Connecticut’s image as a heavy-tax haven for business belies the fact that the state is actually a low tax state, an Ernst & Young tax study says.
Compared to other states, Connecticut’s state and local business tax revenues are a relatively small share of the state’s private sector economy, the study says. Connecticut ranked 5th lowest in total state and local business tax revenues among states when compared to the level of private sector economic activity in other states, Ernst & Young said.
The Ernst & Young study of state and local business tax revenues for fiscal 2009 was conducted for  the Council on State Business Taxation.
The study noted, however, that it did not explore other financial factors – such as labor, energy and building costs — that contribute to Connecticut’s image as costly state in which to conduct business.
Among the study’s other findings:
Connecticut’s increase in overall state and local business tax revenues between Fiscal Years 2005 and 2009 was the lowest growth rate among all states. The growth rate in Connecticut’s combined personal and business tax revenues was 8th lowest in the nation. Connecticut businesses paid for only one tenth of increases in state and local taxes during this period.
Corporate income taxes make up a small and declining share of business tax revenues in the state. Corporate income taxes accounted for only 6 cents of every dollar of combined state and local business taxes collected in Connecticut in Fiscal Year 2009. Property taxes make up a far larger share of business taxes.
Connecticut businesses net a positive return on taxes paid. Businesses paid 99 cents for every $1 of benefit derived from public spending that directly benefited businesses. These services include education, transportation, water and sewer infrastructure, police and fire protection, courts, and others.
