Legislative Democrats’ $2.4 Billion Tax Hike Is A Job Killer

by admin on May 9, 2015

OpEd | by Suzanne Bates | May 8, 2015 11:36am | CTNewsJunkie.com
Connecticut’s economy is like a ship that is taking on water, and while we all frantically bail it out, the state Democratic budget whistles in like a giant cannonball threatening to blow a big hole right through the bottom. The $2.4 billion in proposed tax hikes would be devastating to our state’s economy. We have become the state other states pity because we cannot get our house in order. While other states — including our neighbors — reform and reduce taxes on residents, our lawmakers have decided they must raise taxes again, just four short years after enacting the largest tax hike in the state’s history. And now we are facing another massive tax hike. How many signs do our elected leaders need before they realize how bad things are? We have a shrinking population, fewer children, revenues that come in year after year below projections, shrinking home values, and a populace that is unhappy and frustrated by the cost of living here. Oh, but I’m just being a whiner, right? A complainer. Negative. No. That is a weak defense, if it is any defense at all. Those of us who raise the alarm do it because we care enough to raise the alarm. It is not about negativity, it comes from a place of deep concern for this state that we call home. And that concern ultimately springs from a place of love for Connecticut. Those of us who point out the bad news are as invested in the success of this state as anyone else. We want to see our parents retire here, to see our children find jobs here. We want to stay and build lives here. But we also want to feel like we are not going to get squeezed for more tax dollars every two years to pay for the ever-growing cost of our state and local governments, with no end in sight. Those who are advocating for more tax increases say they must have the revenue otherwise they would have to cut services for our most vulnerable citizens — like the developmentally disabled and mentally ill. This is a false narrative. This is not an either-or proposition. There are other ways, other places to cut. And yes, most of those ways involve shrinking or privatizing parts of state government. The latest bonding package includes tens of millions of dollars for technology infrastructure. We should do as the Connecticut Institute for the 21st Century suggests and outsource the state’s IT to private providers. Imagine the millions we could save. And there is still so much waste. The state’s Department of Agriculture is almost $500,000 in the hole because it is paying to house sick — and contagious — goats at a prison instead of euthanizing them. Sickly prison yard goats — a strange metaphor or bad omen? Lawmakers have also proposed borrowing $3 million for the Tennis Foundation of Connecticut. Yes, $3 million is small fries next to the billions we spend, but it is indicative of a larger problem. This state taxes and spends as though it is wealthy, and clearly it is not. Yes, it has wealthy people, and many successful businesses, but the state is broke and in debt because it has not used its resources wisely. To ask for more money to spend in the face of this is galling to many people. Connecticut’s employers — the people we work for and buy stuff from — are particularly alarmed by the legislature’s budget. This is because it slams them from every angle — from an expansion of the sales tax, to reduced tax credits, to another extension of the corporate surcharge. CBIA, the state’s largest business association, called an emergency meeting yesterday with stakeholders from across the state to discuss ways to push back. Joe Brennan, the association’s president, has come out strongly in opposition to the legislature’s budget. “The stuff I’m hearing is scary,” he said. “I hear every day about investment going out of Connecticut.” The income tax and capital gains surcharge would similarly chase jobs and investment out of the state. For those who would be affected by these tax increases, the effective top tax rate would be 9 percent. As a comparison, New York’s top income tax rate is 8.82 percent. As a state that has historically benefited from having a relatively advantageous tax code compared to our neighbors, this should be alarming. And in a particularly egregious move, the new tax rules would be applied retroactively, so those affected would see a serious bite out of their remaining paychecks for the year, whether they have bills to pay or not. What those who support the legislative Democrats’ budget need to realize is that any increased revenues that come from these hikes would be short lived. That is what happened after 2011 — the state saw a year of revenue growth, followed by three years of revenue stagnation, accompanied by deep, damaging deficits. That is what will happen again if this budget is passed. It would devastate Connecticut’s economy and lead to even greater problems down the road. And then lawmakers will be back where they started, facing distraught families who could see their state aid cut, and state taxpayers who are already fed up. Enough is enough. Let’s hope there are Democrats who are brave enough to stand up and speak out against this budget. If not, it will be up to Gov. Malloy and his veto pen. Suzanne Bates is the policy director for the Yankee Institute for Public Policy. She lives in South Windsor with her family. Follow her on Twitter @suzebates. DISCLAIMER: The views, opinions, positions, or strategies expressed by the author are theirs alone, and do not necessarily reflect the views, opinions, or positions of CTNewsJunkie.com.

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