Tax Hike Will Accelerate Connecticut’s Decline
Prior to 1991, Connecticut did not have an income tax and the state was competitive and very prosperous. Since adopting the tax, however, the state has suffered the slowest job growth of any state. Now the Governor (who hid her plans while campaigning) wants to boost the tax even higher to fund an orgy of new spending. The Wall Street Journal opines on this self‐destructive proposal:
Connecticut Governor M. Jodi Rell wants to thank constituents for electing her with 63% of the vote by socking them with a 10% hike in the personal income tax rate. Fellow Republicans in the state legislature are understandably scratching their heads. But the proposal has no doubt also left many taxpayers wondering why they even bother to pull the lever for Republicans. Ms. Rell dropped this bombshell last week when she presented her biennial budget. In addition to the income tax increase, which would push the top marginal rate to 5.5% from the current 5% over two years, the Governor also proposes increasing cigarette taxes, hiking bus fares and phasing out a $500 property tax credit. Democrats, who control both houses of the legislature, welcome the plan. So does much of the state’s liberal media, who are hailing Ms. Rell as “brave” and “courageous.” But as Susan Kniep of the Federation of Connecticut Taxpayer Organizations put it to the Associated Press, “Gee, why didn’t we kind of hear about this before we went into the polls?” Governor Rell says a tax increase is necessary to fund more education spending. But Connecticut already spends more money per student on public schools than all but three states. According to the latest Census data, which is from the 2004 school year, Connecticut’s per‐pupil spending is $10,788, or more than 30% above the national average of $8,287. …Connecticut adopted its income tax in 1991, and it has since ranked last nationally in employment growth while losing tens of thousands of people to other states. Increasing the income tax rate seems an odd way to reverse these trends. “When looking at states that have growing economies and are thriving,” said Republican state senator David Cappiello in an interview, “they’re the states that either have no income tax or are looking to phase down their income tax. Connecticut is moving in the opposite direction.” …By the way, it’s not as if Connecticut taxpayers haven’t been doing their part; the state will end the current fiscal year with a $600 million revenue surplus. The problem is that the politicians want to spend the money faster than it comes in. Governor Rell’s budget would grow government by nearly 13% over two years and bust constitutional spending caps approved by 81% of voters back in 1992. No wonder she kept her plans secret until after the election.
