To The Editor:
Most experts agree this recession has produced some of the worst economic conditions in generations. Businesses are hurting and families are stretched thin. Many homeowners are struggling to maintain their homes, while others have been forced out of theirs. Some workers hold tenuously to their jobs, while others search desperately for new employment opportunities.
Government on all levels and all branches must understand the gravity of the situation. We must not implement policies that will make things worse.
Unfortunately, the Finance Committee’s tax plan that was unveiled April 2 would do just that. Imposing a 30 percent surcharge on corporate taxes and the elimination of the sales tax exemption on computer and data processing services would inflict more damage on the state’s economy than would be gained in revenue.
Our analysis shows that Connecticut could lose 2,670 jobs each year for the next 10 years, resulting in a decline in the state’s gross domestic product of $344 million and a $258 million drop in personal income each year for that period.
Connecticut will continue to feel the negative effects of a 30 percent corporate tax surcharge for at least seven years beyond its three-year life. And in addition to the 1,500 information technology firms in the state, the sales tax exemption on computer and data processing services would impact every business that uses IT services.
Policymakers must understand the tangible and the more subtle ramifications of their proposals. The Department of Economic and Community Development utilizes economic tools to clarify the sometimes complex issues surrounding economic matters and shed light on the ripple effect policies will have on the business community. Companies, which rely on business plans for long-term strategies, cannot respond to short-term proposals created to boost revenue quickly without serious disruption to employees, stockholders, or their operations.
This is not the direction we should travel. We instead need to understand that businesses can be our partners at this critical time. If we help businesses grow and add jobs now, we will ensure Connecticut’s economy will enjoy a robust recovery and remain a competitive state in the future.
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Joan McDonald
Commissioner
Department of Economic and Community Development
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