• A proposed “millionaires tax” in Rhode Island could impact small, family-owned businesses structured as pass-through entities.
• The author, a state representative and business owner, argues the tax would reduce funds for payroll, equipment, and expansion.
• The op-ed suggests the tax could make Rhode Island less competitive, citing high earners leaving Massachusetts after a similar tax was passed.
• The author advocates for policies that encourage business investment rather than penalizing financial success.

Rhode Island is built on the strength of small, family-owned businesses. They are the backbone of our economy, the employers of our neighbors, and the reason our communities have character and opportunity. I know this not just as a legislator, but as someone who works every day in a family business alongside the people I care about most. That’s why I am concerned about the impact of the proposed “millionaires tax” on businesses and our communities.

While it may sound like a measure aimed at a narrow group of high earners, the reality is far different. Many family-owned businesses – especially those structured as pass-through entities – report their business income on personal tax returns. That means this tax doesn’t just target “millionaires” in the traditional sense; it directly impacts small and mid-sized businesses that reinvest their earnings into payroll, equipment, expansion and employee benefits.

In my case, our family business is a private ambulance service. Every day, we are responsible for delivering critical care to Rhode Islanders, particularly seniors and our most medically fragile neighbors. That responsibility comes with significant costs. Ambulances, lifesaving medical equipment, and the technology needed to support our crews are expensive, and they must be maintained and updated regularly to meet the highest standards of care.

Tax increases like this directly impact our ability to make those investments. These are not abstract tradeoffs – they have real consequences for the level of care we can provide. For businesses like mine, margins matter. Every dollar that goes out the door in taxes is a dollar that can’t be used to hire another worker, increase wages, buy new equipment or sponsor the local Little League team. These are real decisions that affect real people.

Supporters of this proposal often frame it as a fairness issue. But fairness should also mean recognizing the role that employers play in creating opportunity. When government makes it more expensive to operate a business in Rhode Island, we risk pushing investment – and jobs – elsewhere. Policies like this don’t exist in a vacuum; they shape decisions about where businesses grow and where families choose to put down roots.

We don’t have to guess what would happen if we raised taxes here – we can just look to Massachusetts. They passed a millionaires tax and the latest data shows a steady stream of high earners leaving for lower-tax states like New Hampshire and, you guessed it, Rhode Island. We could take advantage of Massachusetts’ mistake and build on the momentum we have built in recent years. We’ve seen the benefits of thoughtful policy decisions that encourage investment and support job creation and tax revenues are up. But progress is fragile. Policies like the millionaires tax risk undoing that work by sending the message that success will be penalized rather than encouraged.

As both a business owner and a legislator, I believe strongly that we can – and must – strike a better balance.

We can support public services, invest in our communities, and maintain fiscal responsibility without resorting to policies that put our local businesses at a disadvantage. We can grow our economy by creating an environment where businesses want to stay, expand and hire.

Let’s focus on solutions that strengthen our economy, support our workforce, and ensure that family-owned businesses like mine and so many others across our state continue to thrive.

Rhode Island’s future depends on it.

Jacquelyn Baginski is a state representative from Cranston.