Taxpayers bracing for a new wave of state tax increases on July 1 are noticing that the state’s current revenue structure is actually doing very well and now projected to bring in nearly $1 billion more this fiscal year than first estimated.
According to the latest report of the Office of Fiscal Analysis (OFA), state taxes revenue will run $960 million more this year than budgeted. That’s $48 million higher than last month’s projection.
OFA is seeing much-stronger-than-estimated tax revenues from the personal income tax, petroleum gross receipts tax and others flowing into the state’s coffers.
After accounting for state spending overruns, OFA figures the state could realize a $656 million net budget surplus for this year, which would be an increase of nearly $200 million in just one month over the agency’s April report.
That means the day after the state closes its books on a projected $656 million surplus on June 30, taxpayers will start paying as much as $2 billion in new tax increases on July 1.
Meanwhile, the new state budget assumes that over its two years, revenues will exceed expenditures by a combined $1 billion.
Small and midsize businesses in Connecticut are particularly concerned about the upcoming tax increases because they will be impacted by the higher sales tax and the increase in the personal income tax.
Policymakers continue to overlook the fact that in Connecticut, an income tax hike is a tax hike on small businesses, many of whom pay their business taxes through the personal income tax.
Now these employers are wondering, if the current state tax structure is working, why are Connecticut’s taxpayers being asked to sacrifice more?
Businesses already face up to $70 million in new unemployment compensation taxes and charges, higher healthcare and energy costs, and the possibility of new, mandatory paid sick leave costs.
Lawmakers should review carefully the revenue levels actually needed to make the state budget work, and question whether we are taking too much money out of Connecticut’s economy at a time when we need it to grow and create jobs.
For more information, contact CBIA’s Bonnie Stewart at 860.244.1925 or email@example.com.