Yesterday we released an independent report (PDF) analyzing Nevada Governor Brian Sandoval’s proposed Business License Fee tax. The proposal replaces Nevada’s current $200-flat business license fee with a tiered gross...
- The Tax Policy Blog
- 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.
Subscribe to the Tax Foundation Newsletter
We will never sell or share your information with third parties.
Join the Tax Foundation's fight for sound tax policy Go
About the Tax Policy Blog
The Tax Policy Blog is the official blog of the Tax Foundation, a non-partisan, non-profit research organization that has monitored tax policy at the federal, state and local levels since 1937. Our economists welcome your feedback. If you would like to send an e-mail to the author of a blog post, please click on that person's name to locate his or her e-mail address or visit our staff page here.