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Taking a Bite Out of Jobs: The Economic Effects of a Sales Tax Increase on Restaurant Meals

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**Please download the PDF to read the full study**

Yankee Letter

Predictably, Connecticut’s budget languishes in perpetual deficit. This is because fixed costs like pension pay- ments and healthcare have risen faster than tax revenue can keep up with them.

As a result, lawmakers confront two unpalatable choices – they can either cut costs or raise taxes. Unfortunately, too often over the past decade, lawmakers have chosen to raise taxes, stifling the state’s economic growth and making Connecticut uncompetitive in attracting people and jobs.

One tax (among many others) that lawmakers have recently considered increasing is the restaurant tax. In this paper, a researcher from The Beacon Hill Institute shows that even a one percent increase on prepared meals would cost the state over a thousand jobs; a two percent increase would result in almost 2,000 jobs lost.

As the history of the last seven years demonstrates all too well, there is a cost associated with every tax increase. More tax hikes will only continue to limit Connecticut’s economic growth. The only long-term solution to our state’s fiscal crisis is economic growth — so tax hikes should definitely be off the table.

**Please download the PDF to read the study**

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Marc E. Fitch

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