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Pandemic put tax burden on CT’s poorest, report shows

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Pandemic put tax burden on CT’s poorest, report shows


Connecticut’s already regressive tax system swung even more sharply onto the backs of its poorest residents during the coronavirus pandemic’s first year, according to a new fairness study from Gov. Ned Lamont’s administration.

The lowest-earning 10% effectively spent almost 40% of their income in 2020 to cover state or municipal tax burdens, more than five times the rate faced by Connecticut’s highest earners – and two-and-a-half times the statewide average, according to the tax incidence analysis released Thursday by the Department of Revenue Services.

The 39.9% state and municipal tax rate effectively paid by the poorest 10% also is up dramatically from the nearly 26% rate assigned to that same group by a 2022 DRS tax fairness study, which analyzed data from 2019.

Meanwhile, taxpayers in the two middle groups paid 13% and 11.5%, respectively, of their income to cover tax burdens in 2020, up from 9.2% and 8.6% in 2019.

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“This latest study just confirms what people in Connecticut have been feeling in their wallets for the last several years — a dangerous combination of historic inflation, an upside-down tax system and an extreme disinvestment in critical public services and infrastructure,” said Norma Martinez-HoSang, director of Connecticut For All, a coalition of more than 80 labor, faith and civic organizations that has advocated for higher tax rates on wealthy households and corporations to finance relief for low- and middle-income families.

The study breaks Connecticut’s earners into deciles, or groups that earned 10% of all statewide income.

For example, it took the poorest 883,552 tax filers to earn about $19.3 billion, which was 10% of all statewide earnings in 2020. This the group that paid almost 40% of its income to state and municipal tax burdens.

Unlike in past reports, the administration did not include a projected income range for the households in this group. But dividing $19.3 billion by 883,552 filers yields a rough average income of slightly more than $21,843 per year.

The second decile includes the next-highest earners, another 316,630 filers, who also made $19.3 billion. Their effective tax rate was 19.8%, and their average income was $60,960.

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The highest decile, the top 10%, involves 478 filers that earned $19.3 billion. This is the group that paid 7.3%, or less than one-fifth the rate of the poorest decile, and earned an average of $40.3 million.

Roughly two-thirds of all revenues generated by state and local government combined in 2020 came from property, sales and other taxes that largely are regressive in nature, the study found.

A regressive tax does not adjust rates based on a household or business’s earnings or wealth. A progressive levy, such as the state income tax, features multiple rates that collect more as the filer’s income increases.

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A second problem with regressive taxes is that responsibility for the bill can more easily be shifted, something that’s particularly burdensome for poor households, the study found.

For example, renters effectively pay some or all their landlords’ property taxes. Gasoline distributors shift wholesale fuel tax burdens onto service stations, which pass the full cost on to motorists.

As a supplement, the report also covered a second methodology that relies upon only half of the tax burden shifts that the primary section of the report assumes. But even under this scaled back version, the lowest earning 10% of filers pay an effective rate of almost 33%, while the richest 10% pay 7.3% and the statewide average is 13.4%.

Lamont, a Greenwich businessman and fiscally moderate Democrat who says higher tax rates would prompt Connecticut’s wealthy to flee the state, said through a spokeswoman that his administration has been and continues to work to make the state’s overall tax system more progressive.

“Gov. Lamont is strongly committed to making our tax structure more progressive so that all Connecticut residents have an opportunity to succeed here,” spokeswoman Julia Bergman said. “That’s why, in recent years, the governor and the legislature have cut taxes for working families, boosted the Earned Income Tax Credit and expanded exemptions on certain pension and annuity earnings to benefit seniors.”

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Bergman was referencing a series of tax changes enacted last year that represented the single-largest state income tax cut in Connecticut history, a package expected to save low- and middle-income families $200 to $400 each next fiscal year, more than $415 million in total.

Lamont and legislators also enacted a broad package of tax cuts in 2022 that included temporary relief, such as a 13-month gasoline tax holiday and an income tax rebate for households with children. But it also expanded a state income tax credit that offsets a portion of municipal property tax burdens and reduced the statewide property tax cap on motor vehicles from 45 mills to 32.46 mills. (One mill generates $1 of tax revenue for every $1,000 of assessed property value.)

Because tax fairness studies routinely lag several years of tax data, the recent relief Lamont approved is not included in the latest analysis.

“There’s definitely value in looking at this [study], but also I think the next set of studies will really tell the tale in terms of the progressivity that’s been implemented by this governor,” said Department of Revenue Services Commissioner Mark Boughton.

But critics counter that Connecticut’s tax system has overburdened the poor and middle class for decades, and recent relief won’t reverse an overall trend toward worsening inequity. They say economic damage caused by the pandemic continues even now, while the 40-year high in national inflation reached in mid-2022 also set Connecticut families back.

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“We expect Gov. Lamont to respond with a reminder of recent tax cuts, which will have little impact on our state’s extreme economic inequities,” Martinez-HoSang said, adding that an income tax surcharge on the capital gains earnings of Connecticut’s wealthiest families could create significant economic change.

