Taxes of various types were on the mind of Connecticut state Rep. Stephen Meskers at a recent community and government affairs event hosted by the Greenwich Chamber of Commerce.
The Democratic lawmaker, whose 150th District primarily encompasses the town”™s shoreline, expressed his hopes that the state will “hold the line” on its income, property and corporate business taxes, which he said are for the most part low, relative to surrounding states.
While Connecticut”™s income tax rate of 6.99% is greater than Massachusetts”™ 5%, it is significantly less than New York”™s 8.82%. The Nutmeg State”™s 2.14% property tax rate is greater than New York”™s 1.72%, but less onerous than Massachusetts”™ 2.25%, while its corporate business tax stands at 7.5%, compared with New York”™s 6.5% and Massachusetts”™ 8%.
Even so, Meskers said at the Feb. 25 event, if Connecticut is to see its commercial real estate market grow as has its residential market during the pandemic, it must hold off on tax increases ”” at least for 2021. “The pressure in New York state, New York City, Massachusetts and even New Jersey to raise taxes is immense,” he said. “I believe we are one of the relatively cheaper places to exist” in the area.
The representative, who was elected to his second term in November, opined that Connecticut could probably afford to keep taxes where they are, due to its budget swinging from a $1 billion deficit to about a $400,000 surplus as a result of federal aid and tax receipts. Looking ahead, he said he was “pretty comfortable” that the “rainy day fund” can also play a part in keeping taxes flat, at least in the short term.
Meskers is also part of a fight against Connecticut residents who work elsewhere, paying at least a portion of their income tax bill to the state where they work. His proposed HB 6183, co-sponsored by Rep. Lucy Dathan (D-Norwalk and New Canaan), would permit Connecticut residents and part-year residents to take credits for tax paid to other states while working from Connecticut during the pandemic.
The legislation is particularly important in the current work-from-home atmosphere, Meskers said. Such “convenience of the employer” rules are unfair when people are not working at the office ”” due to employer leniency, offices being shut down or both ”” with New York taking what he called “a very aggressive stance” on keeping the status quo.
He cited Connecticut”™s and New Jersey”™s filing amicus briefs in a complaint filed last October in the U.S. Supreme Court by New Hampshire against Massachusetts. The Bay State is maintaining that income tax can be assessed on out-of-state workers who are employed within Massachusetts ”” a position with which New Hampshire disagrees.
Should the court rule in New Hampshire”™s favor ”” a decision is not expected until at least the middle of next year ”” S&P Global Ratings recently wrote, the result could be “the reallocation of billions of income tax dollars between certain states. New York and Massachusetts, in particular, could potentially lose significant amounts of income tax, while New Jersey and Connecticut could gain revenue.”
“What we”™d like to see is (such workers) taxed once ”” and taxed in Connecticut, not New York,” Meskers said.
Meanwhile, on March 1 the Connecticut Senate passed Senate Bill 873,which among other things holds that Connecticut residents who work in, and pay income taxes to, other states can get a credit for those taxes on their Connecticut tax returns. That bill now heads to Gov. Ned Lamont, who is expected to sign it into law.
Meskers added that straightening out the tangled tax web would further encourage businesses to come to Connecticut, including computer data centers, which many lawmakers believe will be a boon to municipalities”™ bottom lines. That legislation, House Bill 6514, was passed by the House on Feb. 24 by a 133-13 margin.
“Data centers are the backbone of the digital age,” Lamont said after the House”™s approval, “and with this growing need we are witnessing a significant period of national growth to build these infrastructures and create the corresponding jobs that support their operations.
“Connecticut needs to get in the game and bring this industry to our state,” Lamont continued. “This is a once-in-a-generation opportunity to show the technology industry that Connecticut supports this sector and we welcome their development in our state.”
That bill now also goes to the state Senate.
