No Reason to Raise Taxes

by Penny Teal
Originally in the New London Day.

While The Day did not willfully misrepresent me in its editorial endorsing Catherine Cook for the 18th district senate seat, my position on taxation was, perhaps, not fully explained to the editorial board during our interview, and I would appreciate a chance to clarify my views. I do not support increasing state spending - a point I tried to make when discussing the health care bureaucracy. There is more than enough money available for legislators to provide for the state's needs.

I support an increase in tax on the wealthiest of our residents only because currently, many people who cannot make rent payments are paying income tax. The threshold at which income is taxed must be raised, and to offset that loss of revenue, it would not be unreasonable to require that the very wealthy pay slightly more (Connecticut's tax on the highest income bracket would still be the lowest in the region). If we find a surplus, then the tax rate across the board could be cut but the income tax should be progressive. It is a basic tenet of most religions, and my own belief, that those who have should help those in need.

There are several other ways in which the state could save money in order to lower the income tax.

First, the nearly $800 million lost annually to expedient tax exemptions (those having no rational basis) could be restored. Items in this category include the sales tax exemption for winter storage of personal marine vessels over 40 feet in length; the sales tax exemptions for gold and silver bullion and for junk mail (!); and more. Tax exemptions should automatically expire in a few years, or should be subject to biannual review by the full Assembly.

Second, the budget cap should be revised to prohibit using bonded debt for the state's daily operating expenses. Currently, the cost of paying off this debt accounts for 11% of the budget. The budget cap should further be revised so that it no longer prevents the state from collecting all the federal funds to which it is entitled (that's right: we forego money available from Washington because of the budget cap).

Third, the state should absolutely require payback when it provides tax abatements for economic development but no development transpires. In recent years, one third of the corporations given abatements have moved jobs out of the state; there is no penalty for doing so. The companies which actually create jobs are being cheated, as are the smallest businesses (which typically suffer too high a tax burden to compensate for the state's largesse in other areas). Fully $29 percent of the budget is spent in tax abatements.

Fourth, the state should assess the performance of its own agencies for cost-effectiveness; it should reduce bureaucracy wherever possible; and should stop buying those ridiculous brass nameplates for legislators parking spots!

The aggressive supply-side policies pursued by our legislators over the past decade have led to Connecticut having the worst gap between rich and poor in the nation. We've gone from 45th to 15th in number of individuals working multiple jobs; and we have driven many to desperation with our irrational budget priorities and taxation pattern. We must address the question of who gets taxed what. However, that does not mean that we need to increase taxes overall.

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