While Connecticut takes a bruising in a number of business-climate rankings, it continues to perform well in at least one.
A report released this month by the Council on State Taxation (COST) and State Tax Research Institute (STRI) found that Connecticut is tied with Alaska and North Dakota for having the lowest ratio – 3.5 percent – of state and local business taxes to the gross state product, or GSP.
The nationwide report relies on fiscal year 2015 tax data provided by Ernst & Young
As home base to prominent insurance, financial services and aerospace companies, Connecticut’s economy generates a large GSP and gross operating surplus per worker, the report states. What that means is that business taxes are “significantly below the national average,” the report notes.
The study, produced annually for the past 14 years, includes a caveat: “These results should not
be interpreted to mean that Connecticut is a low-tax environment overall.”
While the ratio of business taxes to GSP is relatively low, Connecticut, which benefits from a high number of wealthy individual taxpayers, imposes higher-than-average taxes per worker, the report said.
In 2015, Connecticut businesses paid $5.3 billion in state taxes, less than a third of the state tax receipt total; and $2.6 billion in local taxes, about a fifth of the local total. Combined, those state and local business taxes constituted about a third of total tax revenue in the state, researchers note.
