.
During a panel discussion, moderator and Chamber President Laurie White began with what became the centerpiece of the debate, the so-called “millionaires tax,” citing data showing 2,300 taxpayers now pay 35% of the state income tax, and asking if there was concern over targeting this “narrow and risky base” or if there should be a “pause” of this discussion on Smith Hill.
The Chamber has criticized the idea as burdensome on small businesses.
“We think people will leave and take their wealth with them,” White said.
The General Assembly is now vetting Gov. Daniel J. McKee’s $14.86 billion fiscal year 2027 budget proposal, which includes a 3% surtax on income above $1 million, indexed to inflation. The additional tax revenue that would be generated would go to the state’s general fund.
Gubernatorial candidate Helena Foulkes is also pushing for a 3% income tax on individuals earning over $1 million, which her campaign projects would generate more than a billion dollars within eight years. The difference with Foulkes’ plan is that money would be earmarked for housing.
Asked whether he supports raising income taxes on high-earning individuals, House Speaker K. Joseph Shekarchi said continuing uncertainty in Washington, D.C., including the effects of the federal budget bill that already provided a top-tier tax cut, needs to be balanced with the uncertain fiscal health of the state, which would need to identify $63 million in cuts or savings to balance McKee’s budget proposal.
“Everything is on the table,” he said. “Including a pause.”
However, House Minority Leader Michael Chippendale said the fact that the state’s budget has grown more than 200% since 2000 while wages have only grown between 20%-30% shows that things are moving in the wrong direction.
“We know it is bad policy. You eventually run out of balance. This is economics 101,” he said. “You can’t legislate on virtue and emotion. We have to use our brains.”
Senate Minority Leader Jessica de la Cruz defended the so-called “Big Beautiful Bill” that has been blamed by state Democrats for putting the state in an untenable fiscal position, suggesting taxpayers are becoming overburdened and that addressing the state’s fiscal deficit could be done by increasing economic growth rather than hiking tax bills.
De la Cruz is sponsoring legislation that would reduce personal income tax rates by 2% each year for five years, beginning in 2027.
“Taxing people into oblivion is not the answer,” she said.
Both House Majority Leader Christopher R. Blazejewski and Senate Majority Leader Valarie J. Lawson were noncommittal on the two proposals and agreed the May Revenue Estimating Conference will present a clearer picture of the state's revenue needs.
But Lawson said lawmakers could look to Massachusetts, which added a 4% surtax on income over $1 million in 2022 and has since brought in more than $2 billion in revenue annually, as a counter to the claim that the Commonwealth has seen a flight of high-income earners.
Despite data from the Massachusetts Budget & Policy Center showing residents exiting Massachusetts took a total of $4.2 billion in adjusted gross income with them in 2023 after the tax on millionaires took effect, Lawson disputed the claim that the Bay State has seen an outmigration of millionaires, arguing it may have gone in the reverse direction.
During the discussion, the Chamber announced it has partnered with several of the state’s leading business organizations to call on the General Assembly to delay any consideration of the proposed millionaires tax, warning that the measure could “undermine investment, job creation and long-term competitiveness.”
The group includes the Rhode Island Manufacturing Association, the Northern Rhode Island Chamber of Commerce, the Greater Newport Chamber of Commerce, Associated General Contractors, the Rhode Island Business Coalition and The Providence Foundation.
Erin Donovan-Boyle, executive director of the Greater Newport Chamber of Commerce, said “any attempts to burden a small segment of our population largely responsible” for tourism revenue would be “devastating to the area – adversely impacting both the industry and its workforce.”
In a time when nearly half of states have reduced their income tax rates, Michael DiBiase, CEO and president of the Rhode Island Public Expenditure Council, said the proposed millionaires tax “would be a step in the wrong direction and would only weaken the economic outlook for Rhode Island, already struggling with outmigration, slow GDP growth and an uncompetitive tax structure.”
“We do not have to guess,” White said. “In Massachusetts, billions in income have left the state, driven largely by high earners. That means lost jobs, lost investment and lost revenue.”
(UPDATED to add comments from Senate Minority Leader Jessica de La Cruz, Senate Majority Leader Valarie J. Lawson, Greater Providence Chamber of Commerce Erin Donovan-Boyle and Rhode Island Public Expenditure Council CEO and President Michael DiBiase.)
Christopher Allen is a PBN staff writer. You may contact him at Allen@PBN.com.
