Front Page News: CT Seniors Deserve Tax Relief

Waterbury Republican-American

Sen. Robert J. Kane, R-Watertown, is trying to rally older voters in his 10-town district behind his legislation to exempt Social Security benefits from the income tax.

“It’s about time seniors in Connecticut got some tax relief,” Kane said.

Realistic or not, state lawmakers are proposing all kinds of tax cuts this session even though the state’s bedeviling budget troubles constrain the legislature’s ability to lower taxes.

“I would anticipate we can’t implement large tax breaks at this time,” said Rep. Jeffrey J. Berger, D-73rd District, the House chairman of the Finance, Revenue and Bonding Committee. Gov. Dannel P. Malloy proposed to cut $570 million from budgeted increases in the adopted $20.4 billion budget for 2017 because anticipated taxes are falling short of the approved spending levels. All the proposed tax rollbacks would mean revenue losses approaching $1 billion if the legislature and Malloy were to enact all of them. To add a complicating wrinkle, the Malloy administration is now warning the revenue outlook for the 2017 fiscal year could worsen. The governor’s budget office is sounding alarms concerning income taxes, the largest source of state funding. Malloy did not propose any tax increases or reductions. The governor’s office left open the possibility of tax cuts Tuesday, but a Malloy spokesman said any tax breaks must be offset by spending reductions.

“What should be clear is that you can’t be in favor of spending increases while simultaneously being in favor of tax cuts. You can’t have it both ways,” said Devon Puglia, the governor’s communications director. As of Tuesday, lawmakers had introduced more than 140 bills — and counting — that propose to eliminate or reduce taxes. Members of the Republican opposition sponsored the most, but some members of the Democratic majority proposed tax breaks, too. There were 39 bills concerning the income tax, including 16 to exempt Social Security benefits, another 15 to exclude pension income, and one to establish a 10-year schedule to increase the personal exemption for single filers from $15,000 to $20,000. The legislature’s budget office estimated last session that eliminating the personal income tax on Social Security benefits would cost $45.7 million in the 2017 fiscal year. Lawmakers also submitted two dozen bills proposing exemptions to sales tax, the second largest source of revenue behind the income tax. This total includes four bills that seek to reverse last year’s decision to extend the tax to parking at state parks. The Department of Energy and Environmental Protection expected to collect $210,000 annually from the tax on parking fees. Two bills propose to restore an exemption for car washes that was repealed last year. Berger said he believes a strong case can be made for exempting coin-operated car washes. He said revenue loss would be minuscule.

The Connecticut Car Wash Association is contending the tax is impractical to collect and has hurt business since its imposition last July 1.
“They have a valid concern,” Berger said. Any tax changes will initially have to go through the finance committee, which is just starting its deliberations. It will conduct its first hearings Friday on four bills, including the legislation Kane is backing to eliminate income taxes for Social Security pensioners. Berger said the finance committee is going to look at some business taxes. There are a dozen bills to eliminate the business entity tax. The $250 flat tax is paid every other year now. Some 161,925 businesses are subject to the tax, according to the Department of Revenue Services. The levy raised $43.9 million last year. There are 15 bills that propose to eliminate a 6 percent tax that was imposed last year on outpatient surgical centers, and another 13 that seek to eliminate the hospital tax. The new tax on surgical centers is budgeted to raise $20 million next year. Budget analysts for the administration and the legislature reported Jan. 15 that hospitals are expected to generate $676.1 million in taxes on net patient revenue. They will release revised revenue estimates April 30. Another 15 bills target the gift, estate and inheritance taxes. Some seek to repeal the taxes. Several measures propose to raise the threshold for inheritance taxes. The only tax increase proposed so far targets sugary drinks. Democratic lawmakers from New Haven introduced two bills. An unsuccessful 2015 bill proposed a tax of 1 cent per fluid ounce on soft drinks. It was estimated that it would raise $86.2 million in 2017. Two Republican bills, including one sponsored by Rep. Robert Sampson, R-Wolcott, would eliminate the state’s earned income tax credit.