Rell: Income tax hike on millionaires

Hartford (WTNH) - Gov. Jodi Rell has proposed a compromise to the Democratic-controlled General Assembly to break the state budget deadlock.

The Governor says she is willing to give Democrats the tax hike they have been seeking if they will give her another half billion dollars in spending cuts. She has embraced the so-called Millionaire's Tax, proposing a hike in the rate on joint filers who make over a million dollars a year from the current 5 percent to 6.5 percent.

Rell also proposed a tax cut that would affect everyone - cutting the sales tax from the current 6 percent to 5.5 percent. She also wants a temporary, three year, 10-percent surcharge on the corporate profits tax, excluding small businesses.

"Cutting the sales tax to 5.5 percent not only benefits consumers, it reduces the cost of doing business in Connecticut and it creates jobs," Rell said.

The Governor also proposes hiking the cigarette tax from the current $2 per pack to $3 per pack. She proposes the total elimination of the Inheritance Tax, which is as high as 16 percent on estates in excess of $2 million. And she calls for an additional $520 million in spending cuts.

"This is a package, it's not an al a carte menu. They've got to suck it up, find the cuts like every household, every business is doing," said Rep. Larry Cafero (R-Minority Leader).

Republicans say they are also willing to suck it up on tax hikes they don't like.

"It's time to put away partisanship. It's time for leadership, the Governor has demonstrated that. Larry's right, as with any compromise there are going to be things in there we don't like," said Sen. John McKinney (R-Minority Leader).

Democrats quickly announced they're cancelling tomorrow's session so they can look it over.

"We're happy to see that she's recognized the need to ask those who have a bit more to contribute to our deficit by including the 'Millionaire's Tax," said Rep. Chris Donovan (D-Speaker of the House).

Donovan and Senate President Pro Tem Don Williams said it was possible the General Assembly could vote on this as soon as Friday, but a more realistic estimate would be Monday.