PROVIDENCE, R.I. (WPRI) — Democrat Nellie Gorbea is calling for Rhode Island to raise its corporate tax rate less than a decade after lawmakers lowered it, exposing a divide among the party’s candidates for governor.

In her first campaign TV ad — which began airing Tuesday — Gorbea tells voters she will “raise taxes on big corporations” in order to fund housing development, create universal pre-K, and assist small businesses. A banner on screen says: “Raise Corporate Taxes.”

Asked for specifics, Gorbea campaign manager Dana Walton told 12 News that Gorbea wants to increase the state’s tax rate on corporate income from 7% to 8%, which would match the rate in Massachusetts. Her campaign estimates the change would generate roughly $39 million a year in additional state revenue.

Gorbea’s proposal would partly reverse a move made back in 2014 by then-Gov. Lincoln Chafee and Democratic legislative leaders, who lowered the corporate tax rate from 9% to 7%. Chafee hailed the reduction as an “important step to making us more competitive” at the time.

“Nellie is the only candidate in the race that is willing to define how her administration is going to pay for fixing the issues facing Rhode Islanders,” Walton said in an email. “For far too long, the state budget has been balanced on the backs of the middle class and small businesses, and it is time to change that.”

Gorbea supports three other policies that would also increase tax bills for businesses, Walton said: raising the tax on financial institutions from 9% to 10.5%, generating about $6 million a year; eliminating what she called “sweetheart” exemptions benefiting hedge funds and dividend recipients; and closing what she described as a loophole involving offshore tax havens, generating about $43 million.

The proposal from Gorbea was immediately panned by two of her rival Democrats, incumbent Gov. Dan McKee and former CVS executive Helena Foulkes.

McKee’s campaign manager, Brexton Isaacs, called the secretary of state’s tax proposals “extremely risky.” He contrasted her ideas with McKee’s pending package of tax cuts in the state budget, including a speedier phaseout of the municipal car tax and a tax credit for some parents.

“We are currently one of the fastest growing economies and her plan would move us backward,” Isaacs said. “Rhode Islanders don’t want a governor who opens their campaign by proposing tax hikes; that’s the old way of doing business.”

“We need to be growing our economy for everyone and that’s why Governor McKee is strongly opposed to raising taxes on Rhode Island businesses,” he added.

Foulkes also rejected the idea, telling 12 News, “I haven’t seen any details on this from the secretary, but it sounds like a proposal to drive jobs out of Rhode Island.” She contrasted the tax hike idea with her proposals to give a $500 tax cut to middle-income families and spend more on K-12 education.

“If the next governor targets Rhode Island businesses with new taxes, the reality is that many will leave and they will take thousands of jobs with them,” Foulkes said. “We already have a difficult enough time recruiting and retaining businesses in this state — that’s why we need a governor who understands the new economy.”

She added, “Cronyism has held Rhode Island back for decades. It’s time to get big things done in Rhode Island, not drive out businesses with poorly thought-out tax policy.”

Gorbea’s general approach got a warmer reception from the two left-wing candidates in the primary, former Secretary of State Matt Brown and community activist Luis Daniel Muñoz, but both said they differ on the specifics.

Brown would institute “a graduated corporate tax that would raise taxes on giant corporations like Walmart and Amazon while lifting the burden off of our small businesses,” spokesperson A.J. Braverman said, adding that he also wants to stop the practice of providing public subsidies for “giant corporations and wealthy developers.”

Muñoz said, “I support raising corporate taxes, and want to offer a more thoughtful strategy around that topic than a one-off line in a TV commercial: as governor, I would work to increase our corporate tax rate to 7.5%, which still keeps us competitive against Massachusetts.”

On the other side of the aisle, leading Republican gubernatorial candidate Ashley Kalus condemned Gorbea’s proposal, arguing it would worsen the inflation problem because companies would pass the increased costs along to consumers.

“These sorts of failed policies from career politicians like Nellie Gorbea have made Rhode Island the 46th-worst state in the country to do business, and this move will all but guarantee we are once again dead last,” Kalus said. “Our state should be fostering an economic climate that attracts businesses and development, not implementing policies that will drive people, jobs, and opportunities out.”

Ted Nesi ( is a Target 12 investigative reporter and 12 News politics/business editor. He co-hosts Newsmakers and writes Nesi’s Notes on Saturdays. Connect with him on Threads, Twitter and Facebook.