The Middletown Press (Middletown, CT)
Stefanowski paid the tax he hates
The business entity tax pops up quickly on Bob Stefanowski’s economic plan for Connecticut in his quest to become governor.
Phasing it out over two years, in fact, is Step 1 of “Bob’s Five-Step Plan to Rebuild Connecticut,” along with ending the business earnings tax. It comes even before his more widely cited (futile) plan to end the personal income tax over eight years.
Stefanowski isn’t alone in decrying the annoying business entity tax, and for good reason. Any business in Connecticut with more than one owner, whether it’s incorporated or a simple partnership, must pony up $250 every two years just for existing.
That’s bad optics for a state fighting a national image problem.
And yet, Stefanowski’s campaign, alone among candidates, paid the tax — even though it’s not required of political campaign committees.
Stefanowski’s July 10 campaign finance report shows the $250 payment made to the Commissioner of Revenue Services on April 22, with the explanation, “Mandatory Annual Business Tax Payment for Campaign.”
And so Stefanowski, running as an outsider — so far outside that he didn’t bother to vote for at least 16 years until news outlets pointed it out last fall — is also an outsider to the tax laws he’d like to change.
“It’s completely unnecessary from our vantage point,” said Joshua Foley, a spokesman and staff attorney for the state Elections Enforcement Commission.
Campaigns are normally classified as committees, not businesses, Foley said — adding that even if a campaign were to organize itself as a business, it would still be subject to all campaign laws. He’s not aware of any campaign having asked for an official opinion on whether it must pay the business entity tax.
Is that bad optics for Stefanowski, voluntarily paying a tax he abhors? Not according to the campaign.
“Just to be clear, Bob pays his taxes,” said Patrick Trueman, the campaign manager.
The question is what that says about a candidate who wants to rewrite the state tax code. As a veteran business executive whose entire claim is that he’s a successful manager, you’d think he would be shrewd enough to pay only what the owes and not more.
Then again, Stefanowski wears his lack of government experience proudly. He’s had to squirm in recent weeks to explain why he registered as a Democrat from October 2016 — just before the presidential election — until July 2017, when he decided to run for governor as a Republican.
At least one opponent said Stefanowski paying the tax is a sign. “It raises the question of whether he knows what he’s doing,” said David Stemerman, a Greenwich hedge fund manager who, like Stefanowski, has no prior experience running for office. “The guy is a consultantmanufactured candidate.”
To those who have followed the race, these two guys have attacked each other more than any other pair of the five Republicans running.
A quick search of the state Elections Enforcement Commission database shows that only one candidate in recent years might have paid the business entity tax. That was Susan Bysiewicz, in her unsuccessful 2010 campaign for attorney general, then governor. She paid $250 to the Department of Revenue Services for “overhead,” and when I asked her last week whether that was the business entity tax, she did not remember.
Bysiewicz made the payment in early 2011, after the election, less than a week after her term ended as Secretary of the State — the office that keeps the list of business entities liable for the tax. The Democrat is now a candidate for lieutenant governor and her campaign did not pay the tax.
As for the entity tax itself, few people, especially among Republicans, like it precisely because it’s a tax just for existing — not based on profits or operations. It’s small, amassing an average of $25.7 million over the last two years, according to the state Department of Revenue Services.
The tax started in 2002 — under former Gov. John G. Rowland, a Republican — as an annual levy of $250. In 2013, under Democrat Dannel P. Malloy, it was cut to once every two years. Last year it was paid by 171,245 business entities including, for example, husband-and-wife business projects that don’t show any revenues yet.
It might even be owed by nonprofits. “The business entity tax in decided by the structure of the entity, not whether it’s profit or nonprofit,” DRS spokesman Jim Polites said Monday.
And, to be perfectly clear, it’s not illegal for a campaign to pay the tax. The state thanks Bob Stefanowski for his generosity.
Stefanowski’s July 10 campaign finance report shows the $250 payment made to the Commissioner of Revenue Services on April 22, with the explanation, “Mandatory Annual Business Tax Payment for Campaign.”