Time to explore a new property tax system for Connecticut

In an important step forward, CT Voices for Children, a Connecticut based non-profit research institute, recently proposed a plan to reform Connecticut’s outdated property tax system and replace it with one that will reduce the tax burden on middle-income and working families while ensuring all cities and towns have the resources they need to adequately fund Connecticut’s public schools.

Wait, What? readers will recall that Connecticut’s middle-income families pay about 10 percent of their income in state and local taxes, the poor about 12 percent and because the Connecticut tax structure coddles the rich, the state’s wealthiest residents only pay about 5.5 percent of their income in state and local taxes.

The new Connecticut Voices proposal would correct those inequities and provide real property tax relief for 2.7 million residents living in 117 of Connecticut’s 169 communities.  At the same time the program would require wealthier residents to start paying their fair share in state and local taxes.

The underlying problem is that Connecticut underfunds its schools by close to $2 billion a year leaving the state’s public schools without the resources they need to provide every child with their constitutionally guaranteed access to a quality education.

The existing system also unfairly burdens the vast majority of local taxpayers.

In an historic effort to address this problem, Connecticut Voices for Children’s proposal would reform Connecticut’s property tax system as follows;

Thriving communities are made possible by good schools, roads, and other public systems. To support these building blocks of local economies, Connecticut’s cities and towns need a stable revenue source that generates needed resources without placing an unfair load onto taxpayers.

Currently, the property tax does the opposite. Connecticut’s property tax system makes residents in poor communities pay more, stifles economic development, and exacerbates racial inequalities. At the same time, because local school funding is so dependent on local property taxes, disparities in property wealth lead to disparities in opportunities for children.

We explore a partial solution to this problem: a system in which communities that tax themselves equally for education receive equal per-pupil funding for education. Our model would cut taxes for 2.7 million residents in 117 cities and towns while maintaining local control and education funding levels.

The report is based on Vermont´s adjusted statewide property tax system, with the following key features:

Gives 2.7 million residents an average tax break of about $400 per person.

Fully funds the Payment in Lieu of Taxes (PILOT) program, alleviating inequities in communities where concentrations of government, university, and hospital property have eroded the tax base.

Reduces disparities in property tax rates and thus reduce incentives for business to relocate from communities with the highest property tax rates to nearby communities with lower ones.

Consistent with tradition of local control, communities willing to tax themselves more to spend more on education are allowed to do so.

Consistent with tradition of taxing property to fund education.

To read the full report and for more background go to: Equal Funding for Equal Effort: A Proposal to Reform Property Tax Funding for Local Education in Connecticut