Taxing Connecticut’s Comeback
Many different types of taxes this year—on innovation, jobs, healthcare, and more—will all have the same result: Stopping Connecticut’s comeback.
Measures contained in the governor’s budget proposal (SB 946) would seriously weaken Connecticut’s strategic tax policy that promotes innovation to drive our economy.
Among other things, the measures would reduce the value of key investment incentives for research and development (R&D) and other key economic activity, which would effectively raise taxes only on companies investing in Connecticut.
SB 946 also reduces the net operating loss carry-forward (NOL), an important tool and prerequisite to attracting and retaining businesses in Connecticut, especially those with significant, up-front investment costs.
The proposal also extends the 20% corporate surcharge that was due to expire and keeps our corporate tax rate stuck at 9% (sixth-highest in the U.S.), which would make Connecticut much less competitive.
Property Taxes: SB 1 is a multi-faceted property tax “reform” measure that actually will mean higher property taxes for most, if not all job creators in Connecticut. Among other things, the third portion of SB 1 will create:
- A new property tax (“municipal contribution to the area-wide tax base”) for commercial and industrial job creators over and above what currently exists, and applying to all factors, including new construction, market value appreciation, and revaluations. This could financially encourage municipalities to inflate the assessments of commercial and industrial properties in an effort to “make back” some of the revenue that may have to be shared with the region.
- A discriminatory “property tax sharing system” with a commercial and industrial mill rate separate from, and likely higher than, residential properties
SB 1044 dictates wages in franchises—mainly small businesses—of all kinds in Connecticut, their parent companies, and other employers, with a tax of $1 per hour worked by any employee paid less than $15 per hour.
The bill applies to employers with 500 or more employees, or franchisors whose local franchisees collectively employ 500 or more employees.
Taxing jobs will make Connecticut too costly and too difficult to do business in, turning away jobs and opportunities from Connecticut.
Job Tax on Wages
HB 6791 is also a tax of $1 per hour worked by any employee paid less than $15 per hour—but applies to employers with 250 or more employees, or franchisors whose local franchisees collectively employ 250 or more employees. Same result: Will turn away jobs and opportunities from Connecticut.
SB 955 will hike health insurance costs for smaller employers, individuals and families by shifting a line item program out of the state budget (funded by all taxpayers) into an Insurance Fund that’s paid for only by health insurers.
The insurers, in turn, will pass the higher costs onto consumers in the form of higher premiums.
On the positive front, one proposal is a big help to developing the talent our economy needs, and, as a technical adjustment, would come at no cost to the state.
SB 1017 will help address the significant manufacturing skilled workforce shortage and create excellent career opportunities for some (with good pay and benefits).
It updates and makes more usable the Manufacturing Apprenticeship Tax Credit.
The revision allows pass-through entities to apply the credit against sales taxes due to the state or sold to other entities where they can be applied against gross earnings and certain other taxes, not just the Business Corporation Tax.
For more information about state taxes, contact CBIA’s Bonnie Stewart at 860.244.1925 | email@example.com | @CBIAbonnie
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