Are Higher Taxes the Bleak Future For Connecticut?January 2, 2017
Faced with a new budget deficit, Governor Malloy has refused to rule out yet another round of tax increases.
As Connecticut faces a rising budget crisis, some state leaders are looking to new taxes as a simple fix. It wouldn’t be the first time Connecticut’s leaders relied on tax hikes to balance the budget.
In 2011, Gov. Dan Malloy (D-Conn.) called for sweeping and historic tax hikes for Connecticut’s residents totaling $1.5 billion dollars. Most taxes were paid by individuals:
Of the new $1.5 billion in tax hikes, 81% will be paid by individuals and 19% by businesses.
Faced with a new budget deficit, Governor Malloy has refused to rule out yet another round of tax increases:
In 2014, Malloy campaigned on the promise he wouldn’t increase taxes, but in 2015 he ended up adopting tax increases proposed by Democratic lawmakers. The burden of those tax increases fell largely on the business community and a few months later General Electric announced it was moving its headquarters to Boston.
The tax increases may impact job growth, though. In 2016, job growth in Connecticut remained anemic:
The construction and mining super-sector saw the biggest loss, down 1,800 jobs. Losses also were recorded in: financial activities; manufacturing; and professional and business services.
The 2016 departure of General Electric (GE) highlighted, for many, Connecticut’s reputation as an anti-business state. GE blamed, in part, the 2011 tax increase:
It took Malloy six months to break his tax pledge to Connecticut voters when he signed into law a $1.5 billion tax hike last June that triples the sales tax on data processing, while hitting GE and other Connecticut employers with a combined reporting requirement increasing their corporate tax liability. As a result, GE is now leaving Connecticut and the state’s politicians can’t say they weren’t warned.
Want to see more content like this?
Sign up for Email updates.