Tax Freedom Day in Connecticut

May 13, 2013

Hartford, CT – State Senator Toni Boucher (R-Wilton) is celebrating Connecticut’s Tax Freedom Day – the day on which the state’s citizens stop working for the government and start working for themselves. This is the latest date for any state in the nation, according to the Tax Foundation.

“This year’s tax freedom date is eight days later than it was last year, reflecting a truly alarming jump in our tax burden,” said Sen. Boucher “High taxes – many of them retroactive taxes have helped create an anemic economic climate in Connecticut.”

According to the United States Department of Commerce Bureau of Economic Analysis, personal income growth in Connecticut was only 2% from 2011 to 2012, the second lowest in the country. Since the state income tax was passed in 1991, our state has ranked dead last in economic growth.

Around the nation, Tax Freedom Day arrived on April 18. Connecticut residents work three and a half weeks longer to pay taxes than the average person in American does.

Here are some of Connecticut’s taxes at a glance, as reported by the Tax Foundation:

  • Connecticut’s personal income tax system consists of six brackets and a top rate of 6.7%. It should be noted that small businesses are taxed through the personal income tax and as such is a new levy on their business as well. That rate ranks 18th highest among states levying an individual income tax. Connecticut’s income tax collections per person were $1617 in 2010, which ranked 4th highest nationally.
  • Connecticut’s corporate income tax system consists of a flat rate of 9%. That rate ranks 6th highest among states levying a corporate income tax. Connecticut’s corporate tax collections per person were $142 in 2010, which ranked 12th highest nationally.
  • It is important to also note there is a surcharge on corporate profits during this recession that was slated to go away.
  • Connecticut levies a 6.35% general sales or use tax on consumers, which is above the national median of 6%. Connecticut’s state and local governments collect $881 per person in general sales taxes and $623 per person in excise taxes, for a combined figure of $1505, which ranks 15th highest nationally.
  • Connecticut’s gasoline tax stands at 45¢ (4th highest nationally), and in July there is a scheduled increase to petroleum gross receipts tax for this summer from 7% to 8.1%.
  • Connecticut’s state and local governments collected approximately $2522 per person in property taxes, which ranks 3rd highest nationally.

Connecticut has increased its tax revenue by 15% from 2011 to 2012. Less than 1% of that increase was the result of economic growth; the rest came from higher tax rates and one-time revenues.

The Governor’s Office of Policy and Management (OPM) reported last month that the economic recovery of the state is “quite slow” and shows only “minor growth.”

“This is not surprising to any of us that also work in the private sector and have businesses that have yet to recover. While other states are flourishing and have recovered jobs lost in the recession Connecticut has not, said Sen. Boucher.

“The state faces a $2 billion deficit over the next two years, despite the enormous tax hike the largest in state history in 2011,” added Sen. Boucher. “The problem is excessive spending.”

Senator Boucher points out because of the combination of high taxes seniors and businesses are leaving. Seniors pay a tax on their pensions, on their estate; on any gift they leave their offspring, a car property tax and a tax on real estate when they sell their house. This combined with a high property tax makes Connecticut unaffordable.

“Most seniors can’t afford to die here and are forced to leave so they can bequeath any assets they’ve worked so hard for to their children,” said Sen. Boucher. “Connecticut loses donations to charitable causes, property tax, car tax and any sales tax on items these seniors would be purchasing.”

A senior population that is leaving is particularly hard on hospitals and charities that have been the beneficiaries of their donations.

The Governor proposed a budget increase in spending over the next two years by nearly 10% an additional $2.9 billion. The majority party also proposed a budget with an even higher increase in spending, suggesting the state budget would include approximately $55 million more in spending than the Governor requested. Included in that is a 15% wage increase for state employees while at the same time a cut to the state portion of teacher healthcare premiums.

In the Finance Revenue and Bonding Committee lawmakers missed an opportunity to try and stem the tide on some of the more egregious taxes the state levies on its citizens. The committee proposed to extend taxes that were set to sunset including: the temporary 20% surcharge on corporations that was to sunset by June 31, 2013, and the tax on insurance premium credits.

Added taxes include: the clothing and shoe tax on items under $50, a digital down load tax and retains the scheduled increase on the petroleum gross receipts tax for this summer from 7% to 8.1%. Most people are unaware that the reason Connecticut has one of the highest gas taxes in the nation is that it is comprised of two components an excise tax and a percentage tax. Together with the scheduled increase on July 1 we will have the highest gas tax in the nation.

“There were even those that continue to lobby for reintroducing tolls on state highways which I have fought vigorously against,” added Sen. Boucher. “It is unjustified given the high taxes the motorists must bear.”

The finance committee also proposes to increase fees on items such as: cremation, marriage licenses.

“The Governor said he was helping the middle class by eliminating the property tax on cars. I’m supportive of cutting taxes, but getting rid of the car tax the way the Governor and now the Finance Committee proposes with no offsetting revenue, sticks our cities and towns with major revenue losses,” said Sen. Boucher.

The committee recommended beginning the car tax change in 2018.

The majority party has chosen to protect the government class not the working class by adding new taxes and hurting the vulnerable. The chairs of these powerful committees will now meet with the Governor and his staff to negotiate a final budget that will have to be voted on by the full general assembly.

“If this tax free indicator doesn’t convince lawmakers that they must stop spending and reduce expenditures and borrowing than nothing else will,” said Sen. Boucher. “This latest in the country tax free day – more than a week longer than last year – is the most powerful evidence available that Connecticut taxes its residents too much.”