Leery of the governor’s plans to raid special programs, … Democratic lawmakers are proposing increases in income, estate, corporation, sales and cigarette taxes.
Rich vs. poor
“We will, I think, need some additional revenues to have a balanced budget, and I’ve always believed we should have more progressivity in our income tax,” said Senate Majority Leader Martin M. Looney, D-New Haven.
Looney has proposed boosting the income tax’s top marginal rate from 6.7 to 6.9 percent. That would apply to earnings above $250,000 for individuals and above $500,000 for couples.
Seeking more from big corporations
With fiscal analysts projecting a 6 percent gap, about $1.2 billion, in next year’s finances based on current trends, Malloy was hard pressed to avoid tax hikes, and is seeking more from businesses.
But Malloy argues the $139 million extra from the corporation, electricity generation and insurance premiums taxes comes only from extending existing rates or credit limits otherwise set to expire — and therefore doesn’t count as a tax hike.
“I think he had to look at every option to deal with a difficult situation,” said Flexer. “But now it is our responsibility to do the same.”
Flexer is one of several lawmakers who has proposed a “combined reporting” measure to ensure that Connecticut corporations pay more in taxes.
The “combined reporting” concept holds that any corporate group with at least one affiliate here should owe taxes that reflect the entire group’s net income.
Rep. Betsy Ritter, a Waterford Democrat, not only has sponsored a “combined reporting” bill, but she has also proposed a hoarder’s tax. This would place a levy on liquid assets — companies with a lot of money in the bank — and dedicate the proceeds to job creation programs.
While Malloy has said repeatedly this is not the time to raise taxes, that line already has been crossed, Ritter said.
“It sounds to me like the legislature is respectfully saying (tax increases) are something we have to have on the table to have a balanced discussion about the budget,” she said.
Other proposals offered recently would repeal a 2009 tax cut on wealthy estates, increase sales tax on food served at restaurants, add 95 cents per pack to the cigarette tax and preserve the towns’ share of state sales and real estate conveyance taxes — worth just under $100 million per year.
The finance committee did raise a concept bill — a measure with a title, but no specific language drafted to date — regarding the real estate conveyance tax. Such measures typically are drafted in anticipation that members may discuss the topic during the legislative session.
Rep. Sean Williams of Watertown, ranking GOP representative on the finance committee, said he doesn’t think Democrats will find the spending cuts needed to support tax hikes and said he fears it will be hard enough to eliminate the other revenue gimmicks in the budget. “There is never enough money for these folks to spend.”