Why raising taxes on wealthiest 1% is a long-term investment in Rhode Island

[TexasTowelie]

By SEN. MELISSA MURRAY and REP. KAREN ALZAT


With the expected influx of $1.78 billion in federal aid from the American Rescue Plan, some would say there is no longer a need to raise any taxes. However, the point of our legislation to raise the income tax of the top 1% is not to address the coronavirus recession. That's the job of the one-time infusion of federal relief dollars.

By contrast, raising the income tax on the top 1% is about Rhode Islands long-term success addressing challenges that predated the pandemic and that will continue if left unaddressed. The problems include an unbalanced tax code which disproportionately benefits the wealthiest and systematically benefits white Rhode Islanders over Black and Latinx Rhode Islanders. The challenges include finding revenue to pay for the goods and services that make Rhode Island a wonderful place to live and grow businesses.

Our proposal to raise the income tax rate from 5.99% to 8.99% on income above $475,000 will only impact the top 1% of earners about 5,000 taxpayers. This proposal is not designed as a fix for the damage done by COVID-19. Indeed, it takes effect beginning with tax year 2022, meaning that most of the estimated $128 million in new, annual revenue will not be generated until people pay their 2023 taxes, after most of the one-time federal aid will be gone. Our proposal is therefore an investment in Rhode Island that will raise valuable revenue and help rebalance our tax system.

The truth is that our tax system has long been unbalanced and the Bush, Carcieri, and Trump tax cuts only further unbalanced our system and provided windfalls for the wealthiest. Today, the top 1% of Rhode Islanders pay only 8% of their income in state taxes income, property, and sales taxes combined whereas those in the lowest 20% of income pay over 14%. That's far from balanced.

Read more: https://warwickonline.com/stories/why-raising-taxes-on-wealthiest-1-is-a-long-term-investment-in-rhode-island,162047