May 1, 2011
WSJ: Connecticut Tax Plan is the 'Anti-Christie'Wall Street Journal editorial, The 'Anti-Christie': What Connecticut Governor's Tax Hike Plan Tells Us About Liberal Governance:
That's how Connecticut's Democratic Governor Dannel Malloy describes himself in contrast to New Jersey Governor Chris Christie, and we'd have to say he's right. Nutmeg State residents will pay for the appellation.
Whereas Mr. Christie has vetoed tax increases, cut spending and is trying to reform public pensions, Mr. Malloy wants to close the Connecticut budget deficit with a huge tax hike and the legislature in Hartford may approve it as early as next week. It's worth exploring Connecticut's tax gamble, not least because it is so at odds with the fiscal strategy that most Republican Governors and New York Democrat Andrew Cuomo are employing to repair their state finances.
The Yankee Institute, a free market think tank, counts some two dozen new taxes in Mr. Malloy's budget. ... He also wants to kick every Connecticut worker with earnings above $50,000 into a higher tax bracket. Those who make more than $500,000 would see their tax rate rise to 6.7% from 6.5%. Even that's not enough for Democrats in the legislature who want to raise it to 7%. ...
This is what always happens when a state introduces an income tax: A gusher of new revenue leads to higher spending, which leads the politicians to demand higher rates; rinse the taxpayers and repeat. What started in Connecticut as a 4.5% top marginal rate is now 6.5%, and yet the state is still running a $3.5 billion deficit. As the nearby table shows, state spending growth has far exceeded gains in median income since the income tax was introduced. Spending growth also roughly doubled the increase in population plus inflation (about 72%) over the period. ...
Connecticut is adopting the Illinois model of raising taxes on everyone to avoid serious spending restraint or pension reform. When these tax increases prove not to be enough, Mr. Malloy will propose another one. A state that was once the Northeast refuge from high tax New York, New Jersey, Rhode Island and Massachusetts is fast becoming another slow growth, union-dominated, job-shedding imitation.
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I suspect that for Connecticut, the effect of the top state income tax rate is highly affected by the rate in New York (state and city), since many top earners who live in Connecticut work in Manhattan.
Posted by: John Thacker | May 1, 2011 1:02:14 PM
Ah yes, Chris Christie, the great governor who balances his budget by not making required pension plan contributions or funding post employment health care benefits for retirees.
Let me skip my required payments and I will look like a fiscal hero also. Here is report from a newspaper published today.
"Governor Christie’s budget for the new fiscal year proposes paying just over $500 million toward the pension obligation, even though, in reality, a contribution of $3.5 billion is needed to satisfy the actuaries that keep track of how much should be going into the system to keep it funded properly."
Posted by: Sid (real one) | May 1, 2011 4:11:50 PM