Rhode Island AFL-CIO President Patrick Crowley can’t remember a Rhode Island gubernatorial candidate who didn’t pledge not to raise broad-based taxes during their campaign.
This year, prospective Democratic primary voters have two to choose from.
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Both Gov. Daniel J. McKee and rival Helena Buonanno Foulkes back a millionaires tax. McKee unveiled the 3% surtax on income over $1 million as part of his fiscal 2027 budget proposal, while Foulkes’ newly published housing plan relies on revenue from a tax on top earners to fund affordable housing.
“It’s encouraging that it seems the party in general has embraced the idea that we need to have a fairer tax structure,” Crowley said. “That’s a paradigm shift 20 years in the making.”
But, it makes the choice looming in the September gubernatorial primary harder: for Crowley and the 80,000-member union federation, which has yet to make an endorsement; for progressives who want a more expansive “tax the rich” policy agenda; and for business leaders staunchly opposed to any increases in income taxes.
A pair of polls released in February showed majority support among primary voters for a millionaires tax, with the strongest backing by registered Democrats. But unaffiliated voters were more evenly divided between support and opposition, while Republicans were steadfastly opposed in surveys by the AFL-CIO and University of New Hampshire Survey Center.
From New York to Washington state, Democratic state officials nationwide are taking a fresh look at taxing top earners to cushion the blow of federal funding cuts under the One Big Beautiful Bill Act.
But even solid blue Rhode Island rests on a backbone of independent voters, who comprise more than half of the state’s 701,000 registered voters.
The moderate majority means McKee and Foulkes have a choice to make: downplay the millionaires tax to court more moderate primary voters, or put the proposal front and center in the hopes of earning support from progressive and younger voters, said Wendy Schiller, a science professor and Howard R. Swearer Interim Director of the Thomas J. Watson Institute for International and Public Affairs at Brown University.
“The constituency is still deciding between McKee and Foulkes,” she said. “It’s a really important issue, especially for independent voters.”
Companion bills introduced in February on behalf of the Greater Providence Chamber of Commerce by Rep. Pat Serpa, a West Warwick Democrat, and Senate Minority Leader Jessica de la Cruz, a North Smithfield Republican, would cut income taxes by 2% each year for the next five years.
For the top tax bracket, which pays 5.99% on income over $186,450 based on 2026 tax numbers, the rate would drop to 5.39% by January 2031 – more than three percentage points less than the 8.99% tax rate that McKee and Foulkes both want to charge on income over $1 million.
“We want to flip the narrative,” said Laurie White, president of the Providence Chamber.
The chamber and its members insist the tax on top earners would stifle income, and in turn, hiring and wage growth, for small businesses, a majority of which operate as pass-through entities in which the owners choose to report their firm’s income on their personal tax returns rather than pay corporate taxes.
In 2022, the most recent data available, roughly 6% of tax filers in Rhode Island reported pass-through income over $1 million, according to data from the Rhode Island Division of Taxation.
The income tax reduction bills boast bipartisan support, including Senate Majority Whip David Tikoian as a cosponsor on the Senate version.
White is also holding out that McKee’s millionaires tax might not come to fruition.
She pointed out that the legislature, not the governor, controls the final tax-and-spend plan. And McKee has not exactly suggested he will fight tooth and nail for the tax hike.
“I don’t see it as a full-throated endorsement,” White said. “I don’t think it’s a foregone conclusion that by the end of June, we might have a different outcome.”
The millionaires tax was notably absent from the governor’s annual State of the State address, which served as a broad-brush preview of his budget plan. Nor was it mentioned in his March 3 letter to lawmakers ahead of a scheduled hearing on various tax changes in his budget proposal, including the millionaires tax.
Instead, McKee used the two-page, single-spaced letter to explain and defend his proposals to phase out income taxes on Social Security benefits and to establish an income-dependent state tax credit for families with young children. Both proposals have received overwhelming support from the demographic groups affected.
Yet, it was the familiar debate over a millionaires tax that dominated the nearly three-hour hearing before the House Committee on Finance on March 3.
Olivia DaRocha, a spokesperson for McKee’s office, said the governor’s omission of the millionaires tax in the letter does not signify his lack of support.
“The Governor’s proposed budget includes hundreds of items,” DaRocha said in an emailed statement. “We do not issue letters for all—or even most—of them.”
Anusha Venkataraman, state director for the Working Families Party, was unpersuaded by that logic.
