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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.
I wish I could give you multiple +1s for this post. This is exactly how I feel about Fairfield County and CT. It's a wonderful state with very industrious people however the more it gets sucked into the NY-NJ, Tri-state orbit, the worse off it will be. This isn't political but rather based on policy.
How you're describing Westchester also applies to Nassau County and to a lesser extend Suffolk County on Long Island as well. The tentacles of NYC/NYS will spread and make adjacent areas more crowded, with higher taxes and lower QoL. I can see this comparison first hand. My parents have their original house in Queens, NY, and are also living in Fairfield. I'm in the area frequently and see how things are changing.
I think if the tax remained flat and low even if not "temporary" like it was supposed to be, CT would be in better shape demographically. While it is great CT has a new-found budget surplus, it's sad that the money hardly made a dent in the woefully underfunded public pension program - a testament to show how many people are relying on the bloated government. And how many of the people collecting CT pensions still live in CT? I'd be curious to see a number.
I think people vote with their wallets and taxes are a huge part of it. I feel that CT taxes you at every turn, property, vehicle, tangible property, sales, income...being a state without an income tax in a high tax part of the country could have been exploited as a competitive advantage for the last 30 years...especially the last 10.
The income tax is likely here to stay. My bigger gripe, probably for a different thread, is with the vehicle property tax in CT. My understanding is that it was in place because CT did not have an income tax prior to 1991, but it was not removed when the income tax was placed into law. I think the vehicle tax system is completely unfair and hinders growth. It also encourages bad behavior and tax avoidance. I'd also say it might hinder people trading into more fuel efficient (newer) vehicles. If someone has a justification for it other than the towns now depend on it, I'd love to hear it.
I think if the tax remained flat and low even if not "temporary" like it was supposed to be, CT would be in better shape demographically. While it is great CT has a new-found budget surplus, it's sad that the money hardly made a dent in the woefully underfunded public pension program - a testament to show how many people are relying on the bloated government. And how many of the people collecting CT pensions still live in CT? I'd be curious to see a number.
I think people vote with their wallets and taxes are a huge part of it. I feel that CT taxes you at every turn, property, vehicle, tangible property, sales, income...being a state without an income tax in a high tax part of the country could have been exploited as a competitive advantage for the last 30 years...especially the last 10.
The income tax is likely here to stay. My bigger gripe, probably for a different thread, is with the vehicle property tax in CT. My understanding is that it was in place because CT did not have an income tax prior to 1991, but it was not removed when the income tax was placed into law. I think the vehicle tax system is completely unfair and hinders growth. It also encourages bad behavior and tax avoidance. I'd also say it might hinder people trading into more fuel efficient (newer) vehicles. If someone has a justification for it other than the towns now depend on it, I'd love to hear it.
I’m not sure why you think that the $1.2 billion advanced payment to the pension funds is not making a dent in our pension obligations. Remember this payment is in addition to the regular annual contributions being made to them that was established by Governor Malloy to meet our long term pension obligations. That plan was very well received by four credit rating agencies who just upgraded our state’s bond ratings.
Also remember those insanely high pension amounts often touted by Republicans aren’t necessarily accurate. They assume that every state worker who is or was eligible for a pension actually takes the pension and lives to a VERY ripe old age. That’s highly unlikely for a variety of reasons. I wouldn’t worry about it.
That advanced payment surely will go a LONG way to helping our state’s fiscal position. Heck I wouldn’t be surprised if there’s a tax cut next year. Wouldn’t that be refreshing? Jay
I’m not sure why you think that the $1.2 billion advanced payment to the pension funds is not making a dent in our pension obligations. Remember this payment is in addition to the regular annual contributions being made to them that was established by Governor Malloy to meet our long term pension obligations. That plan was very well received by four credit rating agencies who just upgraded our state’s bond ratings.
Also remember those insanely high pension amounts often touted by Republicans aren’t necessarily accurate. They assume that every state worker who is or was eligible for a pension actually takes the pension and lives to a VERY ripe old age. That’s highly unlikely for a variety of reasons. I wouldn’t worry about it.
That advanced payment surely will go a LONG way to helping our state’s fiscal position. Heck I wouldn’t be surprised if there’s a tax cut next year. Wouldn’t that be refreshing? Jay
It's a fact, CT is a fiscal nightmare. It's not even subjective.
"With nearly $92 billion in long-term, unfunded liabilities, including nearly $41 billion related to pensions, Connecticut is one of the most indebted states in the nation. Payments on pension, retirement health care and bonded debt consume nearly 30% of the General Fund and have been leaching resources away from education, health care, transportation, municipal aid and other priorities."
