NB Politicus

“Tax Equity” Proposals Call For Reducing Regressive Sales and Property Levies, Raising Rates On Wealthy

Posted in Governor, state budget, state government, Tax Policy by nbpoliticus on March 21, 2021

By John McNamara

Bills that would dramatically alter the way Connecticut taxes individuals and businesses were the subject of a marathon hearing at the Legislature’s Finance, Revenue and Bonding Committee on March 15th.  An overwhelming majority of the more than 300 individuals who testified supported tax reforms but passage will face significant hurdles in the 2021 session.

The “tax equity” proposals, co-sponsored by New Britain Democratic legislators State Senator Rick Lopes (D-6), State Rep. Manny Sanchez (D-24), State Rep. Bobby Sanchez (D-25) and State Rep. Peter Tercyak (D-26) and other lawmakers, provide tax relief to low- and moderate income households by reducing reliance on regressive sales and property taxes. High-income households would be taxed more than the current maximum of 6.99%. on their incomes to make up the difference.

A key provision contained in HB 6187 and SB 821 would adjust the state income tax on individuals earning $500,000 or more and joint filers earning $800,000. Proponents say the adjustments would make income tax rates fairer by raising the rate to 8.82% for individuals at $500,000 and joint filers at $800,000. For households earning $1 million or more the rate would rise to 12.69 percent. Governor Ned Lamont opposes any change in the current rates but a significant contingent of lawmakers. in the Democratic caucus are pushing changes to lower the overall tax burden on individuals and families below $500,000. Raising rates on wealthier households would generate $1.75 to $2 billion annually.

A coalition of unions and advocacy groups that mobilized turnout for the all day March 15thhearing assert that legislation would level the playing field and make the tax system fairer. According to a Voices for Children tax reform report “Advancing Economic Justice Through Tax Reform” issued last December, median income households with $76,106 in pre-tax income pay an effective tax rate of nearly 14% while the top one percent of tax filers with an average income of $3,092,389 have an effective tax rate of 6.5%. The effective tax rate takes into account the total tax burden of property, sales and income taxes on taxpayers. It means that a nurse or salesperson earning less than $100,000 now pays double the taxes comparably to wealthy individuals whose burden has been reduced further in recent years as the result of the Trump tax cuts for the “one percent” with incomes in the millions and billions.

A 2% statewide property tax “on the portion of the market value of homes in excess of $1.5 million” also dubbed the “mansion tax” drew opposition at the legislative hearing from worried homeowners, most of whom would not be effected by the levy on only the highest value residences. The tax on “mansions” with assessed values exceeding $1 million would raise $663 million. The same “mansion” tax is proposed in SB 171 with State Senate President Martin Looney sponsoring the stand alone bill.

Tax relief for the working class is part of the comprehensive legislation with an expansion of the Earned Income Tax Credit (EITC) to 50% of the federal tax credit at an estimated cost of $155 million. The Senate version of the bill also includes a state child tax credit similar to federal Rescue Act one designed to reduce child poverty. For property tax relief the tax credit would double to $400 on homes and motor vehicles at a cost of $63 million.  For COVID 19 relief a direct payment of $500 would be sent to individuals who have faced hardships and unemployment over the last year.

The Finance committee is also considering other provisions of the tax equity legislation that would generally lower the tax burden on working and middle income residents:

  • A 10% tax on digital ads placed in Connecticut by companies with digital ad revenue of more than $10 billion (Google, Facebook, and Amazon) generating $140 million annually.
  • Lowering the estate tax exemption to $2 million, eliminate the payment cap, and enact estate tax rates similar to the rates in effect before the Great Recession. This would generate approximately $162 million annually.
  • Increasing the base corporation business tax rate to 11.5% for corporations with gross income of $100 million or greater and extend and increase the current surtax to 20%. This would generate approximately $250-300 million annually.
  • Imposing a surtax of 5% on capital gains, dividends, and taxable interest for individuals with income in excess of $500,000 per year ($800,000 for joint filers). This would generate approximately $850 million annually.

Proponents of the legislation face a considerable amount of misinformation about impacts on working and middle income households whose effective tax rates would stand to be reduced by passage.  Any tax adjustment in the direction of equity always elicits arguments that the big taxpayers that the state depends on would flee like snowbirds to Florida and that businesses would go offshore if they haven’t already to avoid paying more taxes. Standing in the way of any change and buying into those arguments is Governor Lamont who made a “no new taxes” pledge to the Connecticut Business and Industry Association last week.

