Connecticut Commentary: Red Notes from a Blue State

Governor Dannel Malloy, busying himself with re-inventing Connecticut, has now formed a task force to review and assess the effectiveness of the state’s business tax credits, according to a recent press release. Executive Order 17 “will create a nine member Governor’s Business Tax Policy Review Taskforce. The taskforce’s mission will be to review the state’s business tax policies to ensure that Connecticut is getting the maximum return on its investments, with an eye toward policies that will make the state even more competitive for future job growth.” “Over the last year,” Mr. Malloy said, “we’ve made every effort to reinvent our state, so that we could turn around twenty years of job loss and spur our economy. From ‘First Five’ to the bipartisan jobs package, we sent a message across the country and around the world that Connecticut is open for business. This taskforce will make sure that Connecticut is getting a solid return on those investments by closely examining ways to r...

Ned Lamont, styled an “entrepreneur from Greenwich” by one reporter , showed up at City Fare Catering on Franklin Avenue in Hartford in mid April, with a plan. (As a side note, may one mention that Republican “entrepreneurs” from Greenwich are usually called “millionaires?”) Lamont, the entrepreneur, is running for governor as a Democrat. Lamont’s plan is to eliminate the business entity tax in Connecticut, a proposal that could well be seconded by Gov. Jodi Rell, other Republicans and some blue dog Democrats interested in getting re-elected next term. Connecticut is bleeding jobs, and businesses are looking to the legislature for a lifeline. Even a sign of a lifeline, even a symbolic life line, might do must to restore flagging spirits. The business entity tax is a $250 annual fee paid by thousands of small companies in the state. Not unlike other Connecticut businesses, City Fare Catering has been hit by a precipitous drop in business owing to the current malingering recession....

Aetna’s CEO, Mark Bertolini, gave a shout through the ear trumpet of heedless legislators at a Middlesex County Chamber of Commerce breakfast, according to a report in the Business section of a Hartford paper: "We've done the analysis, and, quite frankly, Connecticut falls very, very low on the list as an environment to locate employees . . . in large part because of the tax structure, the cost of living, which is now approaching, all in, the cost of locating an employee in New York City.” Aetna -- a company that insures people in 160 countries around the world and maintains offices in Indonesia, Beijing, Shanghai, Abu Dhabi -- is well positioned to move jobs around on the international chessboard. The business reporter noted darkly in his story, “In short, the Hartford-based health insurer could add workers anywhere around the globe as it grows its health-technology business. Forty percent of Aetna employees today work from home full-time.” Aetna was engaged in openin...

Every newspaper in the state should be challenging every elected official to cite four ways to reduce spending. It is no longer possible, or even advisable, to think about these matters inside the usual spending box. Connecticut has for so long thought exclusively in terms of increasing revenue that the state has lost the virtue of prudence in spending. What is needed is a method that will force legislators to curb a habit that threatens to bury the state in debt. A way to reverse the state’s decline has been offered by the Yankee Institute , the best libertarian-conservative think tank in Connecticut. Two economists for the YI, J. Scott Moody and Wendy P. Warcholik, have suggested the adoption of a “ Taxpayer’s Bill of Rights .” The bill the two have in mind will set statutory limits on spending, “which would grow no faster than the increase in inflation and population. Since spending drives taxes, the speed limit is meant to ensure that growth in government does not exceed taxpayers’...

In the new state reinvented by Governor Dannel Malloy and his Malloyalists, sin taxes are in. And if the state is unable to reap enough taxes from current sins – boozing, gambling and driving cars to work rather than biking to the job -- Connecticut will, with the help of the federal government, create new vistas of sin and tax them to the hilt. The tax on tobacco products in Connecticut, already the highest in the Republic, was increased in Mr. Malloy’s first budget 27.5 to 50 percent on products such as cigars and pipe tobacco. Snuff tobacco suffered a tax increase from $0.55 to $1 an ounce. Former Attorney General Richard Blumenthal rose to prominence in the state by beating the tobacco industry with a big litigation stick; recently Senator Blumenthal sought to end cigar smoking as at sporting events. Taxes on gas in Connecticut, an energy product frown upon by the environmental industry, is the highest in the nation, largely because the state realizes a revenue bonanza on gas ...

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: CAPITOL REPORT RAISE’EM; CUT’EM 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 ...

The road taken by Governor Dannel Malloy in providing specific businesses with disappearing tax breaks and other temporary business incentives is not the road less taken. Most recently, President Barack Obama provided Solyndra with millions in tax dollars because Mr. Obama wished to encourage the production of green energy. The problem was that the product made by Solyndra was underpriced – the sale price of Solyndra’s solar panels was less than the cost of production -- and it is only a slight exaggeration to say that company bigwigs, after successfully pressing the administration hard multiple times for tax subsidies, took the money and ran. The Solyndra drama is still unfolding. Called to testify before a congressional committee, the top dogs at the bankrupt company took the fifth, and not because they feared they might in their testimony betray their company’s trade secrets. The captains of this industry were trying to avoid jail time. The practice of enticing a company to prod...

