CT Senate Leaders Offer New Plan To Tax Rich To Mitigate Federal Cuts

By Keith M. Phaneuf, CT Mirror

The state Senate’s leaders unveiled a new proposal Thursday to boost taxes on Connecticut’s high earners, seeking to raise hundreds of millions of dollars to mitigate anticipated deep cuts in federal aid to health care, education and other core programs here.

Senate President Pro Tem Martin M. Looney, D-New Haven, in a joint statement with Majority Leader Bob Duff, D-Norwalk, recommended boosting the two highest marginal rates on the state income tax, which would generate revenue from single filers earning more than $250,000 per year and couples topping $500,000.

The state income tax has seven different rates, taxing various portions of household income between 2% to 6.99%. Most middle-class income is taxed between 4.5% and 6%.

Looney and Duff’s plan would boost the tax rate from:

• 6.9% to 7.5% for all earnings between $250,000 and $500,000 by single filers, and between $500,000 and $1 million by married couples.
• 6.99% to 7.99% for all earnings greater than $500,000 by single filers and above $1 million by married couples.

Though the state Senate Democratic leadership office hadn’t completed projections on the full revenue impact early Thursday afternoon, it estimated boosting the 6.99% rate to 7.99% would generate more than $420 million per year.

The Democratic leaders say these higher rates would be offered if the Republican-controlled Congress and President Donald J. Trump follow through on plans to extend 2017 federal income tax cuts set to expire after this year, a move that would chiefly benefit households making more than $320,000 annually.

To pay for that tax relief, Congress is eyeing $880 billion in federal budget cuts, a move that likely would cost state and municipal government here more than $1 billion in federal aid for Medicaid, special education, food stamps, higher education research grants, and other programs.

“In. the wake of yet another federal tax cut that overwhelmingly benefits the wealthiest Americans, Connecticut cannot afford to fail to take action at a time of crisis,” Looney said. “If Washington insists on handing billionaires another tax break, we will ensure some of that windfall comes back to the people of Connecticut to help deal with the massive federal cuts we anticipate.”

Duff added “this is a proactive, conditional measure that protects core services, invests in education and infrastructure, and maintains a level playing field.”

Looney and Duff’s comments come a few days after dozens of progressives in the General Assembly appealed for state tax hikes on the wealthy to help offset likely deeper cuts in federal aid to Connecticut.

But despite those sentiments, it remained unclear Thursday whether Connecticut would break from a recent trend and consider any tax hikes aimed solely at high-earners.

Gov. Ned Lamont has consistently blocked any effort to raise taxes on the wealthy since he took office in 2019, backed by other fiscally moderate Democrats and minority Republicans in the state House and Senate.

And Lamont, who says boosting state taxes on the rich would prompt them to flee Connecticut, has said it’s premature to discuss raising levies on them now before the federal budget picture has been resolved.

This marks the fifth consecutive year that Looney has introduced bills to boost income tax rates on the capital gains earnings of rich households, and to create a so-called “mansion tax” — a statewide property levy on high-value homes. But legislative leaders have never included these proposals once in the final budget package negotiated with Lamont.

“Despite the unpredictability coming out of Washington, the [Lamont] administration is having ongoing discussions with legislative leadership about a path forward, after we see a final federal budget and know its impact on Connecticut,” Chris Collibee, the governor’s budget spokesman, said Thursday. “Especially in light of recent economic concerns, his preference is increasing the number of taxpayers in our state, rather than increasing taxes.”

Republicans in the General Assembly also are pressing Lamont to avoid raising state taxes. The first step toward responding to any cuts from Washington, they say, is to look for options to trim spending at the state level.

“Democrats worship at the altar of government spending,” said House Minority Leader Vincent J. Candelora, R-North Branford, who said neither Democratic legislators nor Lamont have responded seriously to recent instances of inefficiency or malfeasance.

Candelora noted that public colleges and universities here entered the fiscal year holding more than $1 billion in reserves, even as they appealed to legislators for more state funding. The Connecticut State Colleges and Universities system, which includes community colleges and regional state universities, held more than $610 million of those stockpiled funds.

The GOP leader also cited a recent report from the state auditors showing state officials mismanaged audits for Connecticut’s school construction program in recent years and failed to enforce price caps that are meant to hold down costs for local school building projects.

“Not only do they [Democrats] not care about the stockpiling and hoarding of money, they also don’t care about the criminal misuse of money,” Candelora added.

This article first appeared on CT Mirror and is republished here under a Creative Commons Attribution.