“Who Pays?” by Connecticut Voices for Children has garnered plenty of headlines, but as economic analysis and fiscal advice for lawmakers, it is deeply flawed.
Clearly, the report’s purpose is to provide rhetorical ammunition for a hike in the income-tax rate for Connecticut’s wealthier residents. But the state’s income tax is hardly “flat.” Generous credits ensure that low-wage workers pay a substantially smaller share of their wages to the state treasury. As a state senator recently said, the top 5 percent of Connecticut’s families generate as much tax revenue as the bottom 95 percent.
In addition, tens of thousands of Connecticut income-tax returns are filed by partnerships, sole proprietorships, or S-corporations. An income-tax hike is thus a business-tax hike.
Pushing a state-level “earned income tax credit” is another of the report’s suggestions. The EITC, to be modeled after the federal government’s program, would foster more dependency on government — something Connecticut has quite enough of already. Voices for Children itself advocates a better strategy: Increasing the threshold at which filers incur their first dollar of income-tax obligation.
For owner-occupied housing, only New Jersey and New Hampshire have higher property-tax burdens than Connecticut. Inexplicably, “Who Pays?” offers no viable restraints on the excessive public-employee compensation and runaway government-school spending that drive the state’s property-tax crisis.
There’s also nothing about lowering the state’s combined gasoline levies, which burden Connecticut drivers with the nation’s highest tax at the pump. And while “Voices” may not find it relevant, some of the most “regressive” taxes are placed on two products that comprise a disproportionately large share of poor households’ incomes: cigarettes and alcohol.
Instead of pitting one socioeconomic group against another, advocates for tax “fairness” would be wise to turn their attention to how high — and rising — the state-local tax burden is for everyone in Connecticut. Then all the state’s long-suffering families, workers and entrepreneurs might receive the relief they deserve.
D. Dowd Muska is a writer, commentator and public-policy researcher.
