Posted on April 29, 2021
The Finance committee passed HB 6443 last week, the Finance Bill, which proposes several new taxes. The proposals in this bill were a surprise and directly contradicted the Governor’s budget which had no new taxes. Please take THIS survey to provide your input on new legislative measures. Here is a summary of the proposed new taxes.
1. Consumption tax of 0.7% to 1.5% on all individuals making over 500k: While this is being called a “consumption tax”, it is by all definitions an income tax.
2. Capital Gains tax: An additional tax of 2% on capital gains: Currently CT imposes taxes on capital gains at the same level as regular income, this proposal would tax capital gains at a higher level.
As a result of these proposals the top tax rate in CT would go to 10.49% (In comparison, Massachusetts top rate is 4.99%).
1. Corporate business tax surcharge of 10% which was supposed to expire this year is being made permanent.
2. New taxes of 2.5% to 10% on digital advertising. Print/conventional advertising has never been taxed.
3. Taxes on cannabis, which is expected to be legalized, and online gaming
1. Carbon tax on gasoline (SB 884): this tax is being promoted to help reduce carbon emissions from the use of gasoline. However, for all practical purposes, this is a gasoline tax. The dangerous part is how this carbon tax will be determined. Starting next year and every year thereafter, the state government will auction gasoline carbon credits. The amount of carbon credits will be smaller than the demand for gasoline to ensure that the usage of the fossil fuel decreases. This could easily lead to spike in the price of these credits, which will in turn be passed on to consumer. In past experience with ethanol RINs and carbon credits in Europe, it has been seen that such a mechanism could lead to astronomical increases in price of carbon credits of as much as 50%. The tax is expected to gravitate to the percentage increase in price of gasoline required to reduce consumption (in economics called the price elasticity of demand).
2. Municipalities to be allowed to impose sales taxes (HB 6655): This legislation is being done to allow high property tax municipalities to replace their property taxes with sales taxes, however it allows a new source of taxation for all municipalities and can be expected in the long term to new regressive sales taxes.
3. Truckers tax on mileage: This tax would be likely passed on to groceries and other goods.
These taxes would increase the incentive for most high earnings individuals (especially with capital gains) to move out of state. This will continue to erode the tax base for Connecticut. The consumer taxes will hurt ordinary hard-working citizens of this state. I am opposed to ALL these new taxes. Please provide your input by taking THIS survey.