In Connecticut, the richest state, the debate should not include cuts to low and middle income families struggling to make ends meet. State and local taxes falls most heavily on those with the lowest incomes. The wealthiest residents pay less than one-half the effective tax rate paid by almost everyone else. The budget should be balanced by making taxes fair for all, and requiring that the top 5% pay the same combined tax rate as the bottom 95%.
Connecticut needs about $1.3 billion in the coming year just to maintain services and meet pension and health fund obligations. The deficit is made worse by federal government budget cuts, which have placed more pressure on states.
The bottom line is that it is possible to generate the revenue necessary to meet the needs of the people of our state without cutting services while reducing the tax burden on most working families.
If households with incomes over $300,000 (the top 3 or 4%) paid the same tax rate as the rest of the people of Connecticut, it would raise an additional $2 billion a year in revenue. Measures advocated by members of the community-labor coalition Better Choices for CT include:
HB 5791, Corporate Accountability for Large Employers that pay poverty wages
Extend sales tax to services used by large businesses
Close other corporate loopholes and end corporate tax expenditures
Maintaining the scheduled EITC increase
Additional tax on portion of income over $500,000
equalization of automobile tax rates