January 23, 2014

Rep. Case, House Republicans announce tax relief effort

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HARTFORD – In light of recent reports of excess revenue into the state coffers, House Republicans today announced an effort to restore tax exemptions for clothing, footwear and over-the-counter medicine, and provide small business relief by eliminating a special unemployment assessment of $59 million – without adding to the state deficit.

State Rep. Jay Case (R-63) joined with House Republican Leader Larry Cafero and others to make the announcement Thursday, saying it’s time to give the taxpayers of Connecticut some relief after everything the state government has put them through over the last few years. Their proposal will save consumers $185 million.

“In recent memory, our citizens have seen the largest tax increase in state history to fill budget holes devised by past budget failures,” Rep. Case said. “All that was before my time in Hartford and it was part of the reason why I decided to run for office. Now we’re looking at positive numbers and trying to decide what to do with it. Well, I think Connecticut deserves relief, its small businesses need a boost and its residents deserve these tax exemptions.”

The total cost of $247 million for the initiatives will be covered through available funds and will notcreate future budget deficits.

Restoring the tax exemption on clothes and footwear:

The clothing and footwear exemption for items under $50, projected to cost $167 million, is slated to be restored in July of 2015. Cafero said that it is prudent to advance that timeline to April 1 of this year – Democrats took away the exemption in 2011 while attempting to balance the budget. The exemption will increase sales and help businesses meet their bottom lines. “This is the definition of a middle class tax cut,’’ Cafero said.

Eliminating Special Assessment on businesses for the state unemployment fund:

Cafero said pre-paying the interest of $59 million on money borrowed from the federal government to cover unemployment benefits at the height of the recession will spare businesses from having to again foot the bill. Businesses, many of whom did not layoff a single worker, have been saddled with three consecutive special assessments to cover the interest, costing them $71 million since 2010.

Restoring tax exemption on non-prescription drugs:

Restoring the sales tax exemption for over-the-counter drugs that Gov. Malloy eliminated in 2011 will also be “revenue neutral.’’ Republicans proposed covering that loss of revenue of $21 million by keeping the Earned Income Tax Credit at the current rate of 25 percent of what a person would receive from filing their federal Earned Income Tax Credit returns. The rate is scheduled to go up to 30 percent of the federal rate over the next two years.