$1.2 billion toward $41 billion in pension debt = 3%. Hence my comment, hardly a dent.
I think if the tax remained flat and low even if not "temporary" like it was supposed to be, CT would be in better shape demographically.
What do you mean by "CT would be in better shape demographically? All states are gaining more minority population. Or do you mean demographics in an economic sense?
Quote:
Originally Posted by conway234
My bigger gripe, probably for a different thread, is with the vehicle property tax in CT.
Here is how I understand the vehicle tax but I could be wrong.
If you have a $50,000+ plus car you of course will pay more to the town. If you are lower income and have a modest older car that is worth about $10,000 you will pay less. So it seems fairer to lower income people. Or if you do not have a car and take public transportation you are usually pretty poor so you would not even have to pay. It kind of seems fair.
Other posters....did I get the concept right?
In my mind the car tax goes back to being fair, just and kind like the progressive graduated state income tax.
It's a fact, CT is a fiscal nightmare. It's not even subjective.
"With nearly $92 billion in long-term, unfunded liabilities, including nearly $41 billion related to pensions, Connecticut is one of the most indebted states in the nation. Payments on pension, retirement health care and bonded debt consume nearly 30% of the General Fund and have been leaching resources away from education, health care, transportation, municipal aid and other priorities."
$1.2 billion toward $41 billion in pension debt = 3%. Hence my comment, hardly a dent.
Massachusetts just reported a few weeks ago that their net gain for the last year in their pension fund was 29.5%. The state is on a track to fully fund their state pension liability by 2036. My town uses that same state fund via the county for town pensions and is on the same trajectory to zero out unfunded pension liability by 2036. There are some cities that opted out that are a disaster for unfunded pension liability but the money managers have managed to ride the Obama, Trump, and first 6 months of Biden market gains into turning unfunded pension liability from frightening to under control.
Last edited by JayCT; 09-01-2021 at 12:21 PM..
Reason: Revised quote
What do you mean by "CT would be in better shape demographically? All states are gaining more minority population. Or do you mean demographics in an economic sense?
Here is how I understand the vehicle tax but I could be wrong.
If you have a $50,000+ plus car you of course will pay more to the town. If you are lower income and have a modest older car that is worth about $10,000 you will pay less. So it seems fairer to lower income people. Or if you do not have a car and take public transportation you are usually pretty poor so you would not even have to pay. It kind of seems fair.
Other posters....did I get the concept right?
In my mind the car tax goes back to being fair, just and kind like the progressive graduated state income tax.
Fair question. As for demographics, I was thinking more of age and socio economic diversity, and not ethnic diversity. I think some older residents/retirees would be more willing to stay in Connecticut as opposed to leaving for places like Florida. I know in FFC, many move there for schools and leave town the second their children graduate high school for lower tax jurisdictions. It would be nice to stem some of that outflow to provide diverse age groups in towns. Also, the CT estate tax can be onerous to wealthy individuals. While it only applies to estates over $5 million, those people worth that also have the means to skirt around it through attorneys, trusts, accountants, etc. Perhaps people would be less likely to engage in behaviors that are geared toward tax avoidance if income and estate taxes were lower.
As for the vehicle tax my bone to pick is the fact that it is not a uniform progressive tax like an income tax. You can have the same vehicle taxed at wildly different rates depending on the town. The same applies to real estate, however, real estate values change across town lines. A 2012 Honda Accord is worth the same across town lines. Yes it is progressive as you described in that the lower value car you have, the less you pay. However, the rate is not standard across the state as it is based on individual town mill rates. The value of the car is also subjective but CT sticks to NADA full retail book value. Regardless of condition or modifications. Appeals are seldom won on vehicles. Houses are routinely inspected and reassessed for accurate values based on condition.
Take a $10,000 car (taxed at $7,000) assessed value. In Wilton that tax is $195. In neighboring New Canaan, it is $127. Across the state in Guilford it is $228. In Hartford it is $315. So now if you take that times a $40,000 car, you're looking at large differences. I just don't see how that is an equitable tax. To that, I know of people who have registered vehicles in Montana LLCs. I've seen many people keep vehicles registered in New York, Vermont, or Maine. Maine allows non-residents to legally register cars. Other states may be using an agent, second home, or residence.
It's a fact, CT is a fiscal nightmare. It's not even subjective.
"With nearly $92 billion in long-term, unfunded liabilities, including nearly $41 billion related to pensions, Connecticut is one of the most indebted states in the nation. Payments on pension, retirement health care and bonded debt consume nearly 30% of the General Fund and have been leaching resources away from education, health care, transportation, municipal aid and other priorities."
