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Oppose Job-Killing, Burdensome Tax Increases On Nutmeggers!
An Open Letter to the Connecticut General Assembly
March 1, 2011
On behalf of the National Taxpayers Union’s more than 4,600 members in Connecticut, I strongly urge you to reject Governor Malloy’s plan to raise taxes by $3 billion. If enacted, these tax hikes would hurt the state’s chances of a swift economic recovery and seriously harm the state’s attractiveness as a place to do business.
As part of his budget, Governor Malloy proposes to increase taxes on individuals who make more than $50,000, raise the top income tax rate from 6.5 to 6.7 percent, and increase the number of income brackets from three to eight. Additionally, the Governor wants to raise the state sales tax from 6 to 6.25 percent and to 6.35 percent locally, extend the corporate profits tax, lower the exemption for the death tax, increase the cigarette tax by 40 cents per pack, hike the gas tax by three cents per gallon, raise the alcohol tax by 20 percent, increase the hotel tax by two percent, and raise many fees on things such as driver’s licenses. In all, the Governor proposes to raise rates in 25 different categories of taxes, according to an analysis by the non-partisan Yankee Institute for Public Policy.
Even under its current laws, Connecticut is hardly a low-tax state. In fact, Connecticut has the third- highest state and local tax burden, according to the Tax Foundation. To highlight but a few of the numbers behind this dubious distinction, the state also has one of the worst business tax climates in the nation, the thirteenth-highest general sales tax rate, and the nation’s second-highest cigarette tax rate. Meanwhile, spending per household in Connecticut has grown from $4,400 in 1980 to more than $10,000 today, an increase of 227 percent – far faster than inflation or population growth. Clearly, Connecticut’s budget woes are not the result of a revenue problem, but a spending problem.
Proponents claim that these tax hikes are the least painful options to address the state’s $3 billion budget deficit, but the reality is that they will do serious damage to the state’s economy. Connecticut’s median household income has remained relatively flat for years and unemployment is hovering at 8.6 percent, more than three percent higher than it was just three years ago. Raising the income tax would hurt hard-working families who are struggling to pay bills. Similarly, increases in the sales tax will discourage consumers from shopping, which will harm retailers who have endured a sluggish economy. Higher gasoline, alcohol, and hotel taxes certainly won’t encourage travel to Connecticut, just as the summer tourist season begins. Moreover, tobacco taxes are unreliable sources of revenue, disproportionately burden the poor (who are more likely to smoke), and hit small retailers such as convenience stores who count as cigarettes and other tobacco products for as much as a third of sales.
Connecticut faces serious budget challenges, but the answer to those challenges is to reduce spending; not raise taxes. Therefore, our members hope you will oppose the Governor’s tax hikes.