Taxes Gas Prices, Taxes
(cross-posted from Pelto’s Point at the New Haven Advocate)
The CTMirror has a lead story today entitled Consumer anger at gas prices prompts Congressional concern
The story covers the fact that as gas prices surge past $4 a gallon “ Connecticut’s members of Congress are in a high-speed race to address their constituents’ pain at the pump. The lead example is United States Senator Richard Blumenthal calling for a “ wide-ranging federal investigation
of the oil and gas industry,”
As the Federal Delegation scrambles to address constituent anger and disgust over gas prices, it is interesting that not one of them apparently pointed out that gas prices are significantly higher in Connecticut because of the way State government taxes gasoline.
In addition to the 25 center gasoline excise tax, Connecticut also levies a 7% gross receipts tax on the wholesale price of gasoline.
As gas prices go up, the 7% gross receipts tax proportionately escalates adding increasing agony to Connecticut’s middle and low income families who are already facing difficulties making ends meet.
Just like when gas prices spiked in 2008, the wholesale tax is now doubling the amount of money the state is adding to the per gallon price of gasoline.
With prices back at historic levels the State is adding about 50 cents a gallon, which is why gas prices are nearly 25- 30 cents more in Connecticut than in neighboring Massachusetts.
To add insult to injury the majority of funds collected through the Gross Receipts Tax doesn’t even go to paying for transportation related expenses. In the last 5 years or so, the gross receipts tax has brought about $1.5 billion into the state coffers, but less than half of that went to pay for transportation related expenses. The rest went into the State’s General Fund.
On top of everything else, the very moment that it seems like things couldn’t get worse, the budget deal between Governor Malloy and Democratic Leaders will increase Connecticut’s gas tax by another 3 cents. (not to mention the additional amount that will be added with the 7% tax on the wholesale price).
It is nice to see Connecticut’s Federal Delegation call for investigations and action but they may want to check back with the mother ship since it is the state of Connecticut that is an active partner in pushing gas prices beyond the reach of many Connecticut residents.
State Budget, Taxes Budget, Legislature, Taxes
An example of collaboration in the political arena?
Collaboration is a term usually used in a positive sense to mean working together to achieve a common goal. However, it can also be used as a negative, as in “Collaborator” or “Collaborationist”, a pejorative description of people who work with the enemy even if it against the needs of their own people.
So what type of collaboration is this? The agreement Governor Malloy and Democratic Leaders announced last night make a number of changes a few of which will require some wealthy Connecticut taxpayers to pay a little more (i.e. those who die, those who buy really expensive cars, boats or jewelry and those who make between $250,000 and $2 million a year) but fundamentally it gives the super wealthy a pass and leaves a disproportionate tax burden on those in the middle class.
Second, above all else it leaves in place the unachievable $2 billion in state employee concessions which means that the FY 12 budget Democratic legislators are planning to vote for is $500 million or more out of balance.
Furthermore, the Governor has been clear, if the state employees “fail to provide the funds” he will be forced to lay off thousands, destroy and safety net and cut municipal aid, forcing local property taxes to go up even further.
And finally, this new consensus budget maintains the deepest cuts in the history of public higher education in Connecticut. Cuts that will mean Connecticut’s families will be paying more and getting less from Connecticut’s colleges and universities.
There are a number of important and positive changes to the budget. (Some highlighted bellow.)
However, this “collaboration” on the part of the Democratic Legislature maintains the worst elements of the Malloy budget including making Connecticut’s state employees enemy #1.
The plan adopts Malloy’s revised income tax proposal which includes a $300 property tax credit paid for primarily by changes that will increase the income tax for those making between $250,000 and $2 million.
The higher sales tax will apply to clothing under $50, over the counter medications but haircuts, automobile trade-ins, car washes, and boat repairs and storage will not be taxed.
There will be 7 percent luxury tax on clothing costing more than $1,000, jewelry above $5,000 and cars and boats above $50,000 rather than Malloy’s plan to add an extra 3 percent to those types of items.
Under the compromise plan, the inheritance tax would apply to estates of more than $2 million instead of Malloy’s plan of $3.5 million.