“McKee missed the mark in that letter,” she said. “The lack of inclusion for the [tax proposal] in his own letter shows it’s not a real priority.”
The progressive political group has pushed lawmakers to take the tax hike a step further, joining with some Democratic lawmakers and other advocates to advance a “Fair Share Agenda.”
Companion legislation introduced in January by Rep. Karen Alzate, of Pawtucket, and Sen. Melissa Murray, of Woonsocket, both Democrats, with backing from the Working Families Party, proposes a 3% tax hike on the wealthiest 1% of tax filers — those who earn $640,000 in 2026 tax numbers.
It would affect 6,100 tax filers and generate $200 million in annual revenue, according to calculations by progressive advocates. Limiting the 3% surcharge to income above $1 million, as McKee proposed in the fiscal 2027 budget, would raise $135 million from 2,300 state tax filers, according to analysis from the state budget office.
What position candidates take on the tax on the top 1% will be a key factor in the Rhode Island Working Families Party’s pending endorsement. If no candidate supports the proposal, the party’s eight-person standing committee might not make an endorsement at all, Venkataraman said.
The Working Families Party did not make an endorsement in the 2022 governor’s race.
The Providence Chamber as a nonprofit does not endorse candidates, but its members are active and “interested-oriented” voters, White said.
Schiller views McKee’s quiet inclusion of the millionaires tax as a political strategy, meant to appease progressives while not alienating the more conservative wing of his party and independents. He also would want to avoid giving anti-tax Republicans a reason to switch affiliations and vote against him in the Democratic primary.
“In the primary, you don’t want to do something or talk about it so much that you attract people to vote that wouldn’t have voted otherwise,” Schiller explained.
Especially while waiting for Foulkes to take a stand. The former CVS executive initially stayed out of the fray when it came to income tax hikes.
Then on March 2, Foulkes unveiled a multi-faceted housing strategy reliant on a millionaires tax to fund affordable housing construction. She spent the intervening days touting the plan, including the millionaires tax, in interviews with reporters and social media.
Which is where the candidates’ parallel policies started to divulge, Adam Myers, associate professor of political science at Providence College, said.
“He hasn’t really proudly proclaimed his support for raising the top income tax,” Myers said of McKee. “Helena came out with a plan, and she’s talking to reporters about it, which seems at least an order of magnitude above McKee.”
Foulkes’ strategy to link the revenue from the tax to a tangible and specific goal — housing — might prove more persuasive than McKee’s proposal, which does not specify where the money would go. Schiller compared it to former Gov. Gina Raimondo’s 2015 RhodeWorks plan, which relied on state bonding and tolls on large commercial trucks to pay for infrastructure improvements on state roads and bridges.
“Southern states do this all the time, putting taxes on something and telling voters, ‘this is what we’re going to do with it,’” Schiller said. “If Foulkes can tie it to build low-income housing, I think people can live with that.”
White also favored Foulkes’ proposal because it calls for a constitutional amendment, requiring input by voters on the ballot.
“It expands the field in terms of who has a point of view on it,” she said. “It’s not being decided by a very few handful of people late at night when the budget is being debated.”
Angelika Pelligrino, a spokesperson for Foulkes’ campaign, did not directly answer questions about the campaign strategy behind Foulkes’ tax proposal. Instead, Pelligrino emphasized the need to improve the state’s housing shortage in a text message response.
Pelligrino also did not directly answer questions Monday regarding Foulkes’ stance on a tax on the top 1% of earners.
McKee’s office previously indicated he does not support a lower threshold for tax changes, warning of economic consequences for the state relative to its neighbors.
House Speaker K. Joseph Shekarchi and Senate President Valarie Lawson have remained noncommittal on competing legislation for income tax increases and reductions, awaiting still unscheduled committee hearings. However, Lawson is a cosponsor on Murray’s bill to increase taxes on the top 1% of earners, along with Senate Majority Leader Frank Ciccone.
Gregory Stevens, a third Democratic gubernatorial candidate who owns a trio of Pat’s Italian Restaurants, said in an interview Monday that he does not support any tax increases.
Stevens said he “liked the sound of” the income tax reduction proposed by the Providence Chamber, but had concerns about the corresponding drop in state revenue. The five-year reduction would reduce income tax revenues by $213 million, according to analysis by the Rhode Island Public Expenditure Council.
Nancy Lavin is a senior staff writer for the Rhode island Current.
