Gov. Ned Lamont has proposed four major changes to the state tax code that would result in $336 million in tax cuts.
Speaking at a Tuesday press conference with Melissa McCaw, secretary of the Office of Policy and Management Melissa McCaw, Lamont described the tax cuts as the result of the state government ‘s navigation from deficit to surplus.
“We now have some organic growth that allows us to provide significant tax relief to the people of Connecticut, ” Lamont said.
The four proposed changes include an increase and expansion of the property tax credit, a lowering of the mill rate cap for motor vehicle taxes, expanded exemptions for pension annuities and an opt-in tax credit for employers who help pay off student loans of Connecticut Higher Education Supplemental Loan Authority (CHESLA) recipients.
The property tax credit expansion will take the form of reverting to full eligibility, which will allow individuals earning up to $107,500 a year and joint filers with up to $130,500 a year to take advantage of the tax credit. Originally slated to happen in Fiscal Year 2024, Lamont is proposing the timetable be moved up, and additionally that the credit be increased by 50% from $200 to $300 a year. According to McCaw that will make 1.1 million taxpayers eligible to receive the credit and will amount to $123 million dollars given to Connecticut property owners.
The governor also proposed slashing the current cap on vehicle mill rates (currently set independently by individual municipalities) from 45 to 29 mills. McCaw estimated that 1.7 million vehicles will be impacted by the lowered cap and noted that it includes commercial vehicles as well as private vehicles, meaning small businesses will be able to tap directly into this $336 million in tax cuts.
Lamont emphasized the importance of the lowered mill rate for having an impact on car owners across social strata, noting that under the current set-up “you could have a Honda in Hartford and pay higher property tax on it than you would for a Hummer in Hartland or Harwinton. ”
The state will calculate and pay the difference in car taxes owed to each municipality as a result of the legislation, the governor added.
Additionally, a proposal was announced to speed up the implementation of an exemption for pension annuity holders from 2025. Lamont proposed that this to go into effect immediately upon the adoption of the relevant legislation. McCaw said the result would benefit 250,000 persons in the state and represent a $43 million cut in total taxes.
With the fourth proposal, businesses will also be allowed to participate in the student loan tax credit program offered through CHESLA. Businesses that opt in will be eligible for a 50% employer tax credit on up to $5250 in student loans repayments. Routed through businesses that have hired some of the current 32,000 CHESLA borrowers it represents up to $9.4 million in workforce development in the form of lowered taxes according to McCaw.
While federal American Rescue Plan Act funding was cited as making it possible to move up the timetable on some of the tax cuts, both Lamont and McCaw insisted that they will not be one-time affairs.
“If we continue on this trajectory, we do feel that these are sustainable adjustments that we can make in our tax policy, ” McCaw said.
The announcement drew a negative response from Bob Stefanowski, the Branford-based businessman who is seeking the Republican Party nomination for governor ”“ Stefanowski ran unsuccessfully against Lamont in 2018.
“These proposals don ‘t begin to scratch the surface of lowering the burden of affordability on Connecticut ‘s families and small businesses, ” Stefanowski said in a press release. “Ned Lamont ran a campaign promising to cut the property tax burden on Connecticut ‘s working families by $400 million, he has never even tried to make good on that promise. In fact, to make matters worse Governor Lamont added $2 billion in tax hikes during his tenure, hurting working families and small businesses the most. Nothing he ‘s proposing today undoes the harm caused to every resident and business in our state. ”
The Connecticut Business & Industry Association ‘s President and CEO Chris DiPentima observed that “while it ‘s always great to be discussing tax cuts instead of tax hikes, ” he believed the $336 million tax package fell short of what his organization hoped to see.
“Making Connecticut more affordable is essential for keeping current residents and attracting new ones to grow our tax base and workforce, and the governor ‘s proposals provide some measure of relief for individual taxpayers, ” DiPentima said in a press release. “However, that is only part of the overall prescription needed to bring back jobs and drive an economic recovery with opportunities for all. ”
The governor ‘s proposals will be submitted to the Democratic-majority state legislature, which reconvenes on Feb. 9.