The new plan increases the reach of the healthcare provider tax which brings in more revenue and federal funds and also relies more on the new tax on major electric generator. The plan also maintains the higher gas tax.
The plan makes some relatively minor changes to the appropriations side of the budget (will outline in a later post).
For those and a more details breakdown of the tax changes, CTnewsjunkie has posted a copy of what was handed out to legislators and others yesterday. Click Here: http://www.ctnewsjunkie.com/upload/dem-deal.pdf
Malloy, Taxes Malloy, Taxes
Cross-posted from Pelto’s Point (New Haven Advocate)
Tonight, Governor Malloy will go to Middletown for his 17th and final town meeting on his statewide budget tour. As the legislature’s Appropriations and Finance Committees prepare to vote on the Governor’s budget in the next two weeks, will the Governor make any changes to the budget plan he provided to the General Assembly two months ago.
For entrainment purposes, at least, the most memorable meeting may have been the one in Greenwich at which irate taxpayers complained about the new 3% tax on luxury items and the Governor’s decision to remove the sales tax exemption for storing boats.
However, for Connecticut’s middle income families the most interesting development occurred when the Governor spoke to the CTMirror’s Mark Pazniokas following last week’s meeting in Danbury.
Malloy told the CTMirror that he was well aware of the frustration middle class families had about his tax proposal and that while he would not support any additional taxes, he might reconsider shifting the burden of how those taxes are raised.
Great news for Connecticut’s middle income families but there was one extraordinary follow-up that hasn’t gotten much attention.
While Malloy said “I’ve always acknowledged the final package will be somewhat different from what the original proposal is, but the framework is not going to change,” it was the follow-up that deserves attention.
Pazniokas wrote that Malloy “declined to go into details about what a more progressive tax structure might look like…but then he acknowledged the consistent complaints he has received about how heavily his proposed income-tax increases would fall on the middle class.”
And while Malloy said that his Administration was reviewing those complaints he “seemed resistant, however, to raising the top rate much, if at all, above the 6.7 percent.”
Malloy, State Budget, Taxes Foley, Lamont, Malloy, Taxes
Cross-posted on Pelto’s Point (New Haven Advocate)
Courtesy of Christine Stuart, CT NewsJunkie
Yup you heard it right. Christine Stuart had a great story about the April 4, 2011 “debate” between Ned Lamont and Tom Foley. Lamont, Foley Criticize Parts of Malloy’s Budget Proposal
Turned out, everyone played their parts well. Lamont called Malloy’s budget plan the “first honest budget this state has seen in a long time.”
While Foley whined that “there are no sacrifices in this budget and no sacrifices for receivers of state spending.”
The discussion revealed yet again that Tom Foley simply “doesn’t get” how Connecticut state government works and who “benefits” from government programs and services.
The highlight of the entire evening though came when Tom Foley “praised Malloy’s decision not to boost income taxes on the state’s wealthiest residents by more than 0.2 percent”
At least you have to give him points for honesty.
Although he lost his bid for Governor, Foley is having a pretty good year.
First, as a member of Connecticut’s super wealthy, Foley gets to pocket more than $100,000 a year thanks to the Obama-Republican extension of the Bush Tax Cuts.
And then, while he complains that Malloy’s budget plan is all taxes and no cuts (which, of course is false) he actually thanks the Governor for not raising taxes significantly on people like him.
The fact is that Malloy’s plan does increase state income taxes on about 64% of the state’s taxpayers, while reducing income tax for about 8% of the people.
However, the tax increases are not applied evenly and the greatest additional burden falls on those with incomes of between $50,000 and $100,000.
As CT Voices has pointed out in the analysis of Malloy’s budget, a “household with $60,000 of income that normally claims a property tax credit of the maximum of $500 would lose that credit, resulting in an overall income tax increase of just over 0.8% of the household’s income. By comparison, a household with income of $200,000 would experience an overall increase of under 0.5% of its income.”
Overall, Malloy’s tax proposal has the greatest impact on those making below $1 million dollars.
