Consider that Connecticut – sited between the financial powerhouses of New York and Boston – was once an economic leader, but, sadly, our days of prominence have been followed by decades of decline. Why?
Consider that Connecticut is still a leader in several categories, but mostly the kind one tries to avoid. Residents and business entities are being taxed out of existence—gift tax, occupational tax, gross receipts tax, alternative minimum tax, a tax on Social Security benefits, and an estate tax, just to name a few. According to a recent Yankee Institute study, of Connecticut’s 360 revenue sources, the bottom 200 brings in only $29.6 million dollars. Governor Malloy’s two-year, $40.6 billion budget proposal is swarming with nuisance levies where the negative impact on the state supersedes any financial benefit.
Consider that Connecticut has an estate tax with a very low threshold of $2 million dollars. It is difficult to retire comfortably when residents are taxed beyond their working years. With a high cost of living and soaring healthcare rates, senior citizens suffer disproportionally from our taxes. If that weren’t bad enough, the estate tax has drawn even more scorn. The adage “You cannot afford to die in Connecticut” has become an accepted truth.
Consider that Connecticut has an estate tax with a very low threshold of $2 million dollars. The Federal threshold is currently $5.45 million dollars and is slated to go up to just under $6 million later this year. Even New Jersey is phasing out their estate tax (2018). It is no surprise that accountants have been telling clients for years that Connecticut is not only a bad place in which to retire, but also a bad place in which to die. The statistics showing Connecticut at the wrong end of the spectrum when it comes to out migration should be a clarion call to all that we must reverse course now and stop repeating mistakes with the same old “tax-and-spend” philosophy that brought us to this situation in the first place.
Consider that Connecticut, despite our efforts to thwart wasteful spending and tax hikes, is still indebted to our own pension fund. We create new revenue sources to stop the bleeding, but get sidetracked by new spending opportunities – a cycle that requires immediate intervention. We have heard your voices and understand that no matter how hard you work, you are still bombarded by rising costs and rising taxes, and you are finding it difficult to keep up.
The Greenwich Delegation has considered these concerns and has introduced H.B. 5631, An Act Increasing the Threshold for Imposition of the Estate Tax, which would bring Connecticut’s estate tax threshold in line with the Federal level. Perhaps this will also lead to a reduction in the income tax down the road, which could be offset be revisiting our pension crisis and finding ways to reduce the state’s financial obligation in the future.
Now, Consider that Connecticut, a state once championed for its prestigious public schools, international companies and high standard of living now finds itself being abandoned by employers, ignored by college graduates and reconsidered by lifelong residents. When will the last of our businesses uproot for tax-friendly alternatives? What will become of our home when the aging population that remains can no longer afford to live here? Who will be left to turn the state around? And, at that point, who will be left to care?
Consider that, Connecticut… and consider that we can do something about it, but it must be done soon. This is our Connecticut moment.