Report: State tax system leaves CT residents struggling

Back • Publication Date: March 18, 2024 • Fiscal & Economics

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Monday, March 18, 2024

new report brands Connecticut’s tax system as “regressive” for low- to middle-income residents and uses a report from the state to make its point.

The Connecticut Voices for Children report reviewed the state’s Tax Incidence Study, in which one of the biggest findings is how property taxes contribute to a regressive system. Because a town’s mill rate does not adjust based on a tax filer’s income, low- to middle-income residents spend more on housing as a percentage of their budget than those with higher incomes.

Patrick O’Brien, research and policy director of Connecticut Voices for Children and the report’s author, pointed out Connecticut could have a more fair tax system by implementing a few policy changes.

“One, eliminate and/or close the state’s tax gap, which was shown likely primarily benefits high-income and wealthy tax filers. Two, eliminate and/or reduce regressive tax expenditures. And three, possibly increase personal income tax rates on high-income and wealthy tax filers,” O’Brien outlined.

He argued the new revenue could then be used to provide tax cuts for lower and middle-income households, and could help with creating a state-level child tax credit. One thing to note is the state’s report was based on data from 2020.

O’Brien acknowledged the state has made changes to its tax system since then but the Connecticut Voices for Children report showed despite the new cuts, the tax system is still regressive.

The report detailed the effects of the state tax system beyond its residents. Connecticut has only recently come in second behind Massachusetts for income inequality.

O’Brien emphasized it is only exacerbated by the regressive tax system.

“This is really hurting the economic well-being of the state’s low- and middle-income tax filers, and that, in turn, ultimately ends up hurting economic growth in the state as well,” O’Brien contended. “It can have multiple effects that we’re trying to address.”

The report recommended creating a task force to ensure all future reports from the Department of Revenue Services have all the required information to get a thorough picture of the state tax system. The most recent report faced criticism for lacking some data.

author Edwin J. Viera, Producer

Disclosure: Connecticut Voices for Children contributes to our fund for reporting on Budget Policy & Priorities, Children’s Issues, Education, and Juvenile Justice. If you would like to help support news in the public interest, click here.
Authors: Edwin J. Viera •  Source: PNS • View