At the highest levels, the increase in the income tax rate from 6.5% to 6.7% means the super wealthy would see a total increase in their “burden” of about 0.2% or about a quarter of the hit middle income families would be taking.
Before these tax changes take place, Connecticut’s low- and middle-income families pay about 10% – 12% of their total income in state and local taxes while the state’s top earners pay less than 5% of their income in state and local taxes.
If Malloy’s plan is adopted, the total tax to income burden for the middle 20% will increase by about a full percent while the top 1 percent would see their share grow by less than half that amount.
And Foley says thanks – wow – talk about a priceless moment.
Where I come from, we’d say Tom Foley has pretty big ones to get up in front of an audience, after pocketing the windfall from the extension of the Bush Tax Cuts and then praise Dan Malloy for giving Connecticut’s super rich yet another break.
So much for accepting the responsibility of paying one’s fair share.
Malloy, Taxes Taxes
Cross-posted on Pelto’s Point (New Haven Advocate)
Photo by WNPR/Chion Wolf
Last Friday (March 25th) Governor Malloy was on John Dankosky’s Where We Live show on WNPR.
Dankosky began by raising the concern that many people have that the Governor’s proposed tax plan places a disproportionate burden on the middle class and lets the wealthy off the hook. Dankosky asked the Governor why not ask the wealthy to pay a little more.
Malloy pushed back saying his budget does, in fact, put the burden on the wealthy.
By way of an explanation, Malloy explains his position by saying “We do that, we raise those rates. We go from a three bracket state to an 8 bracket state.”
I understand “political spin”. For good or for bad it has become the way we talk about politics and government in the United States.
But here is the problem. Sometimes “spin” takes the place of “truth”
And this is just such a moment.
The General Assembly’s Office of Fiscal Analysis and Connecticut Voices for Children are both been very clear.
Malloy’s budget DOES NOT place the burden on the wealthy.
CT Voices, one of the foremost experts on Connecticut’s tax structure reports that “Moderate and middle-income taxpayers would be disproportionately affected by the Governor’s tax proposals…[the] tax changes would make moderate and middle-income taxpayers the hardest hit of any other income group.”
Voices goes on to point out that the Institute on Taxation and Economic Policy has completed an analysis of the Governor’s tax plan and “that the combined effects of personal income and various sales tax changes would be an average tax increase of 0.9% of income on the middle 20% of taxpayers in Connecticut, compared to an average of 0.5% for the top 1% of taxpayers”
Say the truth is…
As of now, Connecticut’s middle income families pay about 10% of their income in state and local taxes while Connecticut’s wealthiest pay less than 5% of their income in state and local taxes.
And despite what the Governor said on the air on Friday, as a result of his plan, Connecticut’s middle income taxpayers will see their taxes increase TWICE THE LEVEL of the wealthy (as measured by the percent of income paid to the state).
Follow this link to the radio show and then listen: http://www.yourpublicmedia.org/node/11646
The Governor’s comments about the wealthy comes about 5-7 minutes in.
People want a serious, honest discussion about taxes. That can’t happen if the Governor of the State is engaged in political spin rather than truly explaining what his proposals do.
Public Opinion Research, Taxes Q-Poll, Taxes
When it comes to politics, it’s not just the politicians who like to use hyperbole.
According to the latest Quinnipiac University Poll, one out of every ten Connecticut residents will very likely be picking up and moving out if Governor Malloy’s tax package passes and becomes law.
Think about that.
300,000+ Connecticut residents selling their homes, giving up their apartments, quitting their jobs, pulling their kids out of schools and hitting the road.
True the impact on the economy would be “bad” but there would be a lot more jobs for the rest of us and one could pick up a house cheap.
Of course, in many states, these angry people would find that they will actually be paying a higher percentage of their income in taxes but they won’t figure that out until they move.
So, if polls are accurate and voters’ responses are to be believed, a whole lot of our neighbors are headed for the border.
What is even more interesting is that there is no statistical difference in attitude due to political party, age or income.
