Connecticut increasingly relies on tax credits to promote its economic development. The state’s revenue loss from corporation business tax credits (an estimated $305.6 million in FY09) has increased 113-fold since 1987. However, no comprehensive economic development plan seems to guide the adoption of new tax credits. Indeed, more than one-third of the projected FY 09 revenue loss is attributed to three new film industry credits.
Relatively few of Connecticut’s business tax credits put a ceiling on the total amount of credits that can be claimed in a given year. As a result, the state’s total revenue loss through tax credits is open-ended. Currently, there is no process for the on-going review of existing current tax credits and repeal of those with inadequate economic return.