$3.2 billion in new taxes debated at State Capitol

Politics

HARTFORD, Conn. (WTNH) — This week the Legislature’s “Tax Writing” Committee, Finance Revenue and Bonding put forth its proposal to balance the state budget. The massive revenue package includes billions in new taxes.

Earlier in the week, the Appropriations Committee proposed a spending package of $46 billion over the next two years.

State Representative Sean Scanlon, the Democratic Chair of the Finance Revenue & Bonding, “We are the last game in town.”

According to the Tax Foundation, Connecticut has the second-largest tax burden in the country. With $3.2 billion in new proposed taxes, it’s not surprising the measure is not popular.

Republican House Minority Leader, State Representative Vin Candelora points out in a year in which the Federal government is sending aid it is unnecessary to tax residents. “We are the only state in the union that’s actually raising taxes at a time that we have more money than we need to balance the budget.”

Some of the new taxes proposed in the package include:

  • Truck Mileage Tax, Credit Card Convenience Fee, Digital Tax
  • Consumption Tax on Wealthy, Gaming Tax, Marijuana Sales Tax
  • 10% Corporate Tax Surcharge Permanent, 2% Capital Gains Surcharge, Property Tax Credit Cancelled

Motor Transport Association of Connecticut President Joe Sculley quickly responded, “It was encouraging to see bipartisan opposition to the truck mileage tax expressed in today’s meeting of the Finance, Revenue & Bonding Committee. There is a clear recognition that this tax would only slam in-state businesses while out-of-state won’t pay it since the administration has repeatedly admitted it will be administered on the ‘honor system.’

There are tax credits. Notably, the largest tax cut in recent history with a child tax credit for qualifying families.

It also establishes a statewide child tax credit based on someone’s personal income. The credit is $600 per child up to three children for families making less than $200,000 and individuals making less than $100,000, which represents the largest state income tax break in Connecticut’s history. The new credit would cost the state $150 million in 2023 and $300 million in 2024 in lost revenue.

Other credit ideas include:

  • No Admission Tax, No Tax on Breastfeeding Supplies
  • Expansion of the Earned Income Tax Credit

The hospitality industry keeping a portion of the sales tax next year to make up for losses during the government shut down of restaurants and hotels during the pandemic. And Research and Development tax credits are expanded. Tax amnesty for those who owe the state.

Connecticut’s historic $3 billion rainy day fund is not touched. But some say accounting gimmicks break the spending cap. Republicans and Democrats passed a bipartisan package in 2017 which set a volatility cap on capital gains and defined the state spending cap.

Representative Candelora intends there is still time to make critical changes, “I think it’s important they allow Republicans on the field to fix all the mistakes democrats have made with this budget.”

State Senator Kevin Kelly the Republican Minority Leader in the Senate said: “Some of these tax increases are regressive and will hurt those most struggling today. For example, a mileage tax on trucks will result in higher costs on products they transport, like groceries and home heating oil. Canceling property tax relief for middle-class families is another punch in the gut. And if the billions in new taxes drive out Connecticut’s wealthiest taxpayers, it is the working and middle class who will be left behind to foot the bill. We’ve seen it before. In addition, this plan skirts the state’s spending cap. If Democrats really cared and fought for those policies, then they wouldn’t be looking at every turn to get around them and move our spending offline and out of transparency. Circumventing these caps is turning our government into a sham.”

State Rep. Sean Scanlon admits, “There’s good stuff in here, but it’s not perfect. It’s the conversation we wanted to have and it’s the package that meets the moment. There are people hurting. Whether it’s through passing the largest tax cut in state history for middle and working-class families in the form of a state child tax credit and an increased Earned Income Tax Credit (EITC) or tax relief for businesses, we are putting more money into the pockets of those who need it most right now and making investments in policies that will help grow our state.”

The governor told reporters at a late day press conference that there are specific items he doesn’t support, “Playing games with spending cap moving things off budget same type of games that got us in trouble over the last 30-years. And spending I said I don’t think we need,” said Governor Ned Lamont.

Budget negotiations will now begin between the legislature and the governor. Chair Scanlon described the process as being, “… in the 4th inning of a baseball game. There are many innings to go before the game is over.”

The Legislative Session ends June 9.

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