After talking with some lobbyists, Gov. Dannel Malloy is calling for the General Assembly to roll back more than $200 million in corporate tax increases in this year’s budget.
General Electric and other major corporations have demanded these changes while threatening to leave our state. But the General Assembly shouldn’t do GE’s bidding. They should build on this year’s progress instead.
Gigantic companies like GE have a long tradition of avoiding taxes. Most small and medium-sized businesses, however, cannot afford to hire the “the world’s best tax law firm,” let alone create one in-house. So instead of letting GE CEO Jeffrey Immelt, on the way to becoming a billionaire, decide Connecticut’s tax policy, the General Assembly should do right by the people —the vast majority of people— who play by the rules instead of gaming them.
To help everyone, including GE (despite what they say), the General Assembly should continue with property tax reform.
To make Connecticut more business-friendly, Speaker Brendan Sharkey and Senate President Martin Looney should build on their signature initiative: property tax relief. Property taxes are Connecticut’s most regressive and burdensome levy.
How is Bridgeport, our state’s largest city, ever going to bounce back from outsourcing when it has one of the highest property tax rates in the country? How is it fair that the same Toyota Camry gets taxed almost ten times higher in struggling Hartford than in wealthy Greenwich?
It’s property taxes that have our state stuck in second gear. As Speaker Sharkey says, even GE probably pays more in property taxes to Fairfield each year than it does in corporate taxes to the State of Connecticut.
This budget makes progress with car tax reform, but the same inequities apply to houses. Instead of cutting back the property tax credit, the General Assembly should transform the credit into a full-blown property tax “circuit breaker.”
Enacted in many states, circuit breakers ensure that property taxes never exceed a certain percentage of a taxpayer’s income. In places like Bridgeport, Hartford, New Haven, and for seniors in every town, a circuit breaker will provide tax relief and make our state more competitive.
To pay for this, the Assembly should pass the low-wage employer fee. The fee would level the playing field between Connecticut Main Street small businesses, who pay fair wages, and the big box stores that cannibalize on Connecticut’s social services budget with their unethical business models.
Big businesses won’t have to pay the fee, after all, if they pay their workers more. UConn economists estimate the fee will create jobs, add revenue, and boost GDP. If that’s too risky for the legislators, another UConn economist says fixing the state hospital tax could save hundreds of millions too.
While they’re at it, though, the Assembly should consider a new idea: a statewide levy on multimillion-dollar homes like Jeffrey Immelt’s $5.25 million mansion. The near-billion-dollar CEO can threaten to move his employees’ jobs, but if he wants to sell his mansion, someone else will have to buy it.
Whoever lives in that six-bedroom, 10-bathroom structure can probably afford to pay more: after all, New Canaan’s mill rate is less than half the rate in Bridgeport. How is that fair again?
This year’s budget was a compromise. It included millions of dollars in cuts to social services, important new investments in transportation infrastructure, property tax relief for Connecticut’s struggling cities, and yes, a slight increase in taxes for corporations and some of our most fortunate individuals.
No one is happy, because nobody got everything they want. Giving GE everything it wants, though, means someone else will have to pay for it —children with developmental disabilities, veterans, middle class property taxpayers, commuters stuck in traffic, children attending struggling schools, or parents seeking a new spot for their children in a magnet or charter school.
Instead of asking the middle class to foot GE’s bill, legislative leaders should stand firm in the special session, find the courage of their convictions, and continue on the path of progress they have started.
The General Assembly should use the special session to reform Connecticut’s property tax system once and for all.
Alex Taubes is the executive director of American Dream Clean.