Jobs Tax Will Drain State’s Economy

Some lawmakers continue to pursue a new tax on jobs in Connecticut based on a report that it could divert money from the state’s economy and direct it into the state budget.
SB 1044 would impose a punitive tax for each employee paid less than $15 per hour in wages in businesses with 500 or more employees, and franchisees that collectively have 500 or more employees.
The tax would hit some larger companies but also hundreds if not thousands of smaller businesses throughout Connecticut that are local franchises—and, under franchise rules, responsible for local taxes.
A fiscal note for the tax bill is dangling the prospects of more money for the state’s General Fund—which legislators are desperately trying to balance.
According to news accounts, one legislator said that expected revenue from the jobs tax “is too significant to ignore … this is money for us to spend.”
But at what cost? The impact of the tax is likely to include:

• More automation by employers of routine tasks—such as food ordering in many franchises
• Fewer jobs—especially for younger workers–as employers decide not to expand in Connecticut
• Higher prices as the tax cost is passed on to consumers

Earlier this year at Connecticut Business Day, an attorney said his business clients are expanding—but not in Connecticut—because the cost of doing business and government intrusion into the workplace has become too burdensome.
And a small construction firm that’s designed and built several large food and retailer stores in Eastern Connecticut said proposals like these, and Connecticut’s anti-employer image, have caused those food and retail businesses to stop expanding in the state.
Connecticut has a state spending problem that is overrunning taxpayers’ ability to afford it.
The state also has a jobs problem with a real unemployment rate—including those who have quit the job market—of over 12%.
This year, however, lawmakers are considering several ways, such as SB 1044, to take money out of the state’s economy in an effort to increase state spending.
SB 1044 will do nothing to increase jobs in Connecticut nor deliver aid to those who the bill’s supporters say will benefit from the tax. The tax revenue won’t go to social services programs but will be gobbled up by the General Fund.
This is a critical time for Connecticut. Lawmakers should be finding ways to grow the state’s economy, and make state government more effective, efficient and affordable. CBIA urges them to reject jobs taxes like SB 1044.
For more information, contact CBIA’s Eric Gjede at 860.244.1931 | eric.gjede@cbia.com | @egjede