A coalition backed by organized labor and progressive groups on Tuesday unveiled a renewed push to hike the amount of income tax paid by well to do Rhode Islanders.
The Revenue for Rhode Island coalition wants to raise the income tax from 5.99 percent to 8.99 percent on the adjusted gross income above $475,000 in earnings each year.
Senate Finance Chairman William Conley (D-East Providence), a sponsor of the proposal, calls it a reasonable way to raise $128.2 million in additional state revenue without affecting most Rhode Islanders.
He dismissed the idea that people would leave the state because of a relatively small tax bump.
“If you’re somebody who’s in a $500,000 tax bracket, this is going to cost $750 more in taxes,” he said in an interview. “So just common sense tells you that somebody’s not going to leave the state of Rhode Island because they’re going to pay $750 more in taxes.”
Critics say Rhode Island should be lowering taxes to improve its business climate and attract more affluent residents.
Meanwhile, a competing proposal, backed by Rep. Gregg Amore (D-East Providence) and Sen. Ryan Pearson (D-Cumberland), would increase the top marginal income tax rate by one percentage point, from 5.99 percent to 6.99 percent, while earmarking the additional money for public education.
“This could be a win-win because it asks the top 1 percent to make a modest investment in their’s and the state’s future workforce, while maintaining RI’s income tax competitiveness,” said Gary Sasse, director of the Hassenfeld Institute for Public Leadership at Bryant University.
Rhode Island’s top income tax rate was cut to its current 5.99 percent level, from just under 10 percent, when former Gov. Don Carcieri signed a bill into law in 2010. Supporters said the cut would bolster the state’s economy.
But advocates for higher taxes on the well to do say working families are now paying a disproportionate share of the tax burden.
“The lowest 20 percent of the tax filers in Rhode Island pay 12.1 percent of their income in taxes,” Conley said, “while the richest top 1 percent only pay 7.9 percent of their income in taxes.”
Rep. Karen Alzate (D-Pawtucket), the House sponsor of the measure, said in a statement, “With this modest revenue proposal, our state will have the funds to properly support our citizens and our infrastructure, establishing Rhode Island on firm footing for future success.”
The proposal faces an uncertain fate in the General Assembly since legislative leaders have in recent years adopted a skeptical posture toward broad-based tax increases.
In a statement, House Speaker Nicholas Mattiello said, “We will consider the proposal during the committee process and it will be carefully vetted. But my position has been that we need to remain competitive with neighboring states so high-wage earners don’t leave Rhode Island.”
The Revenue for RI Coalition includes the RI AFL-CIO, NEARI, RIFTHP, SEIU State Council, SEIU District 1199, Economic Progress Institute, RIASSE Local 580 SEIU, Coalition of Labor Union Women RI, Direct Action for Rights and Equality, Providence Central Federated Labor Council, RI Association for Infant Mental Health, RI Coalition for the Homeless, RI National Organization for Women, The Right from the Start Coalition, URI American Association of University Professors (AAUP), and the Women’s Fund of RI.