Connecticut shouldn’t raise taxes even on the super-rich

By Chris Powell

While Connecticut state government reduced income taxes this year, being flush with hundreds of millions of dollars of “emergency” federal aid for an emergency that is long over, no one should expect state government to make a habit of it. With a national economic recession coming on, state taxes probably will be raised before they are reduced again.

So the government class soon may renew its clamor for higher state taxes on rich people, who already pay most of Connecticut’s income tax but who are thought to be easy targets politically. Last week the Connecticut Mirror reported that a national liberal advocacy organization, the Center on Budget and Policy Priorities, has issued a study assuring states that contrary to popular belief, higher taxes won’t provoke rich people to relocate to states with lower taxes. So presumably Connecticut should tax them a lot more.

The study’s conclusion is not entirely ridiculous. For the more money people have, the less sensitive they may be to tax increases — if they are happy with where they’re living. Connecticut has many rich residents who could save hundreds of thousands of dollars and some who could save even millions of dollars a year by moving to states with lower taxes. They stay because money isn’t the only thing of importance to them.

But of course it’s a matter of degree. Tax people enough and at a certain point even the super-rich will move. 

Cheered on by the Center on Budget and Policy Priorities, liberals in Connecticut seem to want to discover the tax threshold that will prompt the super-rich to relocate, and then raise their taxes to a point just below that threshold. They call this “equity,” though people not on government’s payroll might find it arrogant, greedy, and cynical.

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In any case Connecticut already has created many tax exiles not just among the super-rich but also the merely prosperous, especially older people who want to avoid the state’s winters and have established legal residency in income tax-free Florida while returning to Connecticut in the spring and summer. It’s not just Florida, for Connecticut has lost many residents to the Carolinas, where taxes generally are lower, especially property taxes.

Scorning states that like to cut taxes, the author of the budget and policy group’s study says: “If deep tax cuts result in substantial deterioration in education, public safety, parks, roads, and other critical services and infrastructure, these states will render themselves less, not more, desirable places to live and raise a family.”

Well, sure. But what if a state’s living conditions decline even with tax increases? That seems to be the case in the highly taxed northeastern part of the country, including Connecticut, which has been lagging the country in population and economic growth.

Even Connecticut’s liberals acknowledge the disincentives created by taxes, at least in regard to the high property taxes of the cities, taxes that long have been pushing the middle class out to the suburbs and leaving the cities with ever-worsening poverty and governance. 

In the end Connecticut’s liberals have simply wanted more money for government and its employees no matter the cost in urban demographics or anything else. Results don’t seem to matter.

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The most telling evidence of this indifference to results is in public education, where for years spending has increased despite declining enrollment and declining or stagnant student performance. Insofar as any correlation between education spending and student performance can be found in Connecticut, it is a negative one. The more spending, the worse the results.

The only correlation that counts in education is between spending and the satisfaction of teacher union members, the core of the majority political party’s army.

That’s why Connecticut shouldn’t raise taxes on anyone, including the super-rich. 

For more revenue to the government will just sustain the indifference to results and distract from what the state needs most, an examination of why many expensive policies — including those on education, poverty, welfare, and crime — are not reaching their nominal objectives. Maybe the real objectives are something else.

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Chris Powell has written about Connecticut government and politics for many years. (CPowell@cox.net)

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