Connecticut Raises Taxes To Fix Budget Deficits Anger Taxpayers

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Connecticut Raises Taxes To Fix Budget Deficits Anger Taxpayers

This ARTICLE On Connecticut Raises Taxes To Fix Budget Deficits Angers Taxpayers Was PUBLISHED On October 16th, 2019

Why Connecticut Raises Taxes

Connecticut Raises Taxes To Fix Budget Deficits Anger Taxpayers.

  • The once Republican state has turn Democrat
  • When the state was led by Republicans, the state cut states to stimulate the economy of Connecticut
  • For example, when the state cut the boat sales tax in half, boat sales doubled thus generating more revenues due to the increase of boat sales
  • Republicans in general lower taxes to stimulate sales and growth of businesses
  • Democrats, in general, believe in raising taxes to cover budget shortfalls

In this article, we will discuss and cover how Connecticut Raises Taxes to fix budget deficits and how this means to taxpayers.

Will Raising Taxes Work To Balance The State’s Budget Deficit?

Will Raising Taxes Work To Balance The State's Budget Deficit?

Connecticut, like many other democratic states, is facing major budget deficits.

  • Like most politicians do to solve the budget deficits in state government, the state is looking to increase taxes
  • Increasing taxes and creating new taxes often backfires as it did in Illinois
  • Newly elected Illinois Governor J.B. Pritzker who was sworn into office this year has increased taxes in Illinois
  • He has recently doubled the state’s gas tax
  • He is creating new taxes and increasing the state’s income tax
  • He is also proposing in replacing the state’s flat tax to a progressive tax system in Illinois
  • Progressive Tax Plans penalize wealthy and high-income wage-earners
  • Common sense is that increasing taxes will generate revenues
  • However, the high taxes in Illinois are backfiring because countless businesses and taxpayers are leaving the state to lower-taxed states
  • Increasing taxes only become effective with cutting spending
  • However, Pritzker seems like he has no plan in cutting spending
  • He has recently approved wage raises for Illinois lawmakers

This is the issue with increasing taxes. Taxpayers and businesses leave the state and new businesses and residents do not migrate to states with high taxes.

Solutions To Connecticut’s Budget Shortfall

What are Solutions To Connecticut's Budget Shortfall

Connecticut Governor Ned Lamont and state lawmakers decided in increasing taxes to meet the state’s budget shortfall.

  • The Democratic governor and state Democrats agreed on a $43 billion two-year budget agreement
  • The new tax hike agreement includes launching new taxes and increasing existing taxes to meet the large state budget deficit

Governor Ned Lamont said the following:

We hope the policies, led under my leadership, would close a projected budget deficit of about $3.7 billion over the next two fiscal years, though the state will not raise income taxes. The state also is facing a large gap in its pension funding.

Connecticut Raises Taxes On The Following

what are the suggestions that Connecticut raises taxes

Connecticut Raises Taxes On The Following:

Sales Tax:

  • The state will expand the state’s sales tax of 6.35%
  • This includes interior design, laundry, dry cleaning, work clothing, and supplies, uniforms, and parking
  • Lawmakers are working on another bill which will raise the sales tax to 6,85%

Connecticut Mansion Tax:

  • The state is following New York’s Mansion Tax increase and implementing it to Connecticut
  • Tax on real estate over $2.5 million in value will see the mansion tax increased to 2.25% from the current 1.25%

Connecticut E-Cigarette Tax:

  • The state is implementing a whopping 10% tax on wholesale e-cigarette products and accessories

Tax On Plastic And Plastic Products:

  • State lawmakers are proposing a 10 cents per single-use plastic bags and a complete ban on plastic bags by 2021

Meals And Food:

  • There will be an additional 1.0% tax increase on prepared meals on top of the current sales tax, thus making it a 7.35% tax rate on meals
  • All alcohol products with the exception of beer will see an increase of 10% in taxes

Trade-in Vehicle Tax:

  • The new vehicle trade-in tax will increase to $100 dollars from the current $35 dollars
  • With ride-sharing, the ride-sharing fee will increase to 30 cents per ride from the current 25 cents

Sales Tax On Digital Downloads:

  • The current 1.0% sales tax on digital downloads will increase to 6.35%

How Tax Hikes Can Backfire And Do More Damage Than Good

How Tax Hikes Can Backfire And Do More Damage Than Good

The governor and lawmakers are convinced increasing taxes and creating new taxes will solve the financial crisis in the state.

  • However, tax hikes often lead to companies and residents to flee the state to lower-taxed states
  • This is what is happening in Illinois, New York, and many Democrat-controlled states
  • It is becoming obvious in Connecticut as well
  • Dozens of companies have left and/or are planning on leaving the state to more tax-friendly states

This includes General Electric and Alexion Pharmaceuticals. Aetna was all set to leave Connecticut but canceled leaving the state due to being taken over by CVS.

Outlook

What Outlook can be?

Connecticut, the home of 17 Fortune 500 Companies, needs to be more tax-friendly in order to avoid these larger companies from leaving. According to the Tax Foundation analysis conducted in 2018, the state was the second most in per capita state and local individual income taxes. This is a developing story at Gustan Cho Associates Mortgage News. We will keep our viewers updated on any new developments in the coming days, weeks, and months on this topic.

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