TAXES

Our tax code is extremely regressive. Our state’s wealthiest residents shoulder a far lighter tax burden than everybody else. In Rhode Island, the poorest 20% (people who make less than $21,700 annually) pay 12.1% of their annual income in state and local taxes.[1] The richest 1% (people who make over $467,700 annually) pay only 7.9% of their annual income in state and local taxes.[2] Everybody in the middle pays between 9% and 10%.[3] Clearly, Rhode Island’s richest residents are not paying their fair share.

This did not happen by accident. Over the past few decades, the super-rich have steadily made our tax code more and more regressive by buying off corrupt politicians, persuading them to cut taxes for the 1% again and again. For example, in 2006, the state passed a tax reform package that included, among other things, a large reduction on the marginal tax rate applied to the richest 1%. This tax cut for the top 1% has already cost Rhode Island well over a billion dollars in lost revenue over the last thirteen years.[4] This has caused immense damage to our state. Our public schools are crumbling, our roads and bridges are poorly maintained, our transition to clean energy is too slow, our job training and childcare programs are inadequate, and our public health services are woefully underfunded—all because the super-rich insist on paying lower taxes than the rest of us.

62% of Americans believe that the rich pay too little in taxes.[8] This belief is consistent and longstanding. For decades, polling has indicated that a majority of Americans—and usually a large majority—believe that the wealthy should be taxed more heavily.[9] The idea is especially popular among Democrats. Research suggests that 75% of Democrats believe that the rich should pay higher taxes.[10] And 62% of self-identified Independents feel the same way.[11] In Rhode Island, where Democrats substantially outnumber Republicans, our elected officials have no excuse not to heed the clear wishes of the public and force the very wealthy to begin paying their fair share. The Rhode Island Political Cooperative will finally give this majority a voice and promote a progressive tax system that works for the benefit of the many, not the few.

Contrary to the claims made by the ultra-rich and their political allies, raising taxes on multimillionaires will actually improve our economy. By raising taxes on the 1%, Rhode Island can generate revenue necessary to improve education, job training, childcare, infrastructure, and public health. These are investments that matter a great deal to talented young people who are deciding where to live. Unlike the super-rich, who are largely older and settled, young people are far less likely to be tied to a specific state. In fact, young college graduates are the most mobile group in the country. A recent college graduate is four times more likely than the average millionaire to move to a new state.[17] Ensuring that the top 1% pay their fair share will allow us to invest in repairing our infrastructure, launching new job training programs, and improving our education system. This will make Rhode Island more attractive to young and highly skilled prospective residents, as well as the businesses that rely on them, contributing to a more vibrant and dynamic economy.

In Rhode Island, the highest capital gains tax is only 6%. While reforming the income tax system and increasing the burden on the rich will fight some inequality, much of the 1% 's money comes from passive income, rather than active income. Through stock portfolios, real estate, and more, rich people can afford to have a salary of zero, and a massive return on capital gains, and only pay the 6% tax. This is a glaring loophole in the Rhode Island tax system, and it’s time to change it. Tiara supports legislation that would increase the capital gains rate to 10%, ensuring that Rhode Island’s richest cannot cheat the system and avoid paying their fair share.