A standing room-only crowd packed the State House basement Tuesday night to rehash the merits of a proposed tax increase on top earners in Rhode Island during a five-hour hearing before a House legislative panel.
But the person who might finally shake loose the long-stalled progressive priority wasn’t even in the room: Senate Majority Leader Frank Ciccone III. The Providence Democrat ascended to the No 2. position in the upper chamber last week under a leadership shuffle prompted by the death of former Senate President Dominick Ruggerio.
Ruggerio long-opposed raising taxes on wealthy residents, but his successor, Senate President Valarie Lawson, and her right hand, Ciccone, both support the idea, and are co-sponsors of this year’s Senate legislation.
The companion bills introduced in February by Rep. Karen Alzate, a Pawtucket Democrat, and Sen. Melissa Murray, a Woonsocket Democrat, call for a 3% surtax on the top 1% of earners — those who make more than $625,000 a year, based on 2025, inflation-adjusted numbers. The proposal would affect about 5,700 state income tax filers and generate an extra $190 million in annual revenue for the state, according to the Economic Progress Institute, which backs the legislation.
“The reason why I have supported it is, it was something that should help the state bring more money into the state,” Ciccone said in an interview Wednesday.
Unlike Lawson, who is seen as progressive, Ciccone has garnered a reputation as one of the most conservative Democratic lawmakers in his 22 years on Smith Hill — opposing gun restrictions, protections for reproductive rights, and in 2010, voting down the legalization of gay marriage.
An unlikely ally
Ahead of the Senate elections, progressive group Indivisible Rhode Island called for senators not to elect Ciccone as majority leader, referring to him as “Trump Lite” in a social media post. But Ciccone has aligned with progressives at times, too. He led the push in the Senate to let undocumented immigrants apply for state driver’s licenses, which was signed into law in 2022, with a July 2023 start date. And, he has long supported a version of a millionaire’s tax.
“His district is one of those districts that would benefit from something like that,” Alzate said of Ciccone. “It makes sense, with schools shutting down, and a large immigration population. I think he sees this as a way to give some relief to his constituents.”
Put another way: “People are complicated,” said Zack Mezera, Rhode Island political director for the Working Families Party.
“I am not going to say we expect this to pass by any means, but we’re optimistic, increasingly optimistic, with the new leadership in the Senate,” Mezera said in an interview Wednesday.
Mezera also noted that while door-knocking in Ciccone’s district over the weekend, residents overwhelmingly expressed support for higher taxes on the rich.
Per-person income in Ciccone’s Senate District 7, which covers the western side of the capital city, was $26,859 in 2023 — about 60% of the statewide average of $45,919, according to U.S. Census Bureau estimates. More than one in five district residents live below the federal poverty line — double the statewide poverty rate. Just 6% of the district’s households earn more than $200,000 a year.
But will Ciccone leverage his new leadership position to advance the income tax bill in the upper chamber this year?
“It’s something we’re interested in,” he said. “The leadership team has been discussing it. We haven’t come to a total agreement on what it should look like.”
Lawson, an East Providence Democrat, was similarly vague on the same question.
“I have long supported adjusting our tax code to ensure that those at the very top of the income spectrum pay their fair share,” Lawson said in an emailed response Wednesday. “However, I firmly believe in the importance of the legislative hearing process, and of hearing from all points of view on this and every matter. I look forward to the committee’s review and to discussing this issue with all of my colleagues in the coming weeks.”
A Senate committee hearing on the legislation had not been scheduled as of Wednesday.
On year six
Across the rotunda, the House Committee on Finance heard impassioned pleas for and against the “tax the rich” bill during its initial, Tuesday night hearing.
“Let’s be clear, this is not about punishing success, it’s about fairness, shared responsibility and building a Rhode Island that works for everyone, not just those at the top,” Alzate told lawmakers.
She’s made the same plea to her colleagues for each of the last five years. Yet the bill, in various forms, has failed to advance out of committee in either chamber.
To Alzate, the need for new state revenue streams has never been greater than now, as the state stares down a $223 million projected budget deficit for fiscal 2026, while bracing for federal funding cuts.
One after the other, advocates for housing and homelessness services, public transit, and health care urged lawmakers to back the income tax hike as an alternative to stripping funds from critical services, workers and families.
“The Rhode Island health care system has been on edge for years, now we’re at the point where it’s completely unraveling,” said Alex Moore, political director with SEIU 1199, which represents more than 5,000 health care and service workers in Rhode Island. “We’re expecting closure notices, quite frankly, any day now. Our system needs several million dollars just to stop the bleeding.”
Opponents pushed back with equal force, warning of the devastation for the state economy and tax revenue as businesses and wealthy residents leave for tax-friendlier pastures across state lines. To what degree raising taxes on the rich influences migration patterns has been the subject of much debate among policy analysts nationwide and in Rhode Island.
Battle of the policy briefings
The Economic Progress Institute (EPI) in March published a 26-page policy paper to debunk the “tax migration myth” based on the state’s historic population changes and experiences in other states that have implemented some form of a millionaire’s tax.
However, the business-backed Rhode Island Public Expenditure Council (RIPEC) countered with its own, 18-page report in April examining the consequences of the proposed income tax hike. RIPEC in its report warned that the state’s dwindling population will further suffer if it adds to its three-tiered income tax structure, creating “significant risk” for state coffers. The top 1% of earners in Rhode Island paid 35% of the state’s income tax liability in 2022, according to RIPEC’s policy report.
Although neighboring Massachusetts adopted an extra 4% tax on income over $1 million beginning in 2023, more states are shifting away from complex and progressive income taxes. If Rhode Island follows the path of its northern neighbor, its already weak business climate could worsen, said Michael DiBiase, RIPEC president and CEO.
“If we pass this bill, we may make one budget cycle a little easier but we will be back in the same place next year with little to show for it,” DiBiase said during the hearing.
EPI responded in a nine-page brief on Wednesday, calling RIPEC’s prior analysis “weak on evidence” and emphasizing that the potential negative consequences, like out-of-state migration, would be “marginal at most.”
The dueling policy positions each relied on a dizzying sea of statistics. One stat stood out to Alisha Pina, coordinator of Revenue for Rhode Islanders, a grassroots advocacy coalition set up to drum up support for the income tax bill.
Under the existing state income tax structure, the lowest 20% of earners — who make $22,300 or less per year — paid more than 13% of their income to state taxes in 2024, including the 3.75% tax on personal income, according to analysis by the Institute on Taxation and Economic Policy. Meanwhile, the top 1% of earners pay 8.6% of their total income in taxes under the existing 5.99% state income tax rate, along with sales, corporate and other taxes.
“That is so absurdly inequitable that I cannot even fathom why we are not passing this in our first year,” Pina told lawmakers. “That alone should scream to you to be with the 99%.”
An extra 3% tax on income above $625,000 would force top earners to pay 9.2% of their income in state taxes overall. If approved, the tax increase would take effect Jan. 1, 2026.
House Speaker K. Joseph Shekarchi remained noncommittal on the income tax bill.
“I will be reviewing the large amount of testimony offered at the House Finance Committee hearing held on Tuesday night,” Shekarchi said in an emailed response Wednesday. “I am keeping an open mind on this issue as we work on adopting a budget in a very challenging year.”
This story was originally published by the Rhode Island Current.
