Wednesday, October 12, 2011

Malloy on Taxes: So What?

Tom Dudchik’s popular site, Capitol Report, featured a picture of Democratic Connecticut Govern Dannel Malloy side by side with an accompanying picture of Republican Nebraska Governor Dave Heineman. Mr. Malloy looks a little stern and sour, lips pursed, jaw jutted forward, rather as if he had just told the leaders of SEBAC that they would have to wait on their Cost of Living Increases for a couple of years, while fighting off as he did so an army of benighted tax resistors still smarting from the largest tax increase in Connecticut’s history. Mr. Heineman, on the other hand, appears relaxed and expansive. The title below the pics reads, in an assertive font:


The lede on another report was not cheery:

“In Nebraska, Republican Gov. Dave Heineman enacted the biggest tax cut in state history, and the state's unemployment rate of 4.2 percent is now the second lowest in the nation.

“In Connecticut, Democratic Gov. Dannel Malloy enacted the largest tax increase in state history this year, and the state's unemployment rate of 9.1 percent ranks in the bottom half in the nation.”

Ditto in the case of a dozen other media reports.

Mr. Heinman chairs the National Governors Association. In that capacity he came to Hartford to boast about the advances his state has made in perilous economic times.

The tax cuts and the consequent economic growth in his state have propelled Nebraska into the top 10 “most business friendly” states:

"It made a real difference in our tax-competitive climate, our business-friendly climate. We know we need to do more. It's all of these things combined. It's not just one. It's taxes. It's regulation. It's workforce development. It's education.''

Mr. Malloy, it need hardly be said, is big on all three -- education, taxes and regulation – though Mr. Heinman was at pains not to point fingers, governors being a bit more collegial than, say, tempestuous congressmen. Republicans as a general rule tend to regulate government whenever possible, leaving Democrats to regulate everything else. Both nationally and stateside, Democrats have been much in the habit recently of transferring tax monies from have-not hard pressed taxpayers to large businesses too big to fail or flee.

The fear nationally is that large failed companies will increase unemployment if they are permitted to go belly-up; therefore they must be propped up by so called millionaires, defined by tax-hungry congressmen in Washington as anyone making more than $200,000 per year. The states fear that large companies, few of them in danger of bolting, may, if they are not supported by hairdresser taxes, scoot across the border into more tax friendly states, giving an advantage to tax cutting governors – almost everyone but Mr. Malloy. And so the large financially secure are bribed to stay, for the time being.

Mr. Malloy responded that Connecticut was also business friendly. The governor first had to kill the Hydra before he could begin to straighten out the state. He raised taxes on hairdressers he said “… so that I could look business in the face and say, 'Listen, I believe we've got the bulk of our problem behind us. We've balanced a budget. We've taken the steps necessary to wrestle a structural deficit to the ground and we move forward…I think we are a tax haven. Although our personal taxes may be high, primarily driven by our over-reliance on property taxes, if you look at our corporate tax structure, we have one of the lowest effective rates on the corporate level.''

Given the large opening in Mr. Malloy’s tent, a critical camel rushed in. Said Republican leader John McKinney:

"So Governor Malloy thinks this is a tax haven? I had no idea. I think the governor's comments that we’re a tax haven show that the governor doesn't get it. Maybe the multi-national large corporations are attracted by a lower corporate tax rate, but our economy is driven by small business owners. ... The way to tell business that you have your house in order is to get spending under control. He doesn't cut spending. He increases spending. I'm almost left speechless at the fact that here's the governor of Nebraska talking about cutting taxes and our governor is believing that increasing taxes improved our business climate. Every small business owner pays the personal taxes that Governor Malloy thinks are too high.''

The Governor’s conference will be a ten day affair. It’s flu season. Perhaps Mr. Malloy can arrange to catch something.
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