Connecticut's Winners and Losers In The Senate Tax Bill

HARTFORD, CT — The tax reform bill recently passed by the U.S. Senate will be a mixed bag for Connecticut residents. Corporations and the ultra-wealthy along with heirs and heiresses to fortunes are sure to see some big benefits.

More tax filers will end up taking the standard deduction, which increased to $12,000 for single filers and $24,000 for married couples filing jointly under the bill.

The bill becomes less attractive for residents in high-tax states like the tri-state area due to the elimination of the popular state income tax credit. Those who would still itemize could see a bigger tax bill. The deduction for state income tax was eliminated in the bill and the property tax deduction was capped at $10,000.

The estate tax exemption is doubled to $11 million for single filers and $22 million for married filers.

Senators Chris Murphy and Richard Blumenthal estimated that about 60 percent of average wage earners would see a tax cut for the next seven years due to the increased standard deduction, according to WTNH.

The child tax credit would increase from $1,000 to $2,000 under the bill, but wouldn’t be refundable, according to Forbes. Someone making minimum wage with no tax liability wouldn’t see an improvement from the bill. The personal exemption of $4,050 that can be claimed for the filer, spouse and dependents is eliminated, according to CNN.

The IRS recently passed new rules that would allow Connecticut residents to claim a casualty deduction for repair faulty foundations, but the Senate bill apparently undoes that, Blumenthal said. It is estimated that 30,000 homes in the northeast section of the state have that issue.

The Connecticut senators also worried that Social Security and Medicare funds would be cut in order to reduce the estimated deficit effect of the tax bill.

The House and Senate versions of the bill still have to be reconciled before it goes to President Donald Trump for final approval. Some Republican congressmen from high-tax states like California, New Jersey and New York could be in difficult position due to the elimination of the state income tax and cap on property tax deductions.

Connecticut’s commissioner of the Department of Revenue Services estimated that 75 percent of the tax cut benefits would go to the state’s top one percent of earners while the rest of the state would see a 1.2 percent cut on average for the House version of the bill. Proposals to reduce corporate and pass-through business income could be a boon to the economy, he said.

The federal government collected more than $16,500 in tax revenue per capita in Connecticut during fiscal year 2015, which is the fifth highest in the nation, according to the U.S. Census Bureau.

High tax states including New Jersey, Massachusetts, New York and Rhode Island are all in the top 10 of revenue per capita. Low tax state Florida's per capita contribution is $8,762.

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