Much talk at the Capitol is focusing on so-called “tax expenditures” and their impact on state revenues in Connecticut. As policymakers look for solutions to the state’s fiscal crisis, it’s important to understand how good tax policy drives, not deprives, state revenues.
Without a strategic tax policy – including prudent use of credits and exemptions – Connecticut would be a very different, and much poorer, place.
Connecticut used tax policy to help stimulate the growth of research and development industries in the state, and good things happened – more R&D facilities were built and more jobs created – and the state gained additional revenues.
When Connecticut used tax policy to help ignite the state’s financial insurance and real estate cluster, more good things happened – companies and jobs stayed here, others moved in – and the state gained additional revenues.
And when state tax policy was used to help manufacturers, the state became more competitive for jobs, keeping many companies here and encouraging new, cutting-edge businesses to start.
Take away those basic tax policy decisions to grow our economy and Connecticut would have much fewer jobs, a much weaker economy and much less in tax revenue.
Without the strategic use of tax policy, many of the businesses and industries we’re depending on to grow us out of the recovery would have left the state years ago.
Tax policy with a vision understands the reality that businesses are now competing not just with those in our neighboring states, but in a vast new global marketplace.
And it’s the kind of focus that has directly promoted areas that can grow and lift Connecticut’s economy again.
Now, as the state grapples with how to grow its way out of the recession, one part of the solution should be obvious: Stay with the strategies that work – both for the results they bring and the stability they demonstrate to the business community.
The business community encourages policymakers to look at the whole picture of tax policy before making decisions that could in fact deprive the state of the revenue it needs.
For more information about how tax credits and exemptions work to keep Connecticut’s economy competitive, visit gov.cbia.com and click on taxes.
Bonnie Stewart is vice president of government affairs at CBIA. She can be reached at Bonnie.Stewart@cbia.com.