11 percent of all voters are say there are likely to leave if Malloy’s plan becomes law
- 13 percent of Republicans
- 11 percent of Democrats
- 10 percent of Unaffiliated
The same basic pattern holds true when breaking the population down by income
- 10 percent of those making $30,000 to $50,000 say they are likely to leave
- 9 percent of those making $50,000 to $100,000
- 10 percent of those making over $100,000
Now, it is important to note that Republicans do rise to the surface when one combines the two categories of those who say they are very likely to leave and those who say they are somewhat likely to leave if Malloy’s tax package passes.
Combine the two categories and it is then that 33 percent of Republicans, 23 percent of Democrats and 28 percent of unaffiliated voters say they may move out of state (But again it is interesting that there is no statistical difference based on income). Rich or Poor they still believe greener pastures are out there.
Bottom Line: From a political standpoint, passing Malloy’s package may be the best things the Democrats could ever do to boost their electoral endeavors.
Today, Republicans only make up 21 percent of the electorate. A full third of those Republicans say they may move out if the tax plan passes.
What better way to boost the percentage of Democratic voters in Connecticut?
Hey Democrats: Forget about fixing the tax package to make it fairer – Maybe the Republicans really will get up and go someplace where they will learn about real tax burdens – like New Jersey or New York.
Malloy, Public Opinion Research, Taxes Taxes
Cross-posted from Pelto’s Point (New Haven Advocate)
Public opinion survey results are driven by three primary factors, how the pollster wrote the questions, who they asked and the depth of knowledge or understanding on the part of those who are being asked those questions.
So today’s Q-Poll is a perfect example of how difficult it is to survey voters on taxes. Why? Because people don’t like paying taxes and when questions are worded as a simple yes or no on any individual tax voters are always (or almost always) going to say they oppose that particular tax.
Since the news is full of budget and talk of increased taxes, Malloy is taking a big hit. A majority, 51% percent disapprove of the way he is handling the budget and only 32 percent approve of the effort.
As Quinnipiac University Poll Director Doug Schwartz explains in his press release, voters “think he is raising taxes too much”. Furthermore Schwartz observes that “While voters think he is raising taxes too much on the middle class, they think he could raise taxes on the wealthy more”
While the Q-poll is clear, people don’t like taxes there is a very interesting question that is completely overlooked in the press release that the pollster sent out.
While overwhelming majorities oppose every individual tax (as is often the case with surveys), a majority of Connecticut voters believe that “increases in taxes” are necessary to balance the budget including a plurality of the all important unaffiliated voters which are the voters needed to win any competitive election.
Asked “Do you think an increase in taxes is necessary to balance the budget or not? “ Democrats answered yes by a 63 – 32 percent margin and unaffiliated voters said yes by 49 – 46 percent margin.
Also interesting is that more affluent people are far more likely to believe a tax increase is necessary to balance the budget. Those making over $100,000 agreed that tax increases were necessary by a 55-42% margin.
Tax are not popular , however it is good news for the Governor and Legislative Democrats that people recognize that tax increases are necessary.
By re-balancing the proposed tax package to shift some of the burden from the middle class to the wealthy and then doing a better job explaining why they have selected these particular taxes, the Governor and Legislature can build the acceptance and support they crave as they look toward the next election.
Today’s Q-Poll can be found here: CT Q-Poll March 9, 2011
State Budget, Taxes Budget, Taxes
Connecticut Voices for Children, the New Haven-based public policy research organization has put out the most extensive assessment of Governor Malloy’s income tax proposal to date.
As has been pointed out on numerous occasions, even after the Connecticut legislature increased the income tax rate on the wealthy, Connecticut richest citizens “pay less than half the percentage of their income in state and local taxes than do most of the rest of us.
Connecticut’s low- and middle-income families pay about 10% or more of their total income in state and local taxes while the state’s top earners pay only 4.9% of their income in state and local taxes (after accounting for Federal Tax Deductions).
The new study by CT Voices points out that while the income tax is the fairest way to raise revenues, the Governor’s proposal to totally eliminate the property tax credit “as well as increases to the sales tax make the middle class the hardest hit of any income category.”
In the end, the report shatters the notion of shared sacrifice and points to the need for the Governor and Legislature to rework the revenue side of the Governor’s budget proposal.