 

Connecticut Voices for Children, a progressive, New Haven-based policy think-tank, renewed its call Thursday for a new state income tax credit for low- and middle-income filers with children. It argues this credit could channel $300 million annually to assist about 80,000 kids.

Connecticut Voices’ executive director, Emily Byrne, said her group has just begun its review of the latest tax fairness report but said the overall problem the General Assembly faces is clear.

“The report not only reaffirms that our state’s tax system is regressive, but it also reaffirms why this report is so important,” she said, “because it allows the legislature to make informed decisions. … It’s also clear that more families need help.”

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The Yankee Institute, a conservative fiscal policy group in Hartford, had just begun its review of the tax study late Friday. But spokesman Bryce Chinault said, “This report demonstrates why the recent income tax reforms were so important to Connecticut residents, and why the fiscal guardrails are vital to building upon that success.”

Those “guardrails” are a reference to caps on spending and borrowing and other savings programs that have helped reduce state debt by billions of dollars since 2020, which advocates say enables state government to channel more resources to cities and towns.

Members of the legislature’s tax-writing Finance, Revenue and Bonding Committee received the report Thursday morning, and leaders said the 77-page analysis would get close attention in the coming weeks.

But both Sen. John Fonfara, D-Hartford, who co-chairs the panel, and Rep. Holly Cheeseman of East Lyme, ranking House Republican on finance, said it’s clear Connecticut must find a way to ease property tax burdens.

The property tax generated nearly $12 billion in revenue in 2020, more than any other state or municipal tax did, and represented 38% of all tax revenue raised in Connecticut that year.

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Fonfara pushed two years ago to boost rates on Connecticut’s richest families and on large corporations and set up a new fund to support economic development and other services in the state’s poorest cities. It was blocked by Lamont and other fiscal moderates and conservatives.

House Speaker Matt Ritter, D-Hartford, brokered a compromise that abandoned the tax hikes but authorized $175 million in annual bonding for urban investment that began in the 2022-23 fiscal year and runs through 2026-27.

The property tax “punishes those who have the least income,” Fonfara said Thursday, adding that the high mill rates in Connecticut’s urban centers make it very hard to attract commercial and industrial development. “It pits one town against another.”



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Connecticut

The Great Westport Sandwich Contest kicks off with event at Old Mill Grocery

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The Great Westport Sandwich Contest kicks off with event at Old Mill Grocery


People in Westport have the chance to pick the best thing between sliced bread.

The Westport Weston Chamber of Commerce held a kick-off event at Old Mill Grocery on Monday for The Great Westport Sandwich Contest.

The contest runs throughout March with 21 restaurants, delis and markets competing in 10 categories to be crowned the best sandwich maker.

Residents can vote in the following categories: Best chicken, best steak, best vegetarian, best combo, best club, best NY deli, best pressed sandwich, best breakfast sandwich, best wrap, and best fish/seafood sandwich.

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After people sample sandwiches, they can vote for their favorites in each category on the chamber’s website. They will also be placed into a drawing to win a free sandwich from one of the 10 winners.

“Of course, the goal is to have people come to Westport and check out restaurants, our markets and our delis. This is a great promotion. I mean it is a competition, but mostly it’s to bring people to the restaurants. It also gives a great community activity because they are the ones who get to vote who makes the best one,” says Matthew Mandell, the chamber’s executive director.

Winners will be announced in April and receive a plaque.

The chamber has held similar contests to determine what establishment has the best pizza, burger, soup and salad.



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Lawmakers again push to restore Shore Line East service to 2019 levels

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Lawmakers again push to restore Shore Line East service to 2019 levels


Connecticut lawmakers are again looking to restore Shore Line East rail service to its pre‑pandemic levels, a proposal that could add about 90 more trains per week.

Lawmakers are also weighing a separate cost‑saving proposal to shift the line from electric rail cars back to diesel.

The plan comes as ridership remains well below 2019 numbers, though state data shows those numbers have begun to climb.

The Department of Transportation provided the General Assembly’s transportation committee with the following data:

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  • 132 trains per week today versus 222 trains per week in 2019, according to the CTDOT commissioner.
  • In 2019, most weekday SLE trains traveled between New Haven Union Station and Old Saybrook. This allowed SLE to operate with only five train sets in the morning and four train sets in the afternoon.
  • It should be noted that 2019 SLE service levels were very different due to constrained infrastructure; 2019 service levels had a reduced number of SLE trains serving New London (13 trains per day Monday through Friday, as opposed to 20 today), while other stations had increased service (36 trains per day Monday through Friday, as opposed to 20 today).

“2019 levels beyond Old Saybrook to New London would require more crews and more train sets than were used in 2019, requiring significantly more financial resources,” the department wrote in its written testimony.

The department said the governor’s FY2027 budget does not include funding for a full restoration. In other words, even if the legislature requires additional trains, the funds are not included in the current financial plan.

Governor Lamont said on Monday to remember that the state subsidizes the line more than any other rail right now.

“There’s not as much demand as there are for some of the other rail services in other parts of the state, so that’s the balance we’re trying to get right,” Lamont said.

At a public hearing on Monday, concerns about the line’s reliability and schedule were a central focus in the testimony.

