Crucial Dilemma: Connecticut’s Outflow of Wealth
Government places taxes on a lot of fixed assets, principally buildings. It’s tough or impossible to move those.
People, on the other hand, are a different story. They can move.
People can live out of Connecticut six months and a day in jurisdictions that offer a lighter individual tax burden.
They can register their legal lives elsewhere and still keep their Connecticut connections, like a business.
The vast majority of businesses, however, are not taxed as corporate entities.
They pay personal income tax on their business earnings. Take your business to Florida and you zero out that liability.
It’s not a surprise that the major personal tax increase of four years ago triggered an acceleration in the outflow of wealth from Connecticut.
As a group, the people moving out of state have more income than those moving in.
Despite the migration trends, Connecticut’s per capita income continues to rise.
However, outmigration substantially diminishes the projected base for taxing personal income and contributes to our state fiscal problems.
When people in France and Sweden believed their government services, like security, were inadequate to deal with the threat of terrorism, those who had the means beat feet out of town.
Here in Connecticut, the threat is financial.
Pete Gioia is an economist with CBIA. Follow him on Twitter @CTEconomist.
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