Let’s Really Fix Connecticut’s Taxes, Not Spread Pixie Dust

Throwing candy at a parade makes kids happy. They eat it, get a sugar rush and fall asleep — sort of like pixie dust in a Peter Pan story, living in an altered sense of consciousness. The tax proposals of the governor and legislative caucuses reminds me of that; a sweet rush with an aftertaste of bitterness for what could be.

All of these proposals do return money to people. Unfortunately, those proposals are a continuation of the same broken tax and regulatory structure that has Connecticut with fewer jobs than 2008, high unemployment, and relatively poor prospects for our young adults to stay and succeed in life. We should take the opportunity of an improved income stream to make changes in our state processes to not only return money today, but to keep returning it for the far future.

Property tax is the largest tax most people pay and the biggest challenge for low- and fixed-income households. The towns spend property tax income, but their costs and responsibilities are largely dictated by state legislation and regulations. Binding arbitration and labor rules do drive up costs.  Special education that is supposed to be funded by the state above 4.5 times per pupil cost is always significantly underfunded?

The legislature votes for that outcome, and the governor signs it. What about the PILOT program that underfunds towns for non-profit and charitable organizations as well as state property by $300 million? Tax burdened residents complaining about  residents of other towns accessing their facilities could have a better town or city with the $300 million our income taxes were promised to pay to those towns for hosting those nonprofits and state facilities?

Personal property taxes total about $800 million for all towns in the state. They are paid by businesses, including the utilities, which are almost always in the top 10 taxpayer list. That value is about the governor’s tax proposal. What if utility costs dropped with the lower taxes? Everyone would enjoy those benefits, and our businesses would be more competitive with other states’ costs.

Perhaps companies would reinvest here rather than North Carolina as Pratt and Whitney decided last year. After all, property taxes cost business 2-7% each year of their investment. Many businesses net income is in that range, making investment uneconomic and encouraging relocation to lower cost areas like Florida or North Carolina.

Auto taxes cost $1 billion per year, perhaps the most hated tax in the state. It heavily burdens residents, especially the least able to afford costs of getting to work. For an $800 million proposal, could we have tax reform that raised $200 million in some other place and we funded towns to drop auto taxes?

This is a great state to live in, and we can make it better. We can do better than to spread pixie dust.

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