“We’re making the line less attractive, some would say. The schedules are very, very difficult to manage,” said Sen. Christine Cohen of Guilford, the co-chair of the committee.

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The current schedule for eastbound morning commuters is difficult. The train either arrives in New London just after 7 a.m. or after 9 a.m.

“So obviously not really … conducive to a typical workday,” Cohen said.

Cohen, who represents communities along the line, said she continues to reintroduce the bill to expand service year after year, pushing the state to do more with the line.

She thanked the department for the work it was able to do with the recent funding to establish a through train to Stamford.

“What do we need to do, and what are the challenges that you face in terms of expansion at this time?” Cohen asked.

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Commissioner Garrett Eucalitto responded that the biggest hurdle is the cost of labor and access fees to Amtrak, which owns the territory.

“The cost to provide rail service is very expensive,” Eucalitto said.

He said CTDOT knows the current schedule is “not ideal,” but the economics of a work-from-home society are difficult.

“People expect 100% of the trains that they had in 2019, but they only want to take it two days a week,” Eucalitto said.

Asked about the eastbound schedule, the commissioner explained Shore Line East still operates on a model that sends trains toward New Haven in the morning rather than toward New London.

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Changing that would require more equipment, more crews, and a second morning operations base, as well as negotiations with Amtrak, which owns the tracks.

Amtrak is “protecting their slots to be able to run increased Northeast Regional service as well as increased Acela service,” Eucallito said. “They’re going to look at us and question, ‘Well, how does that impact our need for Amtrak services?’ They’ll never give you an answer upfront, it’s always: ‘show us a proposal and then they’ll respond to it.’”

Cohen, who chairs the Transportation Committee, touted how a successful Shoreline East benefits the environment, development along the line, and reduces I-95 congestion.

“We need to start talking about how much money this costs us and think about all of the ancillary benefits,” Cohen said during the hearing.

Cohen said there is multi-state support for extending the line into Rhode Island.

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“We will need some federal dollars. But as you say, there are other businesses up the line in New London,” Cohen said. “We’ve got Electric Boat. We’ve got Pfizer up that way. If we can get those employees on the transit line, we’re all the better for it.”

Rider advocates said the issue is familiar.

“I’d rather see solutions, and not things that are holding it back,” said Susan Feaster, founder of the Shore Line East Riders’ Advocacy Group.

She said she worries the line is facing a transit death spiral, with reduced service leading to lower ridership and falling fare revenue.

“They have to give us the money,” Feaster said. “It shouldn’t have to be profitable.”

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Like other train lines across the country, Shore Line East relies on subsidies.

“We’re not asking for everything to be done overnight, but just incrementally,” Feaster said.

The line received $5 million two years ago, which increased service levels.

The proposal comes as the state reviews whether to return to diesel rail cars that are more than 30 years old.

The state says the switch would save about $9 million, but riders have said it would worsen the passenger experience.

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NBC Connecticut asked Cohen whether she’ll ask DOT to reverse that proposal.

“I really want to,” Cohen said. “I appreciate what CTDOT was trying to do in terms of not cutting service as a result of trying to find savings elsewhere. This isn’t the way to do it.”



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Iranian Yale scholar in Connecticut celebrates fall of regime, calls for free elections

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Iranian Yale scholar in Connecticut celebrates fall of regime, calls for free elections


HARTFORD, Conn. (WFSB) – Thousands of Connecticut families with ties to Iran are watching and waiting as their home country undergoes a historic change.

Among them is Ramin Ahmadi, a Yale doctor, human rights activist and founder of the Iran Human Rights Documentation Center. He has spent decades advocating for freedom in Iran from his home in Connecticut.

Ahmadi moved to the United States when he was 18. On Saturday morning, he learned of military strikes in Iran and the death of the country’s supreme leader.

Ahmadi said protests for democracy and human rights in Iran intensified in December, drawing millions of participants — including his own family and friends.

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“The situation in Iran was a humanitarian emergency and it needed an intervention,” Ahmadi said.

He said he celebrated when he heard the news Saturday morning.

“I was celebrating along with all other Iranians inside and outside the country,” Ahmadi said. “I do regret that we cannot bring him to a trial for crimes that he has committed against humanity.”

Ahmadi said he spoke with his sister in Iran after she celebrated in the streets. She was later told to return home for her safety.

He shared a message she relayed from those around her.

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“They said do not let our death be exploited because worse than that is having to live with the criminals who have done this to us for the rest of our lives,” Ahmadi said. “We do not want to do that.”

For those questioning whether the conflict was America’s to engage in, Ahmadi offered a direct response.

“We will all be affected,” he said. “And to those that tell you that the U.S. and Israel are beating the drums of war in Iran, one has to remind them that it was not like before this Iranian people were listening to Beethoven’s Symphony No. 9 in D minor. We had a war already declared on us by this regime. We were being slaughtered on a daily basis.”

Ahmadi said he believes the path forward begins with young military officers forcing out what remains of the regime, followed by free elections.

“Everyone’s life will be safer in the future and not just Iranians,” Ahmadi said.

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Connecticut lawmakers are also responding to the U.S. strikes on Iran.



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