State policymakers’ short-sightedness was on full display last week when Gov. Dannel P. Malloy publicly admitted that he and his so-called economic development team were forced to offer General Electric an assistance package to maintain their corporate headquarters in Fairfield.GE is holding Connecticut hostage by threatening to leave the state following another wave of tax […]
State policymakers' short-sightedness was on full display last week when Gov. Dannel P. Malloy publicly admitted that he and his so-called economic development team were forced to offer General Electric an assistance package to maintain their corporate headquarters in Fairfield.
GE is holding Connecticut hostage by threatening to leave the state following another wave of tax hikes enacted by the Democratic-controlled legislature. New York, Georgia, Indiana and Texas are among the states wooing the energy conglomerate.
GE's future in Connecticut is a big story, but represents just another chapter in the sad saga of Connecticut's economic decline. Connecticut's poor business climate and unstable financial position has left the state permanently vulnerable to corporate raiding. At stake right now is GE's 5,700 Connecticut jobs and the $14 billion the company says it spends in the state, supporting 65,000 suppliers. No doubt, lower-cost states smell blood in the water and the Malloy administration will be forced to negotiate with other major employers in the months and years ahead as they demand incentive packages to maintain Connecticut jobs.
Malloy and the legislature have no one but themselves to blame. Continuing to rely on tax increases to fund state government has proven time and time again to be detrimental to the state's economic fortunes. What's worse in GE's case, is that the Fairfield company — along with other major Connecticut corporations — warned Malloy and the legislature that adopting the unitary reporting tax, which places a levy on companies with multi-state operations, would make them consider fleeing the state.
Senate Majority Leader Martin Looney (D-New Haven) and other Democratic leaders tried to call GE's bluff, arguing that every other New England state has a unitary tax and that Connecticut was simply following suit. Unfortunately, that argument is short-sighted and underscores lawmakers' inability to comprehend how to create a business friendly environment. Connecticut, which has long been known as a high-cost state, needs every competitive advantage it can leverage to retain and attract businesses. Being the only New England state without a unitary tax wasn't a bad thing. It was a selling point to business decision-makers.
GE obviously wasn't bluffing and if Malloy caters to their demands and offers the company tax breaks or other incentives it will end up offsetting some of the new revenue that will be raised through the unitary tax. Meantime, Connecticut residents and other businesses will be forced to absorb an additional tax burden.
Rather than placate to one company's demands, the legislature should repeal the unitary reporting tax and trim the lost revenue from the budget.
