Connecticut’s wealthiest residents pay much less of their income in state and local taxes than do the state’s middle-income and poor families. After federal income tax deductions for state income and property taxes, the wealthiest 1% of Connecticut’s families (with average income in 2007 of $4.2 million) paid only 4.5% of their income in state and local taxes. This was less than half the share of income paid in these taxes by the state’s middle-income families (9.3% of their average income of $55,000) and the poorest 20% of families (12.1% of their average income of $12,200). Low- and middle-income families pay a relatively larger share of their incomes in sales and property taxes, while higher income families pay a larger share of their incomes in income tax. In total, however, the state’s wealthiest families pay a much smaller share of their income in state and local taxes than do its middle and lower income families.
This report calls for a more progressive income tax to help ensure that those who can best afford it contribute a greater share toward closing the state budget deficit and avoiding damaging budget cuts.