President Carol Liebau’s op-ed was published in the Connecticut Post on May 7, 2021.
Connecticut state lawmakers embarked on the budgetary equivalent of a trip to Foxwoods when they voted to create a new, separate tax on capital gains — and the bets they’re making aren’t the wisest.
Capital gains are the profit people make when they sell a good for more than they paid for it. They stem from selling anything from stocks to antiques and collectibles to real estate. Connecticut has taxed capital gains in one form or another since the early 1970s, but since the state income tax was created in 1991, capital gains have been taxed at the same rate as ordinary income, like salaries.
But recently, the General Assembly’s Finance, Bonding and Revenue Committee advanced a multipart proposal that would, among other things, tax capital gains at a higher rate in hopes of raising an extra $262 million annually. The modified tax, targeted at individuals making over $500,000 and couples making over $1 million, means residents would pay a marginal rate of 8.99 percent — the state’s highest-ever tax on capital gains. The proposal now awaits votes by the full Senate and House of Representatives.