 
Even as Connecticut bested Massachusetts and New York for growth in its high-tech sector, business groups said a series of tax proposals could wipe out those gains.
In April, the finance committee of the Connecticut General Assembly proposed eliminating a sales-tax exemption on the sale of information technology services. The Assembly is also proposing cutting 30 percent cuts in Connecticut”™s tax credit for research and development; electronic and data processing; and others impacting the high-tech industry.
The Connecticut Business and Industry Association (CBIA) held a pair of press conferences in late April to decry the proposals, along with the Connecticut Technology Council (CTC), whose president, Matthew Nemerson, was named president last month of the Technology Councils of North America.
According to Washington, D.C.-based TechAmerica, Connecticut had 69,500 high-tech workers as of 2007, increasing the size of the sector 2 percent from 2006. That exceeded the 1.6 percent growth rate in technology Mecca Massachusetts and the 1.3 percent growth in New York.
The state continues to actively support growth in the high-tech and precision manufacturing sectors ”“ in mid-April, the Connecticut Department of Economic and Community Development (DECD) extended $3.3 million in financing and sales tax exemptions to Barden Corp., a maker of precision ball bearings for the aerospace industry. Barden agreed to add 20 jobs to give it a total work force of 480 people at its Danbury headquarters and a facility in Winsted.
DECD, CBIA and CTC claim the IT sales tax measure would cost the state more than 2,200 jobs annually for the next decade, and would discourage companies from locating in Connecticut. Virginia-based Computer Sciences Corp. credits the tax credit with tripling the size of its Connecticut work force in the past decade to just more than 2,000 employees.
“Now is the wrong time to slow economic growth and kill jobs by strangling our businesses with a network of new taxes,” said DECD Commissioner Joan McDonald, in a statement. “We need to position our businesses for growth so that once the economy starts to rebound they can begin to add the jobs that will fuel a robust recovery.”
Representatives of several technology companies were on hand as well, including Hartford-based United Technologies Corp., Stamford-based Pitney Bowes Inc., and Boehringer Ingelheim Pharmaceuticals Inc., which is formally opening a new research facility this week at its U.S. headquarters in Ridgefield.
Boehringer Ingelheim spokeswoman Marybeth McGuire said the company will continue to invest in Connecticut, but that even uncertainty over the R&D tax credit could impact future decisions on where to invest.
“Decisions about where to invent and how to invent are no longer left to chance,” agreed Carole Bilson, vice president of the engineering and design group at Pitney Bowes. “Because the cost of doing business and the cost of living for employees in Connecticut is high, R&D tax incentives help technology companies of all sizes remain in the state and invent here.”
Connecticut has the highest per-capita rate of patent production in the nation.
“These incentives work,” Paul Pescatello, CEO of Connecticut United for Research Excellence, a New Haven-based trade group, said in a statement. “Cutting tax credits for some of Connecticut”™s most valuable industries will cut down on activity in the areas policymakers had intended to bolster. It will hurt the very companies that invest in the products, building, equipment and people of our state.”
The move comes even as President Obama gave another signal of the importance he is placing on technology, appointing Aneesh Chopra as the nation”™s first-ever chief technology officer, with the Virginia man charged with encouraging innovation in the high-tech sector.
Obama also made Yale University President Richard Levin one of 20 members of the President”™s Council of Advisers on Science and Technology.