It remains to be seen how much the Democratic caucus and its leaders can move Lamont to support one or more of the provisions intended to reduce regressive taxes and make Connecticut’s tax system more equitable. Some are hopeful that Lamont will take a page from President Biden who is now calling for a higher rate on wealthy individuals making over $400,000 for public investments like infrastructure and to address a spiraling federal deficit from the Trump years. 

For now the Finance, Revenue and Bonding Committee, co-chaired by Hartford State Senator John Fonfara and Shoreline State Rep. Sean Scanlon, has its hands full in sorting out what provisions will move to a full vote in the General Assembly this session.

 

Stuck in the 18th Century: State Constitution Impedes Voting By Mail, Early Voting

Posted in 2020 Election, polling, state government, state politics, Voting, Voting Rights by nbpoliticus on June 11, 2020

By John McNamara

Pandemic Prompts Legislation To Allow Absentee Voting Option For All In November But Ballot Reforms Shouldn’t Stop There

Our license plates proudly proclaim Connecticut the “Constitution State” because the state constitution was one of the colonial documents that guided the Founders of the nation when they wrote the U.S. Constitution in 1787.

While a score of other states have ballot access via vote by mail and periods of early voting before Election Day, Connecticut is stuck in another century because of its storied Constitution and a restrictive absentee voting statute.

Amid the public health threat of pandemic the absentee voting statute is expected to change at a special session of the General Assembly in July. Governor Lamont, Secretary of the State Denise Merrill and Democratic legislative leaders are on board to extend absentee voting to every voter this year. As Merrill said to Meriden’s “Drinking Liberally” Zoom political forum on June 9th: “The last thing we want is to have people make a choice between their health and their vote.”

Opposition can be expected from Republican Party leaders intent on restricting voter access as much as possible. CT Republican Chair J.R. Romano is hard at work parroting the discredited assertions of voter fraud.

The need to add a public health emergency option to the absentee voting law would have been moot had a 2014 constitutional amendment referendum been approved in that year’s gubernatorial election. To the question “Shall the Constitution of the State be amended to remove restrictions concerning absentee ballots and to permit a person to vote without appearing at a polling place on the day of an election?” a majority (52%) voted no. Proponents blamed an underfunded “Yes” campaign and the wording of the question for its defeat. A contributing factor was the fact that almost 150,000 more voters chose a Governor but never made it to the question at the bottom of the ballot. The amendment lost by 38,000. Approval would have empowered the legislature to enact “no excuse” absentee voting and paved the way for early voting that accounts for an increasing percentage of turnout in other states.

Connecticut law limits use of absentee balloting to those who will be out of town on election day, members of the armed forces, for an illness or physical disability, religious beliefs and for serving as an election official other than at a place than where you vote. It’s likely this summer’s legislation will extend the right to vote by mail when an illness-causing public health emergency exists to stay within the bounds of the constitution.

Secretary of the State Merrill says she is working with local registrars to open all polling places on November 3rd with any required social distancing that’s needed. A statewide secure mailing operation will be used to support voting by mail for any voter who wants to do so as long as the Legislature revises the absentee voting law. Her office has a $5 million COVID 19 federal grant to meet election costs but could probably use more. According to Merrill, election officials at the local and state level face a daunting task to ensure full voter access but that steps are being taken now “to make this a smooth election.”

One of the unintended consequences of COVID-19 may be to accelerate the movement to adopt post-pandemic statutory and constitutional changes allowing no excuse absentee voting and early voting in Connecticut.

In April the New Britain Democratic Town Committee (DTC) adopted a resolution to extend absentee voting to all this year and called for a new campaign to change the constitution. The DTC also endorsed the federal Natural Disaster and Emergency Ballot Act of 2020 now before Congress that would extend voter access and provide states with new funding for election security.

The nonpartisan CT-SAM Task Force, led by former Metro Hartford Alliance CEO and gubernatorial candidate Oz Griebel, is primarily pushing ranked-choice voting, term limits and open primaries but its platform also includes “removing obstacles to legal voter registration and….early voting, vote-at-home options, and/or by making election day a national holiday.”

