Connecticut tax hikes among largest
Despite the ongoing impact of the recession on state budgets nationally, Connecticut was one of just nine states in the country to hike taxes more than 1 percent on a net basis for the coming fiscal year, according to a new study.
Connecticut and Vermont were the lone Northeast states to raise taxes at least 1 percent, according to the National Conference of State Legislatures, with many of the state taxes covered in the report taking effect in the fiscal 2012 year that begins next June.
Nine states cut taxes 1 percent or more on a net basis heading into fiscal 2011, including New York and Maine in the Northeast.
In large part due to massive tax increases enacted nationally in fiscal 2009, states combined to lower taxes by 0.4 percent on a net basis, for the first time since the 2001 fiscal year.
By contrast, the study noted Connecticut enacted multiple fundamental changes to its tax base, including an increase in marginal tax rates that is expected to contribute $893 million in new revenue.
Connecticut also extended a temporary corporate income tax surcharge for two years, while doubling the rate from 10 percent to 20 percent. The state increased its sales tax to 6.35 percent from 6 percent previously, while levying a 7 percent tax on the sale of many luxury items and enacting higher sin taxes on tobacco and alcohol. And Connecticut authorized new taxes on hospitals, hotels and electricity generators, among others.
“I think what we devised was a way to get out of it,” said Gov. Dannel P. Malloy, speaking at a jobs summit he convened this month in Hartford. “It required everyone to give a little, because quite frankly in Connecticut are problems were too big to tax our way out and too big to cut our way out ”“ it had to be some combination of the two.
“And we were careful, to the extent that we could be, to make sure that we did as little damage to business prospects and job prospects in the state as we could ”“ understanding ”¦ that what business needs is certainty,” Malloy added. “And let me tell you: we balanced that budget, we have turned a corner.”