GOP Senators Call For Special Session on Corporate Taxes [Courant]

August 31, 2015

Hartford Courant

HARTFORD — Prompted by fears that General Electric Co. might leave Connecticut, two top Republican senators called Friday for a special legislative session to repeal the state’s unitary tax on large corporations.

Senate Republican leader Len Fasano and Sen. Tony Hwang, whose district includes GE, said that Gov. Dannel P. Malloy could send a strong message to the business community by getting rid of the tax.

The unitary tax, approved in the most recent legislative session, would increase taxes for corporations like GE that have operations in multiple states.

But spokesmen for both Malloy and the Senate Democrats said Friday that a special session is not necessary.

The concept of the unitary tax is not new, but some business advocates say they never thought it would be approved because it has been defeated repeatedly in the past. As far back as 2009, GE’s director of state tax policy testified before the legislature against the unitary tax, which is also known as “combined reporting.”

As part of a compromise proposed by Malloy, the legislature voted in special session this spring to postpone the unitary tax until 2016.

The tax was to have started in the current calendar year, retroactive to Jan 1. Although estimates have varied, lawmakers say the tax could cost Connecticut corporations $38 million in the first year.

“While you may not have the constitutional authority to order a repeal of the unitary tax, you can call a special session so that the legislature can take action on this critically important matter,” Fasano and Hwang wrote to Malloy.

“In doing so, you would be sending a resounding message — to legislators, the business community and the public, alike — that we must take measurable steps to ensure GE and all Connecticut-based businesses remain valued partners and that state government is committed to creating an economic environment that fosters growth and prosperity.

“Gov. Malloy, we cannot afford to sit back and wait. Any delay will only place further doubts within our business community that the unitary tax will ever be repealed. The time to act is now.”

Hwang, who says he’s working to save jobs in his district, added, “We must remember that GE is but one of thousands of businesses in Connecticut, and all of them are feeling the same built-up frustration about the untenable nature of state government’s spending, taxation and regulation.”

But the Democrats who control the state Senate had a different viewpoint.

“Once again, Connecticut Republicans are siding with Wall Street corporations and their legions of tax lawyers and accountants instead of Main Street businesses that can’t afford those same luxuries and those same tax loopholes,” said Adam Joseph, a spokesman for the Senate Democrats. “Connecticut was the last state in New England to enact combined reporting for corporations. Democrats remain focused on our positive state employment numbers and our increasing economic output.”

Malloy’s spokesman, Devon Puglia, said, “We do not intend to call a special session on this topic. However, if the senator has a thought-out, thoughtful, realistic proposal that doesn’t involve phantom savings, we are happy to listen to it.”

GE has publicly condemned the unitary tax and other taxes on businesses included in the state’s new budget. It has also said it is investigating moving its headquarters out of Fairfield to another state. New York Gov. Andrew Cuomo visited GE headquarters in Fairfield last month in an attempt to lure the company to nearby Westchester County, N.Y., and governors in Texas and Georgia have also made pitches.