The Day: Tax Plan Sends Wrong Business Signal
The Day‘s editorial page today took aim at state budget proposals that would raise taxes on businesses by almost a half billion dollars over the next two years.
The New London newspaper outlined CBIA’s concerns with Governor Dannel Malloy’s proposals to indefinitely extend the corporate surcharge (“originally imposed to get the state through the last deficit crisis”) and limit the use of tax credits that businesses use to invest in research and development and make capital purchases–investments that create jobs and generate economic growth.
“Connecticut business taxes have traditionally been fairly competitive with other states, a position that helps its rankings, but these policies would degrade that standing,” the paper said.
The editorial referenced the CT20x17 campaign–supported by CBIA and more than 80 professional and community organizations–and its goal to leverage the state’s competitive strengths, overcome its weaknesses, and build a strong, vibrant economy.
National economic studies highlight a state’s competitive strengths and weaknesses, measuring the robustness of its economy, its ability to create jobs, quality of life, education system, the cost of doing business, transportation infrastructure, and regulatory environment
Business climate rankings
As The Day noted, too many of those studies rank the state’s business climate poorly. Last year, CNBC’s America’s Top States for Business, Forbes’ Best States for Business, and Business Insider ranked Connecticut 46th, 36th and 35th respectively.
“The goal of the campaign is a lofty one–move Connecticut to the top 20 by 2017,” the editorial said.
“It’s arguably unrealistic given some realities. Connecticut is not going to lower worker pay and protections to compete with southern states and the cost of living will remain higher here, as will energy costs, due both to climate and infrastructure restraints.
“Yet overly ambitious or not, the strategy is a good one. If Connecticut wants to achieve some semblance of fiscal stability, if it wants to create the jobs necessary to keep in state more of the future workforce graduating from its quality higher education system, and if it is to address the poverty in its cities, it must be more competitive.”
The Day also mentioned CBIA president and CEO Joe Brennan’s call for lawmakers to make budgetary and policy decisions that improve the business climate, encouraging more businesses to move and expand here.
And it said the legislature “needs to take a hard look at reforms proposed by Comptroller Kevin Lembo that would boost the Rainy Day Fund and decrease the state’s fiscal exposure to economic booms and busts.”
“Gov. Malloy has done some good things for the business climate,” the editorial said.
“He has improved the regulatory environment, used state investments to help small businesses recover from the recession, and boosted Connecticut’s standing as a bioscience leader. His $400 million in tax breaks for United Technologies Inc.–allowing the company unfettered use of previously earned tax credits, by the way–may have kept a major manufacturer in the state.
“But Gov. Malloy’s efforts to make Connecticut more business friendly have been uneven and hitting hard at corporate taxation at this junction appears self-defeating.”
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