Last week, S.2320, a bill that would create Universal Savings Accounts in the federal tax code, was referred to the Senate Finance Committee. The bill, sponsored by Senator Jeff Flake and Representative Dave Brat, would...
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- Connecticut Tax Hikes in Proposed Budget
Connecticut Tax Hikes in Proposed Budget
Connecticut Gov. M. Jodi Rell (R) presented a budget plan today that includes some very bad tax increases, including a new millionaire's tax. From the Hartford Courant:
In a sharp reversal from her stances since February, Rell would raise the state income tax to 6.5 percent on couples earning more than $1 million per year and individuals earning more than $500,000 per year. The current maximum rate is 5 percent.
Attempting to piggyback off of the rich is not a sustainable way for a state to solve budget problems. For one thing, the rich have volatile income, much of it coming from business revenue and capital gains. So when another market crash comes—and just when a state wants reliable revenue the most—some of the wealthy won't be there to lean on. Also, Texas isn't too far away anymore (or New Hampshire for that matter, where only investment income is taxed, and that at 5%). If a state wants to be competitive and spur long-term economic growth, they should try to attract the human capital and potential investment that comes with high-earners, not tax them out of the state.
A 10 percent surcharge on the corporation business tax is also in the budget—a revenue grab from another subset of the state population.
But it's not only the high-earners being lined up for a bleeding. The governor's budget suggests raising the cigarette tax—found to hit the poor most—by a dollar (that would put Connecticut second for highest cigarette taxes in the country).
... Rell would increase the cigarette tax to $3 per pack, up from the current $2 per pack. That increase would bring an additional $103 million to state coffers from smokers.
Mixing progressive and regressive taxes doesn't make it even.
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