Connecticut Legislature to Vote on Tax Hike-Laced Budget This Week


Posted by Patrick M. Gleason on Monday, May 2nd, 2011, 2:05 PM PERMALINK

The Connecticut Senate plans to hold a floor vote today on the budget agreement recently reached by legislative Democrats and first term Gov. Dannel Malloy (D). The plan, which entails two dozen tax increases, would technically be out of balance the moment it is signed into law and therefore unconstitutional.

The problem is that the budget assumes over $13 million in higher revenue from an online sales tax and cosmetic surgery tax. Yet, that revenue is highly unlikely to come to fruition according to Kevin Sullivan, Commissioner of the Connecticut Department of Revenue Services. CT News Junkie has the following on the letter that Commissioner Sullivan sent to the Office of Fiscal Analysis last month:

Sullivan goes onto say no state that has passed and implemented the tax has started collecting revenue and in all but one state, remote sellers like Amazon have simply ceased doing business with in-state businesses.....Sullivan noted in the letter that the Office of Fiscal Analysis which assumes the tax will bring in about $9.4 million a year never consulted his office when they drafted the fiscal note.

The same is true of the cosmetic tax which OFA assumes will bring in about $4.1 million next year and $4.3 million the year after.

A cosmetic tax also raises privacy concerns and has already proven to be a mistake in the only state where it has been enacted – New Jersey. Aside from the fact that it disproportionately burdens women, in today’s Daily Caller I explain why it is also a net revenue loser for the state:

The New Jersey lawmaker who sponsored the cosmetic tax in 2004 ended up leading the effort to repeal it just two years later, pointing to studies that found that for every dollar in tax collected by the Garden State’s cosmetic tax, the state actually lost $3.39 in revenue.

The budget to be voted on this week in Connecticut is a highly flawed document that relies on gimmicks, increases spending, and will only serve to impede economic recovery, increase revenue volatility, and create future budget holes. The House is expected to hold a floor vote on Tuesday. For extended commentary on the Connecticut budget debate in today’s Daily Caller, click here.

 

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