Earlier today, Connecticut governor Dannel Malloy (D) announced proposed revisions to the $2 billion in tax increases in the recently-passed biennial budget. The proposal would cancel a planned increase of a taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. on data processing, delay a planned switch to combined income reporting until 2016, and eliminate sales taxA sales tax is levied on retail sales of goods and services and, ideally, should apply to all final consumption with few exemptions. Many governments exempt goods like groceries; base broadening, such as including groceries, could keep rates lower. A sales tax should exempt business-to-business transactions which, when taxed, cause tax pyramiding. revenues from parking and car washes. It also raises the Tax CreditA tax credit is a provision that reduces a taxpayer’s final tax bill, dollar-for-dollar. A tax credit differs from deductions and exemptions, which reduce taxable income, rather than the taxpayer’s tax bill directly. Cap to 55 percent and sets a 1 percent tax on the World Wide Web. Per his official announcement, he will ask the legislature to grant him the authority to make cuts of up to 1.5 percent of across-the-board spending to make up for approximately $223 million in lost revenue.
Governor Malloy’s proposal is good news for the state’s businesses. Concerns from business groups and Connecticut-based corporations like GE and Aetna about the budget’s tax increases have been mounting since before the budget’s passing. Doing business in Connecticut is difficult; it ranks 42nd on our State Business Tax Climate Index and has one of the highest corporate tax rates in the country. Taxes on data processing and the shift to combined reporting make that tax burden even heavier.
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