In the Contest for Highest Tax Burden in the Country, Being #1 Is No Accomplishment

February 28, 2018

Before the 2018 session even started, Democrats and Governor Malloy were talking about tolls and raising taxes. Following the two largest tax increases in the state’s history, they determined that the state has a revenue problem.

But is that the problem, really?

A recent report by 27/7 Wall Street found that as a percentage of income, Connecticut residents have the second highest tax burden in the country.

We have the highest per capita income, the highest income tax collections, the third highest property tax collections, and the eighth highest sales tax collections. As a result, Connecticut residents pay 12.6 percent of their income in local and state taxes.

Adopting the taxes Democrats and the Governor want would give Connecticut first place. But is being the state with the highest tax burden in the country something residents and businesses want?

The Connecticut taxpayers that I talk to say they already pay too much of their hard-earned income to the state. In fact, Governor Malloy has enacted the state’s two largest tax increases during his time in office. This is reflected by the steady increase in tax collections since 2011.

The Department of Revenue Services Annual Report for the fiscal year that ended June 30, 2011, shows that the state collected $7.2 billion in state income taxes and $3.4 billion in sales taxes. The most recent report for the year that ended June 30, 2017, shows that the state collected just under $9 billion in income tax and nearly $4.4 billion in sales taxes.

Overall, DRS collected a total of $17.3 billion in fiscal year 2017 compared to the $13.7 billion collected in fiscal year 2011.

At the same time, the Office of Policy and Management reports that after Malloy’s first year in office, the state has run a budget deficit in all but two years. This includes a projected deficit for the recently adopted budget that ends June 30, 2018.

If the state is running year after year deficits while tax collections continue to increase, maybe the problem isn’t revenue.

In fact, I have been saying for a long time that Connecticut has a spending problem. It’s a problem that along with our high taxes has led to downgrades in the state’s bond rating, the loss of jobs and businesses, and an exodus of high-income earners seeking greener pastures and lower taxes.

As I mentioned, the budget adopted in October is already facing a deficit that legislators will have to remedy this session. Raising taxes as the Governor proposes would seem to be an easy way to fix this, but it doesn’t fix our larger problems.

A major problem with Connecticut’s budget is fixed costs. Last year, Democrats negotiated an extension of the state employee contract that locks the state into paying exorbitant salaries, fringe benefits, and pensions until 2027. The other fixed cost is bond debt.

Last session, the legislature limited bond debt to $2 billion per year to slow down debt accumulation.  And 25 years after 82 percent of voters approved a constitutional spending cap, the legislature finally adopted definitions that will reduce spending growth.

We must find other ways to reduce the cost of government.

The tax-and-spend path Connecticut has been on for the past several years has been detrimental to our economy. Accepting the Governor’s call for more taxes will make problems worse.

If we are to create a brighter future for our state, businesses, and residents, we cannot allow Connecticut to be the state with the highest tax burden in the country. That distinction will not serve us well at all.

State Senator Michael McLachlan represents the 24th District, which serves the communities of Bethel, Danbury, New Fairfield, and Sherman.