[dazzleman]

Originally Posted by JayCT

Today is the 30th anniversary of Governor Lowell Weicker signing Connecticut’s income tax into law. Prior to the tax being installed Connecticut had a lot of issues with its budget. It was difficult to accurately project revenue for the next year and for the state to keep its budget balanced. Before the income tax our state had the highest sales tax in the country. We also had a separate Capital Gains tax.

On the other hand, since being installed both the income and sales tax has risen, giving some to say it only encouraged reckless spending. Former Republican candidate for Governor, Bob Stefanowski has proposed to eliminate the income tax but has failed to present a real plan on how that would be accomplished.

The article linked below discusses the tax and gives some great information on it. This year the income tax brought in $10.2 billion, by far the largest source of revenue for our state. It has helped the state have a budget surplus and push the Rainy Day Fund to a record $4.7 billion. It’s also allowing the state to make a record $1.2 billion advanced payment to the state’s pension funds. And for the first time in 20 years, four independent credit rating agencies have raised the state’s Bond rating. It That’s incredible.

While we have talked about the income tax on the Economic Climate thread, we never had a thread dedicated to the income tax. Maybe it’s time. So, was the income tax a good idea? Did it help or hurt our state? Can it be eliminated? Should it be eliminated? Lots of questions and I’m sure there are lots of opinions. Let’s hear them. Jay

https://www.courant.com/politics/hc-...rqy-story.html

The income tax surely broadened the tax base, and was favored by some wealthy people because previously, they were more heavily taxed on capital gains. The income tax lowered the effective tax rate of people who were drawing large amounts of income from capital gains, and spread it out over a larger share of the population.

In theory, the income tax may have been a good idea, but unfortunately the reality never works out that way. Politicians can't resist the ability to take more money, and they continue to increase the rate. Every time there is an economic downturn, they increase the rate "temporarily" but it never goes back down, and then the higher rate remains until the next downturn hits, when it is raised again.

Connecticut has thrown away much of the tax advantage that it had compared to neighboring states. All in all, I wouldn't say the state is a better place than it was before the income tax, unfortunately, and much of that is on the voters of the state for electing the type of politicians that we have elected.

I grew up in New York (adjacent Westchester County) and moved to Connecticut because it offered a better climate and lifestyle overall - lower taxes, lower home prices, less crowding, nicer facilities, etc. But I used to joke that Connecticut was 20 years behind New York on the road to hell, and I'm afraid that this was largely true. The Connecticut of today reminds me of the Westchester that I left behind as taxes have increased, crowding has increased, etc. I miss the Fairfield of the early to mid 1990s when I moved here, with its still healthy middle class and more reasonable prices, and low taxes. And the Westchester that I left behind has become little more than an additional New York city borough. Sometimes I wish we could freeze things in time and preserve what is nice about a place but it seems impossible to do that. It's about managing change, and I don't think Connecticut has done it particularly well.

[BobNJ1960]

The 10 years before the income tax passed saw Ct with its biggest favorable gap, state unemployment rate vs USA unemployment rate. We have not duplicated that gap since.

On top of that, our state now consumes 125% of the GDP via government budgets that it consumed in 1991, as a % of actual GDP. We are slightly above 10% to the state and local government now, 8% in 1991. 10/8 =125%.

Labor Market Information - State of Connecticut vs. United States Unemployment Rate

[Lincolnian]

Originally Posted by Reilly1017

I know every state is different but it always amazes me that almost 20% of the states in this country do not tax personal income: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming.

Someone will always say “yeah but NH taxes dividends and interest”. Well, that’s a upper class “problem”. The average person doesn’t have a $1MM+ taxable stock portfolio generating meaningful dividends and interest.

And NH just voted to phase out the tax on dividends and interest by 2027.

[GeoffD]

Compare Connecticut with Massachusetts. Massachusetts has a flat state income tax mandated in the state constitution. There is enormous pushback on ever raising it because everyone feels the same pain. In the late-1970s, Proposition 2 1/2 put limits on property taxes and fixed the absurd auto property tax so it only hits the newest cars. It forced the state and cities & towns to control costs. Massachusetts was a really high tax state in 1975. It’s now middle of the pack nationally unless you own a million+ dollar home in metro Boston where the property taxes have a big bite despite relatively low tax rates.

I see nothing wrong with a state income tax but it needs to be a flat tax.

[CTartist]

A progressive income tax where the poor, elderly and lower income pay less (and no taxes on food*) is fair, just AND KIND**.


*and other basics of life
**this is for all the Christians....please read Matthew, Mark, Luke, and John where Jesus explains it all

That is all.

[JGBigGreen]

Are these parts of the Bible where Jesus compares and contrasts a flat tax versus a progressive tax?

Originally Posted by CTartist

**this is for all the Christians....please read Matthew, Mark, Luke, and John where Jesus explains it all

That is all.

[CTartist]

Originally Posted by JGBigGreen

Are these parts of the Bible where Jesus compares and contrasts a flat tax versus a progressive tax?

It's all in there.

The widow's mite. Luke 21:1-4

And He looked up and saw the rich putting their gifts into the treasury, 2 and He saw also a certain poor widow putting in two mites.[a] 3 So He said, “Truly I say to you that this poor widow has put in more than all; 4 for all these out of their abundance have put in offerings for God, but she out of her poverty put in all the livelihood that she had.”

[beach43ofus]

After government provides for basic needs, when you take money from the private sector, & give it to government, it harms the economy. CT's basic needs were fulfilled when the income tax began, so I say it was wrong to create the income tax.

Government doesn't create wealth, or produce anything, it just consumes, & provides services. The problem is, gov't keeps expanding their scope of influence beyond basic needs....mission creep...aka tax & spend.

The private sector can take $1, & create $2 out of the investment, so the pizza pie grows. Gov't can't do that, except for a few special cases.

I also agree w/ a prior poster who said it took away a competitive advantage CT had over NY & MA. If CT could repeal the state income tax, I think it would grow the states economy, & more tax revenues would flow into the states coffers.

[mdovell]

Of course the other way around this is further delegate it locally. So you have a local income tax instead of state.

[New Englander]

Originally Posted by GeoffD

Compare Connecticut with Massachusetts. Massachusetts has a flat state income tax mandated in the state constitution. There is enormous pushback on ever raising it because everyone feels the same pain. In the late-1970s, Proposition 2 1/2 put limits on property taxes and fixed the absurd auto property tax so it only hits the newest cars. It forced the state and cities & towns to control costs. Massachusetts was a really high tax state in 1975. It’s now middle of the pack nationally unless you own a million+ dollar home in metro Boston where the property taxes have a big bite despite relatively low tax rates.

I see nothing wrong with a state income tax but it needs to be a flat tax.

Absolutely agree. Plus I feel very good about MA is run and have no issues paying the tax. This is not intended to be a shot against CT at all -- which is still better run than NY (I'd want my money back if I were a New Yorker ).

I have always felt that taxes in MA were very fair. Even those with the million+ homes in metro Boston (particularly Metrowest) are coming out ahead if they have a few kids, as the education is top-notch.

When I was selling my MA domiciled corp, my tax lawyer presented an option to switch everything to NH to reduce the tax bite. I could not consciously do that to the Commonwealth which gave me a business environment (clients, educated workforce, location etc.) to succeed. NH is a wonderful state and I respect their pro-business, low tax policies however I appreciate what MA has done.

In sum, I'm in agreement with a flat tax. Also, CT needs to cut its losses with certain cities that are a sinkhole for state funding, they won't improve..