Tax Cuts for Ultra-High-Earners Reduce Resources for Children
In the mid-2000s, Rhode Island cut about $47 million in state funding, removing thousands of families from the RI Child Care Assistance Program, and repealing a state law requiring child care rates be increased every two years to meet the federal equal access standard.
During this period, the state cut taxes on high earners to attract businesses to the state and boost the economy.
Twenty years later, Rhode Island helps less than half the families it used to help pay for child care, has one of the lowest family income cutoffs for child care assistance in the northeast, and pays provider rates below the federal equal access standard. Rhode Island child care educators earn $16.74/hour on average, among the lowest wages in the state, and lower than wages in many nearby states.
In 2025, the federal HR1 Big Ugly Bill gave tax breaks to the wealthiest Americans by cutting SNAP and health insurance benefits for families. These cuts will reduce children’s access to healthcare and food unless new state funding is allocated to backfill these losses.
New State Revenue is Needed to Help Children Access Food, Healthcare, and Child Care
Significant new revenue is needed to ensure all families have access to affordable, high-quality child care and early education programs so parents can work to cover housing costs and other basic needs and children can learn, play, and grow in nurturing environments. New state revenue is also needed to backfill federal cuts to SNAP, Medicaid, and health insurance subsidies to ensure children and families have access to food and healthcare.
Governor McKee’s FY27 Budget Millionaire’s Tax
- New 3% surtax on household taxable income exceeding $1
- Would generate $135 million in additional state revenue per
- Only affects 2,300 tax filers out of approximately 500,000
Revenue for Rhode Islanders bill (Alzate/H-2238; Murray/S-7313)
- New 3% surtax on household taxable income exceeding $640,000.
- Would generate $203 million in additional state revenue per
- Only affects 6,100 tax filers out of approximately 500,0000
When Ultra-High Earners Pay Their Fair Share, Everyone Wins!
- Corporate executives, Wall Street analysts, and Federal Reserve officials report that America has a “K-shaped economy” with higher-income Americans seeing substantial income growth while lower-income households struggle with weaker income gains and higher costs for everyday basics like healthcare, food, housing, and child care.
- California, Massachusetts, Minnesota, New Jersey, New York, and the District of Columbia levy surcharges on very high earners with income over $1 million to fund public services and balance budgets.
- The Massachusetts “Millionaire’s Tax” enacted in 2023 generated nearly $3 billion in new state revenue in 2025 from a surtax on households earning more than $1 million per Revenue exceeded projections due to an increase in ultra-high earning households.
Questions & Answers About the Ultra-High Earners Tax
Q: Would the value of my house, retirement accounts, or other assets count toward the “millionaire’s tax?”
A: No, the millionaire’s or Revenue for Rhode Islanders tax is an income tax and not a “wealth tax” and would not apply to the value of household or personal assets. It would apply only to household annual income after subtracting deductions, exemptions, and adjustments.
Q: If I have substantial business revenue and report this through my personal taxes, would that business revenue count toward the “millionaire’s tax?”
A: If you report business earnings through your personal taxes as an S-Corp/Pass Through Entity, only annual business profit (revenue minus expenses) would count. For example, a child care business may have $1.5 million in revenue and $1.45 million in expenses (staff wages and benefits, building mortgage/rent, utilities, supplies, food, contracted services, liability insurance, etc.) so only $50,000 in profit would count in the overall taxable household income.
Q: How will the state will use the revenue generated from this tax?
A: The new revenue will go into the state’s general fund and can be used for anything. The best way to ensure the state uses funds to help children is to let the Governor and the General Assembly know you want new funds to go to help children and families with healthcare, food, and child care.
Click here for a PDF of the Generate State Revenue for Child Care, Food, and Healthcare fact sheet.