$1.2 billion toward $41 billion in pension debt = 3%. Hence my comment, hardly a dent.
You are wrong. Of course this is subjective. It’s subjective because it is an opinion of whether the state will have sufficient funds to meet its pension obligations over the next 30 years or so. As I noted and as the quote you posted says, this obligation is over the “long term”. That means it’s not today or even tomorrow, it’s in the future over the course of a number of years, if not decades and those multi-billion dollar amounts are just estimates. It’s opinion just how large those estimates really have to be to meet the pension obligations.
As I pointed out, Connecticut has for several years now had a plan in place to address our pension funding problem. That has included the state making a $2.6 billion contribution every year into their pension funds. That contribution plan has been very well accepted by the independent credit rating agencies, so much so that four of them have raised the state’s credit rating. I am certain that if this plan was viewed unfavorably by these experts, these agencies would not have improved our credit rating. Also remember that this credit rating improvement happened BEFORE the state announced an additional $1.2 billion into the pension funds.
As I have pointed out numerous times here, The Yankee Institute is NOT an objective organization. They are not pension experts, nor are they fiscal experts. They are a public policy “think tank” organization whose goal is to promote a conservative agenda in Connecticut. Our state is generally a liberal state so The Yankee Institute is constantly posting negative and unobjective news items to promote their agenda.
Whose opinion would you trust more? A biased think tank with a certain political agenda OR the credit rating agencies whose job and expertise is to review and analyze in detail and rate a state’s credit rating? I’m sorry but I will go with the credit rating agencies. They are the ones actually putting their money where their mouth is.
All that said, I am NOT saying that Connecticut is fully out of the woods with meeting it’s pension obligations. We cannot relax our diligence in working toward meeting it. The article linked below very cautiously summarizes the current state of our state’s pension plans. It notes that we must stick to the pension payments agreed to over the next several years and then continue beyond that until the state’s current employee funded plan begins to take over from the more traditional pension plans. Again note though, they are not experts either. Jay
You are wrong. Of course this is subjective. It’s subjective because it is an opinion of whether the state will have sufficient funds to meet its pension obligations over the next 30 years or so. As I noted and as the quote you posted says, this obligation is over the “long term”. That means it’s not today or even tomorrow, it’s in the future over the course of a number of years, if not decades and those multi-billion dollar amounts are just estimates. It’s opinion just how large those estimates really have to be to meet the pension obligations.
As I pointed out, Connecticut has for several years now had a plan in place to address our pension funding problem. That has included the state making a $2.6 billion contribution every year into their pension funds. That contribution plan has been very well accepted by the independent credit rating agencies, so much so that four of them have raised the state’s credit rating. I am certain that if this plan was viewed unfavorably by these experts, these agencies would not have improved our credit rating. Also remember that this credit rating improvement happened BEFORE the state announced an additional $1.2 billion into the pension funds.
As I have pointed out numerous times here, The Yankee Institute is NOT an objective organization. They are not pension experts, nor are they fiscal experts. They are a public policy “think tank” organization whose goal is to promote a conservative agenda in Connecticut. Our state is generally a liberal state so The Yankee Institute is constantly posting negative and unobjective news items to promote their agenda.
Whose opinion would you trust more? A biased think tank with a certain political agenda OR the credit rating agencies whose job and expertise is to review and analyze in detail and rate a state’s credit rating? I’m sorry but I will go with the credit rating agencies. They are the ones actually putting their money where their mouth is.
All that said, I am NOT saying that Connecticut is fully out of the woods with meeting it’s pension obligations. We cannot relax our diligence in working toward meeting it. The article linked below very cautiously summarizes the current state of our state’s pension plans. It notes that we must stick to the pension payments agreed to over the next several years and then continue beyond that until the state’s current employee funded plan begins to take over from the more traditional pension plans. Again note though, they are not experts either. Jay
Don't forget that the credit rating agencies had a big hand in bring us the 2008 crisis by failing to properly rate subprime debt. I'm not sure I would fully trust them. There was never a reckoning for their role in that crisis and there was no accountability, and therefore no reason to be confident that they have fixed whatever their problem was.
The income tax could have been better if 100% of it went to paying for state gov't workers' retirements. CT still has one of the worst funded pensions:
I realize Gov Lamont is trying to fix it & they've had nice returns of late, but its still bad. When you read it will be fixed by 2036, at what R.O.R.?
The income tax could have been better if it were more progressive to help smooth out CT's income & wealth gaps:
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Jay
