Senate Republicans Release $1.5B Tax Cut Plan
Connecticut Senate Republicans released a $1.5 billion tax cut plan May 10 as state budget negotiations heated up in Hartford.
The cuts are part of a two-year, $50.4 billion budget plan and represent the largest tax relief proposal of any put forward this legislative session.
Senate Republican Leader Kevin Kelly (R-Stratford) told a press conference that “budgets are about priorities, and this budget makes it easy to see where Connecticut Republicans’ priorities are.”
“We reduce the cost of healthcare for families while expanding access to care,” he said. “We provide the largest proposed increase in funding to our nonprofit health and human services providers.
“We respect and preserve the bipartisan financial guardrails, and we deliver the largest tax cut in Connecticut’s history—$1.5 billion back to you, the people who paid it.”
That the Lamont administration and legislative leaders of both parties appear to be making progress on budget negotiations, all of which contain tax relief, is good news for Connecticut’s businesses and residents.
Kelly said that “99% of the Republican plan” mirrored the budget that Gov. Ned Lamont proposed in January.
The Republican proposal calls for spending $24.9 billion in fiscal 2024 and $25.4 billion the following year.
That is $130 million less than Lamont’s budget proposal and $460 million less than the version approved by the legislature’s Appropriations Committee.
It also includes:
- Continuation of the full phase-in of local education funding by 2028 (an additional $48 million in year one and $96 million in year two)
- Full funding for aid to cities and towns for special education excess costs
- An additional $100 million in nonprofit health and human services providers—an increase of 2.5%
- A reinsurance program that will reduce household healthcare costs up to $7,000 per year
- Begins to move public policy charges off of energy bills and onto the state budget for increased transparency
In addition the GOP plan cuts:
- $109 million more than the governor in savings for accurately budgeting for vacancies
- $53.7 million based on expenditure trends
- $25.4 million by eliminating inflation adjustments for state agencies
- $29.7 million for position reductions
- $11.7 million for limiting position additions
The Senate GOP proposal and the budget plan released by their House counterparts May 2 featured over $1 billion in tax cuts.
Both Republican proposals and the governor’s recommendations fully restore the pass-through entity tax credit, which was not included in the Finance, Revenue, and Bonding Committee‘s tax package.
Although the Senate Republican plan contains the most expansive tax relief of any proposal, it does not include extension of the net operating loss carryforwards, or repealing the sales tax for personnel training.
Both items are a part of CBIA’s Transform Connecticut policy solutions, as is restoration of the pass-through entity tax credit, which will return $60 million to 123,000 small businesses.
The Senate GOP tax cuts include:
- Full restoration of the pass-through entity tax credit
- An increase in the human capital tax credit
- $325 million retroactive reduction in the state income tax middle-class income tax cut with additional relief for seniors
- $2,000 per child tax deduction
- Almost doubling access to the $300 property tax credit
- Exempting children’s clothing under $100 from sales tax
- Doubling the farm machinery tax exemption
- Eliminating the highway use tax
For more information, contact CBIA’s Eric Gjede (860.480.1784) | @egjede.
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