CT Gov. Malloy Proposes Unprecedented Tax Increases

The Hartford Courant reports that Connecticut Governor Dan Malloy is proposing unprecedented tax increases “in one of the largest and most wide-ranging tax increase proposals in Connecticut history.”

Gov. Malloy’s proposal includes over fifty tax changes that officials estimate might raise $1.5 billion in the first year and $1.34 billion in the second year.

Christopher Keating and Daniela Altimari of the Hartford Courant summarized the proposal saying, “taxes would increase on virtually all taxable items,” and highlighted the proposal in its current form including:

  • Increasing cigarette “sin taxes” by 40 cents to $3.40 per pack;
  • Increasing alcohol “sin taxes” (the exact increase has not been released);
  • Increasing gasoline consumption taxes by 3 cents per gallon;
  • Increasing the 6 percent sales tax to 6.25 percent;
  • Raising the state income tax for individuals or joint filers that earn over $1 million from 6.5 percent to 6.7 percent;
  • Repealing the sales tax emption for clothing and shoes under $50;
  • Repealing sales tax exemptions on haircuts, manicures, pedicures, yoga classes, car washes, yacht repairs, limousine rides, airport valet parking services, cosmetic surgery, pet grooming services and non-prescription drugs;
  • Eliminating $500 property tax credits for middle-class homeowners; and
  • Eliminating the “sales-tax free week” that is held in August during back-to-school shopping, among many other increases and adjustments.

Gov. Malloy’s budget director Ben Barnes described the proposal to the Hartford Courant as “moderate” saying:

“These are serious tax increases that will impact Connecticut residents. There is no question about that. On the other hand, (the Malloy Administration has) attempted to be moderate in implementing them, and (they) have been very careful to ensure that (tax increases) are not being borne by individuals and families at a level which (the administration does) not believe is going to be affordable… (He understands) that it’s a sacrifice, but (the administration believes) that those sacrifices are moderate.”

Connecticut’s budget crisis is admittedly difficult. The state faces a staggering $3.7 billion budget shortfall in FY 2012, which totals nearly 21 percent of the state’s FY 2011 budget… however these tax increases cannot be reasonably considered moderate.

Connecticut policymakers need to leave all options on the table in order to sustainably balance the budget. There is a wide range of proven government reform policies that have reduced costs and even improved the quality of public service delivery in states across the country. For more, see the State Budget Reform Toolkit that was recently released by the American Legislative Exchange Council (ALEC) and Reason Foundation.