Imposing a surcharge on capital gains and dividends for the wealthiest taxpayers and raising the top marginal tax rate by a percentage point are among the top priorities of the legislature’s Tax Equity Caucus for the 2026 session of the state General Assembly.
The caucus, formed in 2023 and consisting of more than 50 progressive Democrats in the House of Representatives, presented its legislative priorities Friday morning during a news conference held in the Legislative Office Building ahead of a public hearing on a variety of bills conducted by the Finance, Revenue and Bonding Committee.
Rep. Jason Doucette, D-Manchester and chairman of the caucus, said the group’s focus is to reform “the regressive nature of Connecticut’s tax system that disproportionately impacts working families.”
Specifically, the caucus supports four bills that are among those on the agenda for the Finance Committee’s public hearing:
- Senate Bill 103, which seeks to establish a refundable child tax credit.
- SB 104, which seeks to establish a capital gains surcharge on the state’s highest-income taxpayers.
- House Bill 5133, which seeks to increase the highest marginal tax rate for the personal income tax from 6.99% to 7.99%.
- HB 5187, which seeks to adjust the methodology used to calculate the threshold amounts for volatility funds transfers and increase the maximum capacity of the Budget Reserve Fund.
Doucette said the proposed tax increases on the state’s wealthiest citizens are not “just about raising revenue for the sake of raising revenue,” but about correcting the inequity in the state’s tax system.
He and others participating in Friday’s news conference cited tax changes at the federal level that they said provided more than $1 trillion in tax cuts for the wealthy that were paid for by $1.5 trillion in cuts to healthcare and food assistance.
Patrick O’Brien, research and policy director for Connecticut Voices for Children, said the federal cuts reduced “essential support for low- and middle-income households.”
Noting that proposals for a child tax credit have failed in previous legislative sessions, Doucette added that the caucus needs “the Lamont administration to get on board” with the credit.
As for the tax increases on the wealthy, Doucette noted that the state Department of Revenue Services 2024 Tax Incidence Report “illustrates that the more money you make, the less you pay as a percentage of your income.”
According to the report, working families pay over 20% of their income to state and local taxes as measured in their effective tax rate, he said, while the “top 1% of taxpayers — millionaires and billionaires — pay just around 7%.”
Doucette added, “This is unacceptable at any time, but especially so right now in Connecticut, where families are struggling to make ends meet.”
In addition to the four bills specified during the news conference, caucus member Rep. Nick Guathier (D-Waterford) has proposed a bill intended to mirror one approved in Massachusetts in 2022. Massachusetts voted that year to amend its constitution to create a “4% surtax” on income over $1 million. Despite concerns raised by critics that the surtax would cause a mass exodus of the wealthy, Massachusetts has raised more than $2 billion a year — double the expected amount — that will be used for transportation infrastructure and education, while also experiencing a 38.6% increase in millionaires in the state.
Gauthier has proposed HB 5117, which seeks to establish “an additional marginal rate for the personal income tax of at least 4%” on taxable income that exceeds $1 million, and then earmarks the revenue generated for education; universal school meals; infrastructure projects; free public transit; and child care.
He added that he has submitted SB 5117 as both a “normal” bill to be considered by the General Assembly, but also as possibly a constitutional amendment, which would make the change “permanent” and allow voters to decide the issue.
The push comes as Gov. Ned Lamont has consistently resisted broad-based tax increases, arguing that the state should instead focus on expanding its tax base by attracting and retaining residents and businesses.
Business groups, including the Connecticut Business & Industry Association and the National Federation of Independent Business, have also warned against raising income tax rates, arguing that doing so could weaken Connecticut’s competitive position and discourage investment and in-migration.
The agenda for the Finance Committee public hearing on Friday includes other proposals, including one submitted by all 11 Republican members of the state Senate. SB 100 proposes a personal income tax cut for the two lowest income levels.
Under the bill, the two lowest income tax marginal rates would fall from 2% to zero and from 4.5% to 3%. The cut would affect taxpayers with adjusted gross income of less than $100,000 for single filers and less than $200,000 for married individuals filing jointly.
