Kiplinger is right: Connecticut tax policies put the state at a serious disadvantage.

The Washington, D.C.-based publisher of economic forecasts and personal finance news ranks states according to taxes on income, property, sales, and gas, and it puts Connecticut near the very bottom.

Only California and Hawaii ranked worse than Connecticut for tax climates.

To fully understand why Connecticut tax policies poorly position the state, one must understand why we have become the third least tax-friendly state.

Poor fiscal management—including accumulating a $70 billion-plus unfunded liability burden, bloated state spending, major overtime spending, and overall weak fiscal management—has created an enormous appetite for tax revenue.

And it's not just at the state level.

Many municipalities mirror the state's fiscal mismanagement and voracious spending practices.

Indeed, a study by George Mason University ranks Connecticut 50th in an analysis of its fiscal health.

Poor fiscal management has created an enormous appetite for tax revenue.
Some have countered that a study by Ernst & Young finds Connecticut’s tax burden to be relatively low.

But commentary by the study's own author notes that most misinterpret the study's findings.

Andrew Phillips, tax principal at Ernst & Young, points out that Connecticut taxes are 57% above the U.S. average, and taxes on new business investments are 10% higher than the U.S. average.

If we want to get serious about attracting outside businesses and ranking higher in measures of tax-friendliness, it's imperative that Connecticut take concrete steps to continue to rein in state spending.

The alternative is more crippling tax hikes, which didn't escape the attention of the Kiplinger report's authors:

"Connecticut faces serious financial pressures that could force it to raise taxes even more. The state has more than $83 billion in unfunded pensions, and total liabilities exceed its assets by 34%."


Pete Gioia is an economist with CBIA. Follow him on Twitter @CTEconomist.