Connecticut’s wasteful spending and regular tax hikes have triggered an exodus from the state, with high-income earners fleeing to sunny, low-tax Florida. Tax revenues are falling, and even Democratic Governor Dan Malloy acknowledges that tax increases are no longer a solution to shrink the state’s runaway deficits. Nonetheless, state legislators plan to impose yet another new tax, and are deciding whether to install electronic tolls on Connecticut’s roads.
The new tax is intended to offset reductions in gas tax receipts, which have been declining as cars become more fuel-efficient. Connecticut legislators fear that as electric cars become more popular, gas tax revenues will continue to decrease. However, the legislature has no plans to abolish the $0.40/gallon tax. Along with the new toll, Connecticut drivers will continue to pay the sixth-highest gas tax in the country.
Other Connecticut taxes, too, are among the highest in the nation; Connecticut collects the second-highest state and local taxes per capita, taking in an average of $2,172 per person. According to the Tax Foundation, the state also has the ninth-highest property taxes, the third-highest cigarette taxes, and is the only state with a gift tax.
People vote with their feet, and this onslaught of taxation is causing Connecticut’s wealthiest citizens to run, not walk, from the state. Surveys show that more people are leaving Connecticut than arriving, and retirees make up 21% of this outbound migration. Forbes reports:
Instead of remaining in Connecticut and putting much of their wealth into government coffers, many wealthy families are electing to move to one of the 36 states that does not have an estate tax – or to one of the 49 states that does not have a gift tax.
Kevin B. Sullivan, commissioner of the Connecticut Department of Revenue Services, said about five or six of the highest earners could have a “measurable impact on the revenue stream” . . . He said the state was holding discussions with other top earners in hopes of keeping them.
Connecticut’s current fiscal year, which ends this month, will conclude with a $400 billion deficit. Budget shortfalls have prompted Moody’s, S&P, and Fitch to downgrade Connecticut’s credit rating.
In the face of this crisis, the worst decision Connecticut lawmakers can make is to create yet another new tax.
Senator L. Scott Frantz, a Greenwich Republican, told the Hartford Courant tolls are unpopular in his district. “People do not like them in our neck of the woods, especially because we’re close to the border,” Frantz said. “They don’t like the idea. They think it’s another tax.”
Photo Credit: HD_Vision