Will Any Of These Proposed New Taxes Make It Into CT Law?

CONNECTICUT — Taxes on capital gains, heavy trucks and high-earners are atop the list of taxes that Democrats have added to Gov. Ned Lamont's proposed two-year, $46 billion budget.

On Thursday, Lamont dug in his heels and said he would not sign the document that emerged from the legislature's finance committee — and so the final negotiations and wrangling have begun.

Politics being politics, when the smoke clears, some of the proposed new taxes may end up as law as part of a compromise. Here's what a few of those look like now, based upon the info available from the state General Assembly's Office of Fiscal Analysis:

A proposed capital gains tax would impose a 2 percent surcharge on net gain from the sale or exchange of capital assets for taxpayers with incomes above $500,000 for single filers and married individuals filing separately, $800,000 for heads of households, and $1,000,000 for married joint filers and surviving spouses.

Lawmakers seek to create a Connecticut Health Insurance Exchange which will facilitate group health insurance and pharmacy plans for multiemployer plans, nonprofit employers, and smaller employers. Beginning in July 2021, the funding would be carved out of $50 million in new taxes levied upon insurance companies.

If a big part of your business is selling advertising on websites, search engines or online apps, the state would take a slice of your pie if you do more than $100 million in ad sales each year. The tax rate on digital advertisers is graduated and ranges from 2.5 percent for companies with global annual gross revenues of $100 million to $1 billion, to 10 percent for companies with annual gross revenues greater than $15 billion.

Legislators would also have the 10 percent corporation business tax surcharge, which under current law expires after the 2020 income year, become permanent.

Ambulatory surgical centers would see the 6 percent tax on their receipts convert into a 6.35 percent sales tax, subject to certain exclusions.

Also proposed is a new consumption tax on Connecticut residents with federal adjusted gross incomes of at least $140,000. The tax rate ranges from 0.1 percent for taxpayers with federal AGIs between $140,000 and $185,000 to 1.5 percent for taxpayers with federal AGIs of $13 million or more.

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If you are a producer of digital content, the Democrats want to put some money back into your pocket. Effective January 2022, film and digital media production tax credits can be claimed against the sales and use tax, subject to certain conditions.

The lawmakers are also looking favorably upon hotels, restaurants, and bars, which would be allowed to keep 13.6 percent of the 7.35 percent sales tax they collect on sales of meals and beverages for fiscal year 2022.

The Democrats' bill would also increase, from 50.01 to 70 percent, the amount by which a company may reduce its corporation business tax liability using research and development credits. The aggregate cap on Invest CT tax credits would also increase by $200 million, from $350 million to $550 million.