A Question of Priorities?

Despite Connecticut still struggling to catch up to the region and the rest of the country in economic and job growth, the first two weeks of the 2018 General Assembly session were marked by a raft of proposed new taxes and workplace mandates.

Proposed New Taxes and Fees

[1] Retaining the corporation surcharge that was due to expire in 2019. That surcharge dropped from 20% to 10% this year, with an 8% charge now proposed for fiscal 2019.
[2] Decoupling state and federal tax laws related to the depreciated value of capital investments. This change effectively changes depreciation schedules, with particular impact on manufacturers.
[3] Imposing a new tax on employers—0.05% on all taxable wages— that will be used solely to cover state labor department wages and benefits.
[4] Limiting the $2.5 million cap on unitary (or combined) tax reporting to manufacturers only.
[5] Repealing the 7/7 brownfields program that creates incentives to clean up contaminated sites and reuse them while creating local jobs.
[6] A new tax on pass-through entities, primarily small and family-owned businesses, offset by a matching tax credit. Designed to mitigate changes in the new federal limit on state income tax deductions.
[7] Increasing the hotel occupancy tax from 15% to 17%.
[8] A special 7% tax on restaurant sales.
[9] Canceling a planned 2020 cut in the hospital provider tax from $900 million to $384 million.
[10] Increasing the gas tax by seven cents a gallon.
[11] Boosting real estate conveyance taxes to 0.85% and 1.4%.
[12] Adding a $3 fee on new tire sales.
[13] Eliminating the sales tax on non-prescription medicine.
[14] Hiking the top two state income tax rates from 6.9% and 6.99% to 8.9% and 8.99%. That proposal dramatically impacts many of the state’s small businesses, which are often organized as pass-through entities and pay business taxes at the personal income rate.

Proposed New Workplace Mandates

[1] Expanding the state’s paid sick leave mandate to businesses with 20 or more employees—including manufacturers and certain nonprofits, which were previously exempt. Also covers all employees—not just service workers—and changes the definition of a child from someone under 18 years old to under 26.
[2] At least three legislative proposals broaden workplace sexual harassment prevention training requirements. One of those measures mandates training for all workers at companies with three or more employees. (Current law requires training for supervisors at companies with 50 or more employees.)
[3] Implementing paid family and medical leave, a staple from previous sessions. A proposal introduced last year required 160 new government employees at a cost of $13 million to start and $18 million to run such a program each year.
[4] Hiking the state’s minimum wage—already one of the highest in the country.
[5] Mandating that all health plans offered in the state cover “10 essential benefits,” including certain additional coverages with no co-pays.
[6] Drastically limiting employer-employee communications in the workplace. This measure has surfaced in previous sessions, with the state Attorney General telling lawmakers that a 2011 proposal was unconstitutional and violated federal labor law.

(Sources: SB 1, SB 10, SB 11, HB 5034, HB 5035, HB 5043, HB 5044, HB 5105, Governor’s State of the State Address, Legislative Democrats’ Agenda.)