State Budget, Taxes Budget, Taxes
What sources does Connecticut use to raise funds (This year’s budget – Fiscal Year 2011)
Source of General Fund Revenues:
Income Tax 36%
Federal Funds 22%
Sales Tax 17.5%
Business Taxes 6.7%
Transfers from other Funds 6.3%
Gambling Revenue 3.5%
Tobacco and Alcohol 2.9%
Other Revenue and Taxes 5.2%
*Other Revenue and Taxes include Inheritance Tax, Real Estate Conveyance Tax, Admissions, Licenses, permits, Fines and of miscellaneous.
What are the Major Growth Factors that explain the increase in expenditures (2004 – 2010)
Annual growth rate for selected key programs and categories:
Debt Service (interest/principal on bonds 5.3% average growth per year
Medicaid (Health Care) 5.2%
State Employee Wages and Benefits 4.5%
Education (ECS Grant) 3.4%
Residential Services (group homes etc.) 6.7%
General Assistance (poverty program) 6.1%
State Funding for Higher Education 3.4%
Corporate Viewpoint, Taxes Income Tax, Taxes
Mark Bertolini, CEO Aetna
(Cross-posted from Pelto’s Point at www.newhavenadvocate.com)
Of course, when it comes to the term entitlement many Americans think of government entitlement programs like Medicare or Medicaid. Entitlements are those government services or benefits that people receive when they meet the necessary legal criteria in order to receive such services or benefits.
However, here in Connecticut (in the year 2011), the notion of entitlement seems to be taking on a new and far more ominous meaning.
First Robert Burton wanted his $3 million dollars back from UConn and his name removed from the $48 million dollar Burton Family Football Training Complex because he was left out of the loop on the selection of a new football coach.
Now, Mark Bertolini, the CEO of Aetna announces at a recent Middlesex Chamber of Commerce meeting that whether his company will add or eliminate jobs in Connecticut will depend in part on how the state resolves its budget crisis.
See the Hartford Courant story – http://www.courant.com/business/hc-aetna-bertolini-0212-20110211,0,659887.story
Bertolini reports that “we’ve done the analysis, and, quite frankly, Connecticut falls very, very low on the list as an environment to locate employees . . . in large part because of the tax structure, the cost of living, which is now approaching, all in, the cost of locating an employee in New York City,”
That is quite a threat from Aetna – A Connecticut creation that has called our state home for 158 years.
This comes from the CEO of Aetna, whose 2010 operating earnings were $1.6 billion, up 43% from 2009.
Aetna – a major multinational corporation that proudly declares that it does business in 160 countries around the world.
Aetna – whose 2010 pre-tax operating margin was up to 8% and their post-tax margin as up to 5.2% – an increase of 1.5%.
Aetna – whose stock closed yesterday at 37.65, up from about 29 a year ago.
This past year, Mark Bertolini’s Annual Cash Compensation was $1.5 million, plus short term compensation of $932 thousand plus long term compensation of $7.2 million. His total 2010 compensation package was worth $12.6 million
Although Bertolini fails to make clear what his specific demands are we can safely assume that his worry relates to increased taxes for his company or himself. Does he mean that ANY TAX INCREASE will send his company fleeing? (Has he taken into consideration the huge windfall that he and his executive team received thanks to the extension of the Bush Tax Cuts)?
Is Bertolini saying he’ll lay off his 7,000 experienced workers if Connecticut raises taxes?
Is he saying he’ll sell the company’s huge property holdings here in Connecticut?
Is he saying that he and his senior management team will pull their kids out of school, sell their homes and move out of state because Connecticut tries to balance its budget by asking those among us who can pay a bit more to pay their fair share and help ensure Connecticut remains a great place to live and raise a family.
There is something truly shocking about the arrogance that flows from comments like his.
As we face the greatest economic challenge since the Great Depression, it is amazing that this “corporate leader” uses his prestige and privilege to tell us that as our elected officials finally work to put Connecticut back on track, their actions might very well lead Aetna to turn its back on its own state..
It is comments like Bertolini’s that make me worry about the very future of our Nation.