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Packed Up and Ready to Go – Those Who Can, That Is

In a recent piece, the CTMirror addressed the persistent issue of outmigration of the affluent – and whether it was a matter of fact or myth. With some reluctance, the authors concluded what Yankee has repeatedly demonstrated: that many of Connecticut’s wealthy – and even its not-so-wealthy – are packed up and ready to go if the state’s fiscal situation deteriorates, while many others have turned over their keys and had their mail forwarded long ago. What the Mirror might also have asked is this:  what exactly are state policies doing to those who cannot afford to go? 

On December 17, in the newest installment of an ongoing series, Keith Phaneuf and Clarice Silber asked, Millionaire with a Suitcase: Fact or Myth? After weighing both sides of the question, the apparent conclusion was that, indeed, Connecticut is facing persistent outmigration of the affluent.

Even as the piece’s authors pointed to the increased speed of the tax-increase cycle, they might likewise have noted that Connecticut’s political leaders have long failed to reform past promises to government workers to conform to current fiscal realities.

Refusing to address difficult facts in an equitable way increases, year by year, the already-heavy mortgage of the future by the past. And understandably, people aren’t willing to stay around to help pay ever-increasing bill as the crisis grows. 

This is hardly news. Local newspapers have been reporting since 2016 that two of Connecticut’s billionaires had fled the state following the 2015 tax increases, and that others were poised to leave if conditions continue to deteriorate. State leaders know only too well that actual revenues from the 2015 personal income-tax hikes fell far short of expectations, suggesting a material exodus of taxpayers who would otherwise have been affected by this increase in the top income-tax rates.   

Nor are individuals and families the only taxpayers heading for the hills.

In 2015, General Electric and other corporations warned the state that if it raised corporate taxes again, they would leave or cut back significantly on their Connecticut presence. The state raised the taxes; they left. Others, including Hallmark, RBS and Rogers Corp. followed in downsizing or leaving – even corporations, like Alexion, who had been favored with tax-money subsidies to try to get them to stay. As a result, the corporate tax increases of 2015 brought in only about two-thirds as much as had been forecast. 

Nor are the wealthiest taxpayers, individuals or businesses the only residents who have signaled that their tolerance for tax increases is not infinite. As the state’s newly completed OpenPension website reveals, nearly a quarter of the state’s government-worker retirees move out of state after they retire, as evidenced by the addresses to which their checks are sent.

If a significant part of these workers – who owe their very pensions to those remaining in Connecticut to pay its ever-higher taxes – are unwilling to stay here, it’s reasonable to expect a similar or greater flight among private-sector retirees. 

The exodus is real, as the Yankee Institute itself demonstrated in 2015 in the wake of the 2011 tax hikes. And, as Phaneuf and Silber recognized in their piece, it’s getting worse.

It defies logic to assume that another round of tax increases will do anything but drive away even more of the state’s tax base, and further deflate the only economy in the region that still has not recovered from the Great Recession.

Connecticut continues to struggle; it holds the grim distinction of having suffered through the most anemic housing-price recovery in the country. These are twinned with some of the highest property taxes in the country.  It bears some of the highest energy and utility costs of any state in the country, as well. 

All of this makes Connecticut an expensive place to live and getting more expensive. And it makes it an incredibly expensive place to save for retirement. The high cost of living makes it hard for middle- and working-class earners to save, while the same state fiscal mismanagement that drives net out-migration high and depresses property values deprives residents of an indispensable element of a comfortable retirement: home equity.

As a result, Connecticut has an increasing pool of residents who can’t afford to stay, can’t afford to leave, and can’t afford to retire. That is a recipe for unhappiness – and for unfairness. 

Given that the Phaneuf and Silber article was the fifth in a series explicitly dedicated to looking at the problem of “Extreme Inequality: Connecticut’s Wealth Dilemma,” it’s worth considering what the impact of tax-driven flight from Connecticut has been and will be on those presumably hardest hit by “extreme inequality:” those who cannot afford to leave, and so are left to pay the ever-escalating tax burden as others leave for better-run, less-expensive jurisdictions. 

As more and more of the highest-paying taxpayers leave Connecticut, the state becomes less “unequal,” in traditional wealth and income terms, but that hardly makes it a better place to live. Because what’s left are people who can’t afford to leave or retire being taxed into penury to pay for the retirements of others, many of whom can and do leave.

That seems a far more pernicious inequality, and a much uglier fight. 

Perhaps in looking for inequities, Phaneuf and Silber are looking in the wrong places. Perhaps “extreme inequality” in the traditional sense is amongst the least of Connecticut’s worries.

