GOP leaders: Roll back tax changes to placate GE [Rep-Am]

Republican – American

HARTFORD — Senate Republicans turned up the political heat over General Electric Co.’s possible relocation of its corporate offices, challenging Gov. Dannel P. Malloy to move immediately to repeal one of the business tax changes that prompted the company to explore moving out of state

The Senate’s top GOP leader and a Republican senator from GE’s home base of Fairfield urged Malloy to call the legislature into special session to take action to reassure GE and all Connecticut businesses that the state government values them.

There was no immediate response from the governor’s office.

The tax package supporting the two-year, $40.5 billion budget that took effect July 1 changed how the state taxes income of businesses that are part of a multi-state chain of companies. It is not due to kick in until the second year of the budget.

This new method of taxing corporate income and other tax provisions sparked a tax revolt among the state’s businesses, led by GE.

Malloy and Democrats pushed back its implementation one year and rolled back some of the tax changes, but GE still followed through on its threat to look to move its corporate headquarters to another state.

While headquartered in Fairfield, GE ‘s main offices are at Rockefeller Center in New York City. The multinational conglomerate set up its corporate headquarters in Fairfield in 1974. There are currently 5,700 GE employees in Connecticut.

In a letter to Malloy, Sens. Leonard A. Fasano, R-North Haven, and Tony Hwang, R-Fairfield, argued that repealing the so-called unitary tax would send a message to businesses, legislators and the public that the state government is committed to supporting Connecticut businesses.

This tax change requires companies that are part of a corporate group to base their corporate income taxes on the entire group’s earnings and apportion the company’s Connecticut taxes. Currently, companies only pay taxes on business income earned in the state.

The combined reporting requirement was originally scheduled to apply to the 2015 tax year. The governor and legislature pushed that mandate back to the 2016 tax year in the package of tax revisions.

The one-year delay created a window for the legislature to revisit the tax change in the 2016 session, and possibly repeal it.

The revised tax plan still lowered a cap on tax credits from 70 percent to 50 percent and capped the net losses companies can carry forward year to year to reduce tax liabilities at 50 percent.

It also continued a 20 percent surcharge on the corporation tax that was due to expire and tripled the sales tax on computer and data processing services.

Malloy confirmed earlier this week that state officials have been outlining possible incentives Connecticut could offer GE to counter pitches from other states looking to entice the company to relocate its corporate headquarters.

Fasano has seized on the administration’s overtures to criticize Malloy over the tax changes as well as try to turn the tables on Democratic leaders who questioned the seriousness of GE’s protests and its motives.