Opinion: Connecticut Taxes / New Canaan Taxes

A recent study graded Connecticut’s governor an “F” on fiscal policy. According to the Cato Institute,

"Governor Dan Malloy received poor grades on prior Cato report cards due mainly to his enormous tax increases. In 2011 Governor Malloy raised taxes by $1.8 billion annually, which increased total annual state tax collections by 14 percent.

Malloy received an F on this report for his continued support of large tax increases. In 2015 he signed legislation increasing taxes more than $900 million annually. He increased the top individual income tax rate from 6.7 percent to 6.99 percent, and he extended a corporate income tax surcharge of 20 percent. He increased the cigarette tax by 50 cents per pack and broadened the bases of the sales tax and income tax. He also increased health provider taxes and other taxes and fees.

Despite all the tax increases, Connecticut still faced a large budget gap in 2016 because spending keeps rising and growth is sluggish. Connecticut’s economy has lagged the national economy, and the state’s fiscal future is very troubled. It has some of the highest debt and unfunded retirement liabilities of any state on a per capita basis, as discussed above.

While neighboring New York has cut business taxes in recent years, Connecticut has raised them. In 2016 General Electric made headlines by moving its headquarters from Connecticut to Massachusetts. In 2015 GE head Jeffrey Immelt sent a letter to his employees saying that the company was looking to relocate “to another state with a more pro-business environment.” GE announced in 2016 that it was moving to Boston, after being headquartered in Connecticut for more than 40 years."

So our state is overtaxed but still overspends so much that we are deeply in debt. Are there any lessons for New Canaan? Yes:

1. We should budget with a baseline of 5% spending cuts versus +2.5% for the consumer price index, demanding annual justification of each and every spending priority. Budgeting at last year’s spending plus CPI prevents reallocation of resources to where they are needed.
2. We should not overcharge taxpayers. New Canaan’s formula uses a habitually incorrect formula for calculating tax receipts. This formula leaves government with a slush fund that will always tempt politicians to spend more money.

In Hartford, we have a perfect example of what not to do. In New Canaan, we can be an example of sound fiscal discipline. If we elect Rich Townsend to town council, he will serve as New Canaan's taxpayer advocate.