Higher income tax rate not the change Connecticut needs
I recently attended a Chamber of Commerce event where noted economist Don Klepper-Smith said Connecticut state government must make profound structural changes to spending and regulations to avoid a fiscal catastrophe. He presented compelling evidence to support the need for change, including:
- Connecticut is last among New England states in job recovery and has recovered only 74% of the jobs lost from the 2008 recession.
- Approximately 575 people are leaving Connecticut each week.
- While the national economy is growing at a rate of 2% to 3%, our state is seeing only 1.1% economic growth.
- Connecticut has the second highest state and local tax burden, with an average of $7,000 per person.
- Major employers like GE are in the process of leaving the state.
Klepper-Smith said that, economically, Connecticut has made tenuous gains, at best, since the recession in 2008. He added that another recession would be devastating.
While I am referencing statements Klepper-Smith recently made, he isn’t alone in warning us about these dangers our state faces. A host of economists, rating agencies, and financial institutions have been warning Connecticut for a long time that the state must change its spendthrift ways. We need to cut taxes and regulations and make it more affordable for businesses and residents to stay in our beautiful state.
The taxpayers of Connecticut recognize the need for a change in the way the state conducts business. I believe that is why we have an 18-18 Republican-Democrat tie in the state Senate and why Democrats hold the slimmest of majorities in the House. Their actions have sent a loud and clear message to Hartford that they are taxed too much.
Somehow, my Democrat colleagues still have not heard the message. On April 25, the Finance Revenue & Bonding Committee heard public testimony on SB 1054, An Act Concerning Various Tax Rates, The Use Of Certain Taxes And Fees For Tourism And Other Programs, Establishing The Mental Health Community Investment Account And Concerning The Purpose Of The Capital Region Development Authority.
What this bill’s long title doesn’t tell you is that it contains language to institute a so-called “millionaire’s tax” that Democrats have been pushing for years. A new income tax rate of 7.49% would be levied on single filers earning $500,000, heads of household earning $800,000, and joint filers earning $1 million, and it would be retroactive to Jan. 1 of this year.
This follows the same old logic espoused by Democrats and union leaders that wealthy state residents aren’t paying their fair share. It ignores the fact that these are the very people with the resources to leave Connecticut anytime they choose. And since a number of these high earners also are job providers, their absence would continue to put downward pressure on the state’s employment numbers.
Proposals like this continue our state on the path of revenue seeking that has not resolved the state’s fiscal problems. It also flies in the face of the very warnings financial experts have been shouting at us. Measures like this will have a negative impact on our bond ratings and projected fiscal outlook. It will also deter businesses and people from settling here, further hindering economic recovery.
Connecticut’s wealthy are not an endless well the state can continue to tap.
In the Aesop’s fable, a farmer and his wife are overjoyed to learn one of their geese can lay golden eggs. But they are impatient for more gold and cut open the goose, hoping to find a treasure trove. Instead, they kill the source of their income.
Lawmakers have already been making deeper and deeper cuts in their quest for more revenue. The goose is already on life support and will surely meet its end if this continues.
And just like the farmer and his wife, Democrats will find themselves standing over a dead carcass with empty hands and empty pockets, their dreams of prosperity killed by their own hand.
Sen. Toni Boucher
Chief Deputy Senate Republican Majority Leader
Sen. Toni Boucher represents the 26th District, which includes Bethel, New Canaan, Redding, Ridgefield, Weston, Westport, and Wilton.