Attorney General Richard Blumenthal’s quick fix solution to soaring energy prices – impose a “windfall” profits tax on the greedy captains of the energy industry – will not fix the problem. His pseudo-solution to high energy prices in Connecticut -- caused by an insufficient energy transmission system and the absence of competition in the energy market – is likely to worsen the problem in the long run. The powerful Speaker of the House of Representative, Jim Amann, so far has resisted the tune piped by Blumenthal. He may have been fully awake in his high school Economics 101 class when the teacher explained that companies do not pay taxes – not even taxes labeled, for the edification of the general public, “windfall profit taxes.” Companies are tax collectors not tax payers. If you demand they pay a windfall profits tax, they will collect the tax from consumers in the form of higher prices charged for their product. All business taxes result in higher prices or – when they are state or...

Lamont wins -- Courant If Governor Lamont has his way with progressives in the Democrat dominated General Assembly – a big “if” – he is likely to position Connecticut, with respect to contiguous states, as an economic powerhouse. The Hartford Business Journal reports, “As he prepares for the 2023 legislative session, Gov. Ned Lamont said he is considering several tax policy proposals next year, including allowing the expiring corporate business tax surcharge — an extra cost the business community has long lobbied against — to sunset. “Lamont, in a Monday [December 12] interview with the Hartford Business Journal, also said he is considering a middle class income tax cut, likely targeted at people who earn up to $150,000.” What is the point in taxing a person or a business one dollar and returning to both thirty cents, after having apportioned seventy cents to budget reduction and special interests that will help progressive   politicians return to office to continue the endl...

There comes a point in any taxing scheme when one more tax, however slight, breaks the camel’s back. Here in Connecticut, we passed that point long ago. The recent effective resistance to tolls, a new revenue stream for the state, arose largely because those who pay taxes in perhaps the most progressive state in New England had reached a limit. There is a limit to all good things, even taxes. And, feeling the toll tax bit in their mouths, those from whom taxes in Connecticut are collected began to express their dissatisfaction by moving away from a burdensome load of pain. Consequently, total revenues in the state declined. And everyone knew this, including progressives calling for higher taxes on those in Connecticut who could, so they thought, more easily heft the burden, the much derided rich, and profit-greedy companies. It is a mystery why we never refer in print to profit greedy politicians motivated by impure motives. The rich moved, companies moved, tax revenue diminished. ...

Governor Dannel Malloy, it would appear from recent news accounts, is frantically attempting to put himself right with unionized teachers. The Malloy-teacher romance hit a rough spot when a few months ago Mr. Malloy said of teachers who were resisting his pedagogical reforms, “All they have to do is show up.” Mr. Malloy meant that teacher tenure tended to protect failing teachers from any and all attempts to displace them. The Malloy pedagogical reforms were designed to overleap tenure and displace poor teachers by setting standards against which the effectiveness of teachers in the classroom could be objectively measured. Teachers falling below the set standards would be given the opportunity of taking remedial courses. After a certain point, if the inadequate teachers failed to measure up, they would be dismissed. Whole school systems were put on notice that similar standards would be employed to measure the performance of principals and superintendents.

Chief Executive Magazine , a publication read by national and international Chief Executive Officers (CEOs) of major and minor firms, has just released its list of best and worst places to do business in the United States. Connecticut ranks four spots from last on the list. Three comments from CEOs were far from reassuring: “A difficult tax structure like the ones in New York or Connecticut makes incentive-giving easy, but penalizes existing businesses,” said one. “The climate for coming is better than the climate for staying.”

The canned response to any attempt to lower taxes in Connecticut goes something like this: In the grand scheme of things, savings from the proposed tax reduction will be insignificant. And the computed savings, in any case, will deplete money made available to the state that is used for noble and necessary purposes such as, not to be too bitterly sardonic, miss-educating urban school children for several decades. Thus does the Hartford Courant vociferously object in an editorial to a decision made by Democrats in Connecticut’s General Assembly to cap the state’s gross receipt tax on gas for one year only. The title of the paper’s March 24 editorial is “Gas Tax Cap Is Showboating.” Apparently, political showboating in the future is to be frowned upon by editorial editors and writers at the Courant. A few days before the editorial appeared, Democrats in the General Assembly had devised a TEMPORARY ONE YEAR ONLY cap on the state’s gross receipts tax, a charge placed by the Genera...

