Wealthy Connecticut residents propose $1 billion in new taxes on themselves and other millionaires
Gov. Ned Lamont, seen here in New Britain last month, opposes increasing the income tax on the wealthy. (Michael McAndrews / Hartford Courant)
A group of wealthy Connecticut residents is calling for $1 billion a year in new taxes on themselves and other wealthy state residents with proposed hikes in the state income tax.
The group, known as Fair Share Connecticut, is seeking a top rate of 9.99 percent, up 3 percentage points from the current highest level, on all couples earning more than $5 million a year and individuals making more than $2.5 million.
But Gov. Ned Lamont and Republicans have repeatedly rejected the idea of raising the state income tax, saying that four hikes in the past 12 years have not raised as much money as state officials originally expected. Lamont has also rejected a 2 percentage point surcharge on investment income.
In an open letter to Lamont and the state legislature, the group says tax increases are needed to close the states budget deficit that is projected at $1.55 billion for the fiscal year that starts on July 1.
We are a group of wealthy Connecticut residents who implore you to make us part of the solution to Connecticuts current fiscal crisis and the strategy for future prosperity across our entire state, the letter states. Specifically, we ask that in this years biennial budget, you increase the income tax on us Connecticuts wealthiest residents so that together we can close the budget deficit and invest in Connecticuts future. We cannot continue kicking the can down the road. We need to take bold action.
The groups 3-2-1 plan also includes a 2 percentage point income tax rate increase on couples making more than $1 million per year, and a 1 percentage point increase on couples making more than $500,000.
The letter was signed by 10 people, including Dr. David B. Bingham, a physician who ran for Congress in 1994. and lost in a three-way race against then-U.S. Rep. Sam Gejdenson and former state Sen. Ed Munster. Bingham ran on Gov. Lowell Weickers A Connecticut Party line and captured more than 27,000 votes in a race Munster lost by only 21 votes.
Physicians have been able to do very well in our society, but we have social needs that are growing, said Bingham, a retired doctor whose practice once employed 25 people in southeastern Connecticut. My taxes are mostly on capital gains, which I dont have to work at all for. If those of us who are doing better dont pay our fair share, society will have more people falling through the cracks.
Bingham said he rejects the notion that state government is bloated, adding that there are not enough employees at the Department of Energy and Environmental Protection to handle permits and protect the environment.
When asked about the political chances of the tax increase being approved by the legislature, Bingham said, The chances are zero if we dont speak up, and we have a responsibility to speak up.
In addition to Bingham, the letter was signed by Elliot Leonard of Easton, M. M. Peterson of Hamden, Jaime Myers-McPhail of New Haven, Robert E. Nixon of Norwalk, Frank and Shannon Demarest of Pomfret, Bill Collins of Norwalk, Rachel Garron of West Hartford and Scott Schoem of West Hartford. The group has about 20 members, and some did not want their names publicized, a spokesman said.
My general feeling is wealthier people dont pay their fair share, said Nixon. They have a lot of friends in government and they have lawyers and accountants. … I dont think these proposals can harm the Connecticut economy because both New York and Massachusetts have higher rates. Wealthy people are here for the quality of life.
Nixon noted that large corporations and businesses, along with the wealthy, were the chief beneficiaries of President Donald Trumps tax cuts.
Lamonts spokeswoman, Maribel La Luz, said Lamont is sticking to his position.
As the authors of the letter point out, Connecticut still hasnt recovered the jobs it lost during the last recession, lagging behind our neighboring states, and the only way out is to create more good-paying jobs and opportunities for our residents and families, she said. We cannot tax our way to growth. Gov. Lamont has made it clear that he doesnt want to increase income taxes on anyone, particularly as we continue the fragile economic rebuilding phase of our recovery.
For years, Republicans and some Democrats have charged that tax increases, particularly in 2011 and 2015, have prompted some millionaires and billionaires to leave Connecticut. Lawmakers have repeatedly said that some wealthy residents have been quietly moving out of the state at an increasing pace taking their wealth with them and heading to states like Florida, where there is no state income tax.
Those who have moved to Florida include major Greenwich investors like Edward Lampert, Paul Tudor Jones, Thomas Peterffy, C. Dean Metropoulos and Barry Sternlicht, according to public accounts and statements by fellow Greenwich residents.
Furthermore, national research shows quite clearly that, after adjusting for migration to Floridas sunny winters, there is no net migration to lower tax states, the letter states. Instead, wealthy individuals tend to remain in the locations where they have become wealthy. This is where their jobs, connections, and friends reside, so losing a small percentage of their substantial income is not an important driving factor. Raise the taxes. We arent going anywhere.
The letter was similar to one sent to then-Gov. Dannel P. Malloy in August 2017 by 12 millionaires, including some of the same signers. The letter did not convince any Republican legislators or Malloy.
A billion-dollar tax increase is not acceptable, Malloy said at the time. It isnt.
State statistics show Connecticuts budget has become increasingly reliant on a smaller and smaller number of super rich investors. In fact, statistics show the top 1 percent of taxpayers those earning more than $700,000 per year paid 36 percent of all income taxes in 2014. The bottom 50 percent of earners half of all taxpayers paid only 2.6 percent of all income taxes.
Deputy House Republican leader Vincent Candelora of North Branford said a tax increase could boomerang and end up hurting the state economy. He said the 2017 bipartisan budget helped improve the state economy because it included no tax increases.
We saw an increase in [tax] collections without an increase in rates, Candelora said.
Candelora said he is not precisely sure when taxes will reach their breaking point, but Democrats are testing that limit this session.
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