Some state lawmakers are eyeing bonuses paid to employees of investment banks and insurers that received funds from the federal Troubled Asset Relief Program as a way to raise revenue to help small businesses.
Senate Democrats unveiled a proposal Monday that calls for a two-year, 2.47 percent surcharge on the entire amount of a bonus totaling $1 million or more.
The surcharge would be on top of the total personal income tax rate in Connecticut, for a total tax rate of 8.97 percent on these bonuses, affecting 2010 and 2011 income years.
“It is time the bank bailout really starts working for the small businesses that fuel our economy,” said Sen. Eileen Daily, D-Westbrook, referring to the $700 billion financial bailout that the federal government put in place at the height of the financial crisis in the fall of 2008.
The Democrats’ $20 million plan to help small businesses calls for suspending a $250 business entity tax on small business for two years and creating a small business revolving loan fund that would be administered by a business financing entity.
Their proposal, which comes just days before the General Assembly convenes Wednesday, also calls for consolidating various state economic development agencies and holding a formal hearing to review state regulations and how they affect small businesses.
Sen. Leonard Fasano, R-North Haven, the second-highest ranking Senate Republican leader, said the GOP has made similar proposals but they were ignored by the majority Democrats. While he agrees with helping small businesses, Fasano said he disagrees with paying for it with a surcharge on the bonuses.
“It’s just a wrong thing to do,” he said. “You are going to chase people out of the state. They know that that tax is never going to go away.”
Democrats are uncertain exactly how many Connecticut taxpayers employed by investment banks such as Citigroup, JP Morgan Chase, Morgan Stanley and Goldman Sachs received bonuses of more than $1 million. The $20 million they hope to raise from the surcharge is an educated guess.
Fasano said he sees these bonus recipients as a politically convenient target for the Democrats.
“It doesn’t take a lot of thought process to say, ‘Let’s raid this money,'” Fasano said. (AP)