Connecticut’s income tax – read: license to spend – is now 25 years old , and celebrations are in order.   Just kidding. No one at this point feels inclined to celebrate a destructive measure that has made the state indistinguishable from other spendthrift, high tax states. Views on the income tax have changed only slightly since it was pumped through the General Assembly by then Governor Lowell Weicker – a gasbag, Managing Editor of the Journal Inquirer Chris Powell called him -- and his accomplices both in the legislature and in Connecticut’s media. Mr. Weicker vetoed three non-income tax budgets before the deed had been accomplished. One of the most prominent signs carried by income tax protesters following the long night of the knives was this one -- “CUT THE FAT.”

The Connecticut Business and Industry Association (CBIA), it must be admitted, knows a thing or two about Connecticut’s businesses and industries – perhaps even more than members of the state’s General Assembly, a majority of whom regularly pass bills and restrictions on companies in Connecticut, sometimes heedless of the real-world unintended consequences of such legislation. CBIA, one of the largest statewide business organizations in the country, boasts 10,000 member companies. In business for more than 175 years, CBIA represents the collective voice of Connecticut’s industries crying in a parched wilderness.

The Democrat plan to “to have cities and towns share in the cost of public school teachers’ pensions,” as the Hartford Courant put it in a recent story, continues to be “controversial,” perhaps the understatement of the year. The plan would “cost municipalities a combined $73 million a year and would lead to property tax increases across the state.” The principal spokesman for the Connecticut Conference of Municipalities, Kevin Maloney, has characterized the plan to shift to towns some cost of pensions without giving the towns the opportunity to cut spending by reducing teacher salaries and benefits  as “the largest unfunded state mandate in recent memory,” and the executive director of the Connecticut Council of Small Towns Betsy Gara has said, “Shifting $73 million in pension costs onto the backs of already overburdened homeowners and other property taxpayers will diminish housing values, undermining our state and local economies." Local government relies on prop...

“I don't give reasons. I give orders!” -- Captain Ahab, Moby Dick It seems only yesterday that Governor Chris Christie of New Jersey was threatening to hold a net on the borders of Connecticut and catch companies as they fled a tax prone Democratic Governor and majority Democrats in the state’s General Assembly. Governor Malloy derided the notion. Christie, a blustery Republican, was an easy punching bag. Not so Governor Andrew Cuomo, who recently met with CEO of General Electric Jeff Immelt to discuss moving GE business from Connecticut to New York.

"The business of America is business"  -- Calvin Coolidge Governor Ned Lamont likes to talk shop with businessmen. A Hartford Courant story, “ Gov. Ned Lamont tells Connecticut businesses he’s ruling out ‘broad-based’ tax increases ,” will not please Democrat progressives in Connecticut who seem fully prepared to eat businessmen and businesswomen for lunch. The large and overbearing contingent of progressives in the state's Democrat Party caucus cannot be satisfied with sentiments such as this: “I’ve been pretty clear. I have no interest in broad-based tax increases,” Lamont told president of the Connecticut Business and Industry Association (CBIA) Chris DiPentima. And, he hastened to add, “Every governor, Republican or Democrat since, or including, Lowell Weicker, has done that and it did not solve the problem.” The problem is, of course, lavish, continuing, long-term spending -- and consequent increases in taxes. Taxes in Connecticut have been permanent, while cost ...

" Sometimes...it's better for a man just to walk away. But if you can't walk away? I guess that's when it's tough”  -- Willy Loman, “Death of a Salesman” The old saying is “You can’t fight City Hall.” That is partly true. City Hall is huge and more powerful than you. The gods of government have resources denied to the little people, but then government is supposed to be on the side of the little people, as is the media, a presumed joint support that tends to even the perpetual battle between the lions of the market place and … let’s call him Willy, after Willy Loman, the chief character in Arthur Miller’s play “Death of a Salesman.” The Willy of this piece is a Connecticut salesman – there are many of them – who do business with Amazon. And Willy has a problem that will not be settled by the usual white-hatted Attorney General of Connecticut or legislators who weep over the little guy or the media, afflicters of the comfortable and comforters of the a...

"We can tax the millionaires in Washington and we can make Connecticut a better place for working families ” – 5th District Democratic U.S. House candidate Chris Donovan "Don't tax you, don't tax me. Tax the guy behind the tree"— Russell Long Even the most progressive politician of his day, Russell’s father Huey Long, knew the scheme wouldn’t work; but it was a winner as a populist campaign pitch. Within the Democratic Party of his day, Russell was acknowledged as an authority on tax law. As such, he became an ardent advocate of tax breaks for business. “I have become convinced,” said Russell, most certainly not a chip off his father’s progressive block, “you're going to have to have capital if you're going to have capitalism." One suspects that progressive leader of the state House of Representatives Chris Donovan knows this. However, the deathless scheme, endemic in the Democratic Party, to convince the tax paying public that someone may be f...