Thursday, April 14, 2011

The Malloy Cave In

Chris Keating of the Hartford Courant reports today that Governor Dannel Malloy is about to cave in to union demands after his 17 town tour, which recently concluded in Middletown:

“Malloy is expected to drop his plans for eliminating the maximum $500 property tax credit that chiefly benefits middle-class homeowners, Capitol sources said. Instead, the level probably will be lowered to $300.

“To help pay for it, Malloy would propose changing the income levels at which tax hikes take effect for the highest earners. Higher tax rates would kick in at lower income levels for those wealthiest residents.”
Two groups, the “left leaning Voice For Children” and state unions have for years been pressuring the Democratic dominated legislature to raise marginal tax rates on the wealthy.

Union leader Leo Canty, the Danton of the union movement in Connecticut, has put the “rich” on notice: “Tax them, and they will not leave. There is no data that says they will leave.''

Really? So many of the rich fled California in advance of the red ink, fearing a plucking by the Democratic spendthrifts in the bankrupt state, that George Will was able in one of his trenchant columns to observe wryly that Arnold Schwarzenegger was “the best governor that the state contiguous to California ever had.” The per capita debt in Connecticut is higher than that of California.

The “rich” over the years have been considerably degraded. The “millionaires” upon which unions heap hot coals of rhetorical scorn – mostly to justify wage and pension benefits increases for comfortably situated union workers -- are now those making $250,000 per year, and the level almost certainly will drop lower as quarter-millionaires attempt to protect their earnings by moving to states whose tax environment is less punishing than Connecticut.

The income tax was initiated to pay for Civil War debt. The first peacetime income tax was imposed by Congressional Democrats in 1894 at a 2% rate on those making more than $4,000 per year; in current inflated dollars, these were the millionaires of their age. But as spending increased progressively, the bar was lowered to include Mr. Canty as well as the millionaires. The availability of revenue drives spending upwards; and as it vaults to the sky, the bar that assures only millionaires will pay the increased levies is lowered progressively to include Mr. Canty, whose salary does not allow him to purchase a Lamborghinis.

Pinched awake by these event, Rick Green, a Courant columnist who maintains a blog called “CtConfidential,” is somewhat torn. Was this Mr. Malloy’s plan all along, Mr. Green asks, or is it possible that Mr. Malloy will on Thursday announce changes in his repeated pledge to demand $2 billion in concessions from unions without further tax increases – the unvarying message Mr. Malloy iterated in all of his 17 Town Hall appearances – because he has been attentive to voices raised during these Potemkin Village town hall meetings:

“After hearing Malloy repeatedly promise that he is not going to seek more than $1.5 billion in taxes and that he's going to stick with demands for $2 billion in concessions from unions, what will Malloy's revised tax plan look like? Is he really going to jump on board with labor's tax-them-and-they-won't-leave philosophy -- which is the opposite of what neighboring governors in New York and New Jersey are doing? Or is the governor setting the stage for layoffs when unions don't comply with his concession demands?

“Malloy holds a press conference this afternoon in Hartford.”
The Tea Party folk who will gather at the Capitol one day after Mr. Malloy’s pending announcement, regularly dismissed by Courant columnists as insufferable pests, will know the answer to Mr. Green’s questions by Friday, their meet date.

So will Mr. Green.
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