Connecticut Worst in New England…Again
For the third consecutive year, Connecticut ranks as the 47th worst state in the nation — as well as worst in New England — for individual tax climate according to the Tax Foundation, a nonpartisan tax policy organization. Joining Connecticut’s race to the bottom are other usual suspects like New Jersey, California and New York, respectfully. The low scoring states tend to have high tax rates and “very progressive bracket structures.”
Tax Foundation notes that “High marginal rates adversely affect labor output and investment and can influence location decision-making, especially in an era of enhanced mobility, where it is easier for individuals to move without jeopardizing their current job, or without limiting the scope of their search for a new one.”
According to the report, the “individual income tax is important to businesses because states tax sole proprietorships, partnerships, and, in most cases, limited liability companies (LLCs) and S corporations under the individual income tax code.” It went on to say, “However, even traditional C corporations are indirectly impacted by the individual income tax, as this tax influences the location decisions of individuals, potentially impacting the state’s labor supply, and higher individual income taxes increase the price of labor. States with gross receipts taxes also extend those to pass-through businesses in addition to C corporations, which is also accounted for in this component of the Index.”
Gov. Lamont and House Republicans have both proposed increasing the Pass-through Entity Tax Credit (PET) from 87.5 to 93.0 percent — the pre 2019 level. PET was created to help business owners circumvent the $10,000 cap on state and local tax (SALT) deductions in their federally taxable income. The cap was created in 2017 in the Tax Cuts and Jobs Act, while the rate was lowered to address budget shortfalls in the 2019 legislative session.
Unfortunately, the Finance, Revenue and Bonding voted their version of the budget out of committee on April 19 and decided against restoring the credit. The good news is the bill has not made its way to the House and Senate so there is still time to right this wrong.
It should be noted that Tax Foundation had Connecticut ranked 37th for individual income tax in its 2018 report.
Early Voting Moving Forward, Photo ID Not Required
After a four-hour debate on Thursday (May 4), the House overwhelmingly passed a 14 day early voting schedule, complying with 60.2 percent of voters who favored amending the state constitution and allowing for in-person voting during the 2022 election.
Connecticut joins 46 other states that allow for some form of early voting.
Republicans offered numerous amendments such as adjusting the time frame to three or ten days, but these all failed across party lines. They emphasized that Secretary of the State Stephanie Thomas was only looking for ten days early.
The bill, if passed by the Senate, will begin in the 2024 election cycle. Each town will be required to have at least one polling place open 14 days prior to a general election, four days before presidential primaries and special elections, and seven days before August primaries.
Municipalities will also be required to have their polling locations open from 10:00 a.m. to 6:00 p.m. except for the Tuesday and Thursday before the general election or primary where hours are from 8:00 a.m. to 8:00 p.m. Meanwhile, the estimated cost to the state will be approximately $4.5 million, according to Sen. Matt Blumenthal (D-147).
For those who haven’t figured out the actual date of Election Day, they will still be allowed same day registration. Every early voting polling place for general elections will also be utilized for same day registration.
There is no change to ID requirements in the bill. Current laws do not require a photo ID.
Union Wants Taxpayers and Businesses to Bankroll Their Strikes
On Wednesday (May 3) the Senate sent a bill that “allows striking employees choosing to strike to collect unemployment benefits after a period of two weeks” back to the Appropriations Committee because of a fiscal note.
According to the Office of Fiscal Analysis (OFA), the Connecticut Department of Labor (CTDOL) will need roughly $400,000 in technology updates to the agency’s ReEmployCT unemployment insurance system. It is also anticipated that at least $200,000 will be needed in DOL staff overtime to implement provisions of the bill.
Instead of using their own funds to assist workers during a strike, the AFL-CIO is encouraging its members to contact the Appropriations Committee and urge them to pass the bill — letting taxpayers and businesses to pick up the tab.
The union wants to use this benefit to pressure employers into caving into their demands. Their call to action letter states: “If employers understood that their unemployment insurance experience ratings could be impacted if a strike goes on longer than two weeks, they would be more likely to come to the table and bargain in good faith to avoid the strike in the first place.”
Unemployment is intended to help individuals who lose their job to no fault of their own, not those who choose not to work. State government is supposed to remain neutral in disputes between private-sector management and labor. But this bill will weaponize the unemployment insurance system, and put the thumb on the scale for one of Connecticut’s most influential special interests.
The Appropriations Committee is meeting on Monday (May 8) and it is possible this bill will be on the agenda — which has not been posted at time of writing.
When at First you Don’t Succeed, Do a Study
A bill that would have increased the uniform assessment rate for property tax from seventy percent to seventy-five percent has been downgraded to just a study on Tuesday (May 2) in the Finance, Revenue and Bonding Committee.
The bill did not include language requiring municipalities to lower their mill.
Sen. Henri Martin (R-31) said that “property owners are going to go nuts when they realize that the values of their home are going to increase.” Assuming most towns will lower their mill rates so tax bill don’t increase, Sen. Martin did caution that this can give an “opportunity to the municipalities” to hide expenditures increases within a decrease in mill rates.
Meanwhile, Sen. Norm Needleman (D-33) said, “I know speaking as a first selectman [of Essex] I’m very thoughtful about how we tax our residents and we’re very down to earth and very on the ground and we don’t try to hide anything from anybody. But I do acknowledge that there are municipalities that will do that.”
The bill is headed to the Senate, but a vote is TBD.
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