Beyond this pandemic a broad-based and well supported coalition will be needed to make the permanent changes in the Constitution in a 2022 referendum. “It’s very difficult to change a constitution,” notes Secretary Merrill. “This situation has laid bare the limitations in Connecticut.” The hope is we can keep our venerable Constitution but tweak it enough to allow full voting access in the 21st century.

City Hall Watch: Stewart Wants More Money For Tilcon Watershed Study; Costs To Exceed $350K

Posted in city government, environmental protection, New Britain, Uncategorized, water resources by nbpoliticus on December 12, 2016

By John McNamara

The Stewart administration is seeking an additional $17,500 for an  environmental study of Tilcon Inc.’s  long-term plan to lease city watershed for trap rock mining.

The extra cost is up for consideration at the December 14th Common Council meeting and follows the June 2016 Common Council approval of a $337,000 no-bid contract to Glastonbury-based Lenard Engineering, a contractor the city has frequently used on water supply issues.

The request for more money from a favored contractor of the Stewart administration stems from the original scope of the study commissioned by the city.  That engineering survey was quickly deemed inadequate by both the regional Water Planning Council (WPC) and the state Council on Environmental Quality (CEQ) when members of those councils learned about the agreement with Lenard and opponents of Tilcon’s expansion project raised objections.

Environmental officials, though allowing the city to engage Lenard Engineering last summer, have questioned the “independence” of the firm and chastised the city for the original scope of work which failed to address environmental concerns.

The Tilcon expansion, unsuccessfully sought nine years ago during the first Stewart Administration, will need state approval in order for Tilcon to extract the valuable igneous rock known as trap rock on 131 acres of protected watershed that is in close proximity to the city’s Shuttle Meadow reservoir.

from Protect Our Watersheds CT

from Protect Our Watersheds CT

The new scope of work, according to the council resolution, entails “an enhanced, four-season ecological study.”  The original scope of work, rejected by the CEQ, was set for 15 weeks and left out critical factors in assessing the impacts of expanded Tilcon mining on forest land and the fragile ecology that sustains wetlands in the city-owned regional water system. Apparently the $337,000 isn’t enough for Lenard Engineering to do what it is supposed to do for a true  environmental assessment.

Mayor Stewart, who continues to face strong public opposition about the pending sale of the 1.5 million gallon a day Patton Brook Well as drought conditions force the city to buy water from the Metropolitan District Commission, cites the revenue  ($15 million) the city would obtain from a multi million dollar lease and the long-term benefits of Ireland-based Tilcon creating a small reservoir over the next generation. That reservoir would provide no more than 160,000 gallons a day by the year 2050.

Since Tilcon revived its expansion project this year Stewart has been its biggest cheerleader at first pushing for completion of the study without measuring the ecological impact.  She originally sought to have the study wrapped up this fall.

Her administration has also engaged Gaffney Bennett Associates, a high powered New Britain-based lobbying firm, on behalf of the city on the issue at the same time Gaffney Bennett works for Tilcon Inc. to grease the governmental skids for project approval. Those relationships raise blatant conflicts of interest that have been ignored by both state and city governments.

Attorney Paul Zagorsky, an opponent of the Tilcon expansion and part of a multi-town coalition of citizens (Protect Our Watersheds CT and the Bradley Mountain Alliance), called  out the Stewart administration for its conflicts and  lack of transparency in an August 7th New Britain Herald letter to the editor:

“In her July 28th letter to the WPC the mayor states she was ‘dismayed to learn that the CEQ passed a motion yesterday rescinding their approval of Lenard Engineering.’ While Gilbert Bligh, head of the city’s Water Department was at that CEQ meeting, he did not speak, no one from the city did. I am dismayed the city has withheld and/or provided misleading information to the public and the state, that the Lenard study is a Tilcon quarry feasibility study and not an environmental study, that Lenard is a long time contractor for the city and not ‘independent,’ and that the city is working with Tilcon’s lobbyists on this.”

The absence of  transparency and obvious conflicts of interest around the Stewart administration and water issues should prompt the Common Council to demand more accountability. That includes asking  how much has been expended so far by Lenard Engineering and why $17,500 more is necessary.

The state law adopted this year requires an “independent” study about Tilcon’s expansion and what New Britain’s long-term water needs are. The spirit and letter of that law and the laws protecting the watershed need to be followed.