News & Media

The recent proposal to nearly triple Rhode Island’s state income tax rate on millionaires from 5.99 to 8.99 percent moves the state in the wrong direction at precisely the wrong time. For regions actively driving economic growth while al­ready operating under significant cost pressures, this policy risks un­dermining hard-won progress.

Nowhere is that tension more evident than in Greater Newport. The Greater Newport economy has emerged from the pandemic relatively strong and remains one of Rhode Island’s most important economic engines. Over the past decade, the region added nearly 11,800 jobs. This is an 11 percent increase that outpaced statewide job growth. High-value sectors such as professional, scientific, and technical services have grown by more than 70 percent fueled largely by Naval Station Newport and its extensive network of de­fense, research, and maritime con­tractors.

The region’s ocean economy is another bright spot. Greater Newport’s blue economy sup­ported more than 6,600 jobs in 2024 and has grown 27 percent over the past decade, with strong momentum in defense, maritime trades, cyber-physical systems, and marine technology. These in­dustries are expected to continue expanding well into the next de­cade, reinforcing Newport’s role as a strategic asset not only for Rhode Island but for national security and innovation.

At the same time, Greater Newport’s small business base in tourism, hospitality, professional services, and marine trades has grown faster than the state overall with a 7-percent increase over the last decade compared to 4.1 per­cent statewide.

This growth matters. It demon­strates that when Rhode Island creates the right conditions, busi­nesses will invest, hire, and expand here. But that progress is fragile.

Businesses across the region re­port rising costs from health insur­ance and technology investments to financing and workforce reten­tion. While demand remains solid for many firms, confidence has begun to erode as costs rise faster than revenue. These pressures fall hardest on small and midsize businesses that lack the margins to absorb additional financial shocks. They are the backbone of New­port’s economy.

In this context, increasing personal income taxes on high earners adds another layer of risk. Many are business owners, senior professionals, investors, and sec­ond home residents who support the regional economy year-round.

The proposed increase to an 8.99 percent tax rate on incomes above $1 million is projected to generate approximately $135 million annu­ally. But that projection assumes the very individuals driving invest­ment in regions like Greater New­port will remain in place.

That assumption is flawed. High earners are mobile, particularly in a coastal region where proximity to neighboring states makes re­location relatively easy. In Greater Newport, many of these individ­uals are directly tied to the region’s fastest-growing sectors: defense contracting, professional services, ocean technology, real estate de­velopment, and tourism-related enterprises. Their capital supports local payrolls, nonprofit organiza­tions, seasonal and year-round em­ployment, and the broader small business ecosystem.

If those individuals shift resi­dency or investment elsewhere, the impact will be felt locally through reduced spending, de­layed expansion, weaker philan­thropic support, and fewer job opportunities.

Affordability is a real concern in Greater Newport, but it will not be solved by discouraging investment or shrinking the tax base. It will be solved by growing wages, ex­panding housing supply, strength­ening workforce pipelines, and ensuring employers can continue to scale.

The Greater Newport Chamber believes Rhode Island can and must be both compassionate and competitive. Our region demon­strates what is possible when talent, innovation, and industry align. That success, however, de­pends on policies that reinforce growth rather than undermine it.

If Rhode Island wants to close budget gaps sustainably, improve affordability, and build a stronger future, the path forward is clear: protect and expand the economic engines we already have.

Erin Donovan-Boyle
President & CEO of the Greater Newport Chamber of Commerce,
and Matthew Vargas, Chair, Government Affairs Committee