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New Report: CT Ranks Among Worst for Business Climate

As the state launches a fresh marketing campaign to lure and retain families and businesses, Connecticut is still suffering under one of the nation’s most burdensome tax climates, according to a new study by the Tax Foundation. 

Since 2014, Connecticut has ranked 47th and, once again, received that grade in the “2024 State Business Tax Climate Index,” faring slightly better than usual bedfellows California, the District of Columbia, New York and New Jersey. Conversely, the “best” states are Wyoming, South Dakota, Alaska, Florida and Montana since there is an “absence of a major tax” like a corporate income tax, individual income tax and/or sales tax. 

Every New England state ranked higher — albeit some not much better — than Connecticut, with New Hampshire placing 6th, while Maine, Rhode Island, Vermont and Massachusetts finished 34th, 41st, 43rd and 46th, respectively. 

“The states in the bottom 10 tend to have a number of afflictions in common: complex, nonneutral taxes with comparatively high rates,” according to the study’s authors Jared Walczak, Andrey Yushkov and Katherine Loughead. 

The Tax Foundation’s study also ranked states across several subcategories including Corporate Tax; Individual Income Tax; Sales Tax; Property Tax; and Unemployment Insurance Tax (see table below). Connecticut placed 30th, 46th, 23rd, 50th and 26th, respectively. Compared to the Tax Foundation’s 2023 report, the state only improved its rank in the Individual Income Tax category by moving up one spot; meanwhile, the state dropped by two and three spots in Corporate Tax and Unemployment Insurance Tax categories, respectively, but retained its rankings in Sales Tax and Property Tax. 

  Overall  Corporate Tax  Individual Tax  Sales Tax  Property Tax  Unemployment Insurance Tax 
RANK  47  30 (-2)  46 (+1)  23 (+0)  50 (+0)  26 (-3) 

The report, however, does not reflect Gov. Ned Lamont signing the largest income tax cut in Connecticut history earlier this year — yet it does incorporate other monetary, and tax regulatory policies enacted in nearly 20 states in 2023. Ultimately, the tax cuts’ impact on Connecticut’s rankings remains unclear. 

Regardless, Gov. Ned Lamont and other state officials are supporting a new, $1.8 million marketing campaign called “Make It Here,” replacing “Still Revolutionary.” Spurred by research that only 50% of residents were proud of Connecticut, the branding’s objective is to foster happy families, thriving businesses, and vibrant communities. 

“There is no better place to live and work in the U.S. than in Connecticut, and it’s about time that everyone knows it too,” Gov. Lamont said in a Oct. 17 statement. “We make the most complex machines in the world — submarines, helicopters, and jet engines. We’re home to Fortune 500 companies and game changing start-ups.” 

He added, “The quality of life here is unmatched with our public education, health care systems, and public safety consistently ranked among the best in the nation.” 

Yet Connecticut is experiencing a mixed-bag scenario regarding its economics. On the positive side, for the second consecutive month, the state’s unemployment rate (3.5%) is below the national average (3.8%). With that, the number of unemployed is at a 20-year low, according to the Department of Labor’s (DOL) September Jobs Report.  

On the flipside, the state continues to lose corporate headquarters like the LEGO Group (which will relocate to Boston by December 2026), and Frontier Communications (which is moving from Norwalk to Dallas, Texas). Meanwhile, DOL’s Worker Adjustment and Retraining Notification (WARN) has been notified that Walmart’s Norwalk location will lay off 255 employees by December, while more than 500 employees of Hartford’s CVS Health will be laid off by year’s end.  

As for attracting new residents, Connecticut has struggled, experiencing a net outmigration — with 55.9% of moves were out of state versus 44.1% into the state in 2022, according to a United Van Lines’ annual National Movers Study. Additionally, Hartford is among the worst cities regarding office delinquency rates in the nation, which is a troubling indicator in what economists call the “urban doom loop.” 

If Connecticut is vying for companies and families to make the Constitution State their home, then it might be best for lawmakers, regulatory agencies and state officials, instead of praising a newly designed logo and tagline, to formulate new less restrictive, tax-easing policies. 

Andrew Fowler

Andrew Fowler joined Yankee Institute in July 2022 after four years in the communications department for the Knights of Columbus international headquarters in New Haven. In that span, he managed the organization’s social media accounts and wrote for the company’s various publications, including COLUMBIA magazine, which is delivered to nearly two million members. Additionally, he is the curator of the Blessed Michael McGivney Pilgrimage Center’s online exhibit “K of C Baseball: An American Story,” that explores the intricate ties between the organization and the growth of the national pastime. He was also a production assistant for MSNBC’s “Morning Joe” and the 2016 Dinesh D’Souza film, “Hillary’s America.” Andrew currently serves on the Milford Board of Education. He is an avid runner and basketball fan, cinephile, and an aspiring musician and author. He graduated from the University of Connecticut in 2015.

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