Even taking into account income tax increases approved in 2009 for the state’s high-income residents, the wealthiest Connecticut residents pay less than half the percentage of their income in state and local taxes than do most other residents. After federal deductions for state and local taxes, Connecticut’s low- and middle-income families pay close to 10% or more of their incomes in state and local taxes, while the top 1% of income earners pay just under 5%. Most would agree that the best off should pay a tax rate that is at least equal to the tax rate of the least well off. Connecticut’s state and local tax system, even by this conservative standard, is deeply flawed and imbalanced.
Connecticut’s regressive state and local tax structure also exacerbates income inequality and weakens the state’s ability to raise revenue. As the state considers hundreds of millions of dollars in cuts to health, education, and other needed services and faces projected budget shortfalls, Connecticut’s tax system needs to be reformed to meet current and future needs in the state.
