Gov. Dannel P. Malloy on Thursday vetoed legislation that would have allowed owners or shareholders of LLCs and other pass-through entities to claim the state’s manufacturing apprenticeship tax credit on their personal income tax returns.
The governor said the bill would have resulted in potentially unlimited reductions in personal tax liability for those individuals, which would result in an annual revenue loss of approximately $100,000, in addition to the expense the Department of Revenue Services (DRS) would incur to alter tax forms.
Malloy said he would support legislation with “a reasonable limit” on individual tax liability.
Also included in the vetoed legislation, House Bill 5636, were changes to the way the state evaluates the economic and fiscal impacts of the hundreds of millions of dollars in tax credits and abatements the state uses to incentivize business creation.
The bill would have moved the triennial review duties away from the Department of Economic and Community Development and DRS the Legislative Program Review and Investigation Committee (PRI), which would have conducted a more beefed up review.
Malloy called the change “unnecessary and unwarranted.” He said the most recent review, from 2014, was 169 pages long and that DECD and DRS have subject matter expertise to conduct the review.
Comptroller Kevin Lembo, who had advocated for the bill, called the veto deeply troubling.
“The state owes it to businesses and all taxpayers to fully analyze the return on investment that these sizable and important programs actually deliver in order to assess whether such resources are fulfilling their intended purpose or, if not, whether state funds would be better deployed to other economic development or infrastructure investment,” Lembo said in a statement. “If objectivity really matters, we always want an independent third party to evaluate our work.”