Our greatest fear – one we should all be working together to fight – is a Connecticut in which notional inequality has been reduced, but practical disparities increased, because of the chasm between those who demand comfortable retirements and those who remain who are unable to pay for those retirements, or even for their own.

That affordability crisis appears to be the real clear and present danger for Connecticut. 

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(8) Comments

  1. Gill Gedalia

    December 25, 2018 6:41 pm

    Yep. Don’t see things getting better any time soon in CT. Lived there 17 years, but moved to FL six months ago. Lower sales tax, lower property tax, no income tax, no estate tax, no gift tax, no car tax, no snow. Not missing CT.

  2. G G

    December 21, 2018 8:38 pm

    We left CT for FL this past June after 17 years. No income tax, no estate/inheritance tax, no car tax, lower property tax (mill rate), lower sale tax, gas is cheaper, restaurants are cheaper, wonderful climate, no snow. Our taxes over the past decade in CT were more than $500K. No more.

  3. Al

    December 21, 2018 12:19 pm

    Great article, I wish this would get reported on the major networks. I love my home, I just hate where it is. Once the tolls go up, they will be the end. The sheep will wake up and wonder what the heck just happened. It isn’t a question of if I am moving but when. Most of my family has left, in the 90s, the last massive exodus. I was told, get out, but I’m comfortable here. Not so much anymore, The stress alone of tolls , what new tax hikes are coming, electricity rates going up, MDC 20% hike coming, regionalization, oh and let’s not forget about the teacher pensions, All of this making me sick.

    But the question is, where to go? I hate the humidity, I love the shore, I love the change in seasons, Any suggestions?

    So a article recently that 1/3rd of Americans want to move out of the country.. what the heck happened?

    • Gerard

      April 17, 2019 5:06 pm

      In reply to your query where to move? One possibility is Delaware if you want a state somewhat comparable – low taxes, but similar profile to CT, seashore like CT, close to “big cities” i.e. Philadelphia, D.C. New York. Just a thought. Myself, am planning to flee CT also (have had enough after 20 years, though I would not leave if it weren’t for the mess created by Hartford and their allies in the big cities). Sad to see so many leaving though; it’s a pity our new governor Lamont does not have the gumption to veto the recent unionization, 11% salary raise and fat annual bonuses the legislature just voted for the state’s Attorney General and his team (just under 200 highly paid people). Another spit in the faces of the taxpayers. Which of these attorneys will defend the citizens when there’s a legal case pitting the union against the people? Not one, I am quite sure, especially now that they are actual union members, not just sympathizers. Our system in Hartford has been completely corrupted by this 1%, for example the Speaker of the House is actually a paid government union executive – by the name of Joe Aresimowicz. He pulls down a union salary (plus benefits)of around $100,000 annually, and also heads our legislature (with another salary + benefits; he’ll enjoy spending them in Florida in about ten years). Talk about conflict of interest… it’s hard to believe, but it’s true! you can google it and see for yourselves. We know whose side he and his other co- apparatchiks are on – and it ain’t ours!

  4. Zephyr

    December 21, 2018 11:49 am

    This is likely the best summary I’ve ever read of Ct’s situation, and I’ve read quite a bit. I’m 53. Ct was an awesome place to live for about 43 of those years. Now it’s beyond painful. The idea is to sell the house when I hit 55. Where to go and what to do is up in the air. My income will travel with me but my wife, not so much. And she carries the insurance.

    The state situation is basic theft by one group of people comprised of the union and of the freeloaders (of which there are many, and more come every day!), of the other group of people….those who WORK!!!. And the 1st group has a lot of people.

    Conservatives are to blame as well because any of Boughton, Obsitnik, Stemmerman & Walker could have won the governorship. But NOOOOOO! 40’000 morons voted for Stefanowski to run. That’s 2% of the voting population of 2 million! Hell, only a third of eligible Republicans voted in their own primary!!!! These dopes actually heard “No Income Tax” & believed it!!! You simpletons chose the absolute worst candidate to run!!!

    So, what’s left? Nothing apparently. Oh, and btw, the reason crime has gone down in Ct is because we basically give tons of free stuff to the dirtbags to keep them calm. That will change as the budget squeezes more and more. Then watch crime go up!

    Sad because this is my home and I do love this state. But it no longer resembles the place I knew.

  5. Eli'63

    December 20, 2018 11:10 am

    Bloated Government requires Bloated taxes.

  6. Frank

    December 19, 2018 9:42 pm

    I left in may,living in Florida now.Making more money and not paying half the taxes.Bye bye Ct i wont be coming back!

  7. John

    December 19, 2018 2:49 pm

    Good article,looks like will be leaving also by summer end

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