Earlier this week, the Institute on Taxation and Economic Policy released a new report highlighting the key tax components of Connecticut’s recently enacted budget, which raised more than $1.4 billion in new taxes to mitigate cuts to core services.
The mostly progressive tax package includes increases in personal income taxes for the state’s best-off residents, a new 30 percent refundable state Earned Income Tax Credit, a reduction in the state’s property tax credit, an increase and expansion of the sales tax, a new ‘Amazon’ tax, a corporate income tax surcharge, a lowered threshold for the estate tax, and increases in cigarette and alcohol taxes.
In a year when most state leaders across the country have embraced an anti-tax, cuts-only approach to addressing short- and long-term budget woes, Connecticut lawmakers boldly took a stand for the vital role of government and for progressive tax policy. Connecticut’s approach addresses current fiscal challenges and is forward-looking, putting the state on a path towards fiscal and economic recovery.
State policymakers and advocates still in the throes of crafting their state spending plans for next year should look to Connecticut as a guide for a sensible approach to addressing ongoing fiscal woes.