House GOP Pitches $700M Tax Relief Program
House Republican lawmakers this week pitched $700 million in tax relief proposals targeting individual taxpayers and small businesses.
The proposal includes using $300 million in federal coronavirus relief funds to help address the state’s $520 million-plus outstanding unemployment fund debt.
Employers face higher taxes and special assessments to pay down federal loans taken out when the Unemployment Trust Fund went insolvent after the pandemic shut down the state’s economy in 2020.
Connecticut cannot afford to repeat the aftermath of the 2008-2010 recession, when employers were hit with unemployment tax hikes four times higher than in neighboring states.
That financial strain prolonged the economic downturn. Connecticut was one of the few states that failed to recover all jobs lost in the recession, with GDP growth also stagnant for much of the following decade.
The Republican proposal features a number of additional measures aimed at relieving the labor shortage, including expanding the manufacturing apprenticeship tax credit to small businesses.
In addition, GOP lawmakers want to further expand that credit to trades that hire apprentices who complete 2,000 hours of relevant, on-the-job training.
That credit is currently available to larger employers that hire registered apprentices who complete two- or four-year programs in construction or qualified manufacturing programs with periods of 4,000 or 8,000 hours.
CBIA’s 2021 Survey of Connecticut Businesses found that 80% of employers are struggling to find and retain employers, with over one-third saying the labor shortage was the greatest threat to growth.
Connecticut’s unfilled job openings surged 64% in 2021 to 110,000, while the labor force—the number of employed workers plus those actively looking for work—declined a further 17,000 and is down 92,000 (5%) since February 2020.
The House Republican proposal also restores the pass-through entity tax to its original 93%, freeing up more than $50 million for small businesses to invest in workforce training and operational improvements.
Sales, Income Tax Relief
In addition, it exempts personal protective equipment and COVID-19 rapid tests from the state sales tax.
Republicans also want to repeal the per-mile tax on trucks that increases based on a vehicle’s gross weight that the legislature enacted last year.
The tax relief plan calls for indexing and adjusting state income tax brackets to “reflect actual earnings and not salary adjustments alone, considering the cost of household goods and services have skyrocketed.”
It also expands on Gov. Ned Lamont’s property tax proposal released earlier this month, raising the property tax credit from $200 to $500 and include households without children or seniors eligible.
And the proposal exempts 100% of individual retirement income from state income taxes for joint filers earning less than $150,000 annually.
Lamont proposed accelerating the phased exemption of pensions and annuities from the income tax from 2025 to 2022, with single filers with adjusted gross incomes below $75,000 and joint filers with less than $100,000 eligible.
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