Jobs Tax Will Go to Budget Deficit, Not to Workers

Issues & Policies

Advocates for a new tax on jobs in Connecticut are, as predicted, trying to use the state’s budget crisis as a reason for the proposal.
SB 391 calls for a tax on employers with 500 or more employees, or franchisors whose individual franchisees collectively have 500 or more employees, at a rate of 10 cents to $1 per hour worked by every employee making less than $15 per hour.


Connecticut’s business taxes are the seventh-highest in the country.

Revenues collected, they say, would help support various state programs that are being used by the “underpaid” workers.
In fact, one lawmaker said to the New Britain Herald:
“How long will we subsidize the business models of our largest and most successful, profitable multi-national retail corporations?
“I’d like to see us send them a bill for all the benefits that we are supplying their employees that they should be supplying themselves. If the wages of workers were higher, they would not need as much in state aid like energy assistance, earning income tax credits, and reduced price lunches for their children in school.”
These are exactly the type of fallacies being used to push this bill, which the Connecticut General Assembly’s Human Services Committee approved on a 10-8 vote.
The truth is:

  • No worker will ever see a direct wage increase from this bill; its aim is purely to tax employers to help fix the state budget deficit
  • SB 391 says that any revenues generated from this entry-level job killing bill “may” go to support service programs. In reality, these program funds are routinely swept to support General Fund expenses in nearly every state budget—and especially now with new budget gaps
  • The tax will hit small businesses. It doesn’t just apply to mega-retailers and franchises–most franchise agreements call for the local franchise to pay local taxes, such as this one.
  • Although the unions are pushing the bill, businesses that employ unionized employees would not be subject to the tax for employees paid less than $15 per hour. This bill is simply a way to force these mega retailers to unionize in order to get reduced-price labor.

More reality: Many of the workers at the businesses being targeted at this legislation are in entry-level jobs, and many of them are not, often by choice, working full-time.

Instead of imposing another tax to drive businesses out of the state, perhaps the state could focus on inviting more of them to come here.

They work these jobs in order to attain the skills they need to move to better-paying jobs and careers.
The point is, if the jobs created by certain major multi-national retail corporation or fast food franchises didn't exist--how much more in services would taxpayers be on the hook for?
Instead of imposing another tax to drive franchises and big box retailers out of the state, perhaps the state could focus on inviting more of them to set up shop here.
That would be the fiscally prudent thing to do if we'd like to drive down the costs of the services we provide our citizens.

For more information, contact CBIA’s Eric Gjede (860.480.1784) | @egjede


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