Newly Approved Budget Contains Dangerous Tax Increases

June 4, 2015

Sen. Frantz: The general assembly squandered its chance to put the state of Connecticut back on a sustainable fiscal track.

Hartford, CT – State Senator Scott Frantz (R-Greenwich) released the following statement re: proposed state budget for FY 2016 – FY 2017 as negotiated by the democratic legislative leaders and the Governor.

“As Connecticut again is raising to raise taxes by $2 billion on income and businesses, I fear for future generations as well as current taxpayer and their ability to afford to stay in Connecticut.

“Taxes in Connecticut will have risen by $10 billion in the past six years if these proposals are approved. Debt service is on track to grow in excess of 14 % of the overall state budget. Connecticut’s growing debt obligations paired with mounting collective bargaining obligations and employee retirement costs have created a financial environment that is not structurally sustainable.

“This budget continues to increase spending at more than 7% that after the largest tax increase in state history. This budget is a broken promise that Connecticut families are going to be saddled with for years to come.

“Here is how this $40 billion budget WILL impact middle class families, businesses and veterans:

  • Reduces the Property Tax Credit from $300 to $200, impacting many individuals who own a home or a car. Totals a $152 million money grab by the state. 81% of those who utilize the tax credit have annual incomes less than $100,000; 66% have annual incomes less than $75,000; 44% have annual incomes less than $50,000.
  • Repeals the scheduled sales tax exemption for clothing/footwear under $50 and reduces the sales tax holiday from applying only to items under $100 instead of $300. Represents a $280 million tax hike.
  • Increases income tax burden with two new rates 6.9% and 6.99%
  • Implements a 3% sales tax on the World Wide Web (including digital downloads and ebooks), a new $55 million tax.
  • Implements a sales tax on car washes, a new tax totaling $13.6 million.
  • Increases a luxury sales tax rate on items such as cars, engagement rings, and wedding dresses to 7.75% totaling more than $4 million.
  • Delays the scheduled increase in the Personal Exemption for Single Filers. According to the Department of Revenue Services Personal Income Tax Study of January 2014, 90% of single filers had $75,000 or less of state income. Totals a tax increase of $10.8 million in FY 2016.
  • Delays increase in Earned Income Tax Credit, a tax hike of $22 million on working class families
  • Reduces the burial benefit provided to indigent people by $400 giving their loved ones $1,400 to pay for a funeral.
  • Takes away funding for the Veterans honor guard which means no gun salute at a military service members funeral
  • Implements a sales tax on motor vehicle parking, a new tax totaling $12.2 million.
  • Taxes ambulatory surgical centers. A $35 million new tax.
  • Increases the Hospital Tax. A $410 million increase in taxes. Added costs will be passed onto patients.
  • Delays increase in Earned Income Tax Credit, a tax hike of $22 million on working class families
  • Triples the Computer Data & Processing sales tax rate, a tax hike of over $140 million.
  • A $500 million tax hike on businesses, which will make it difficult for employers to grow jobs and remain competitive. Jobs affect every single family in our state from all walks of life.

What are Connecticut’s largest employers saying about this budget?

Boehringer Ingelheim Pharmaceuticals, Inc. employs more than 47,000 worldwide said this:

  • “Implementing the current, short-sighted tax proposals will stifle innovation, especially research and development of critical medicines, and have far-reaching implications on our ability to plan and make long-term business decisions. The current proposal will undermine the financial feasibility of continued capital investments at our Ridgefield/Danbury site.”

Aetna, which employs 7,450, had this to say:

  • “Connecticut is in danger of damaging its economic future by failing to address its budget obligation in a responsible way. Such action will result in Aetna looking to reconsider the viability of continuing major operations in the state.”

General Electric, which employs 6,300, said this:

  • “Retroactively raising taxes again on Connecticut’s residents, businesses and services makes businesses, including our own, and citizens seriously consider whether it makes any sense to continue to be located in this state.”

Travelers, which employs 6,200 people, said the following:

  • “Raising taxes again will increase the cost of living for nearly every resident and small business in the state, negatively impacting our employees and customers.”

“I along with my fellow Republican legislators applaud these large employers and most importantly, the people for speaking out on this budget.

“Adding insult to injury the budget violates the spirit of the spending cap put in place back in the 90’s when Connecticut sadly instituted the income tax. By a large majority, the people asked for a spending cap to protect the taxpayers forever. By not living within our means and not honoring the spending cap, our state turns its back on the overwhelming number of residents who are demanding that we honor the cap.

“I cannot support a budget that doesn’t honor the state’s constitutional spending cap nor live within its means. With this budget we have solidified Connecticut’s status – a permanent fiscal crisis from which I fear we may not be able to recover.”

The 36th District includes: Greenwich, New Canaan, Stamford