Connecticut is among the states with the highest income inequality in the country, according to a new report from the Center on Budget and Policy Priorities. Connecticut ranks third in the country, with its richest residents— the top five percent of households— having average incomes 17 times as large as the bottom 20 percent of households and five times as large as the middle 20 percent of households. The top five percent of Connecticut’s households receive 20 percent of the state’s income, even without counting capital gains. 
The report, “How State Tax Policies Can Stop Increasing Inequality and Start Reducing It”, also shows that the concentration of income among the wealthiest residents is striking in every state – reflecting three and a half decades of unequal income growth.  The top 1 percent’s share of income rose in every state and the District of Columbia — and it doubled nationally, from 10 percent to 20 percent — between 1979 and 2013, per a recent analysis of IRS data.

States have tools to reduce the growing inequality. The report offers recommendations about how state tax policies can be used to reverse the trend, including broadening the sales tax base to include services, strengthening business taxes by eliminating costly business tax breaks and establishing strong minimum taxes to broaden the base, levy higher taxes on high-income taxpayers, and retain or expand taxes on inherited wealth,

You can download the full report here. Click here for Connecticut-specific data.