Last week, the House Finance Committee heard legislation imposing a 3% surtax on income over $625,000. This would create a 8.99% rate.

NFIB testified in opposition to the proposal noting 82% of small businesses in Rhode Island file their taxes as pass-through entities. These LLCs, partnerships, and S-corps, that file their taxes as individuals, could see their earnings over $625,000 subjected to the 8.99% tax rate. NFIB explained to lawmakers that pass-through businesses are not the wealthy earners this bill purports to target. Rather, the bill will have a chilling effect on the state’s economy with less money for small businesses to invest in job creation, equipment, land, and expanding their operations.

NFIB also argued that this tax hike will impact small business owners’ retirements, as the sale of a business valued over $625,000 would trigger the higher rate. This means an owners’ retirement nest egg will be unfairly taxed at 8.99%.

Please take a moment to tell your lawmakers how this tax hike will impact your small business.