The Middletown Press (Middletown, CT)
Federal tax changes left many Connecticut residents behind
As President Donald Trump’s lightning overhaul of the tax code took effect at the end of 2017, Connecticut residents were feeling a lot better already about their financial outlook.
The 1 percent of Connecticut denizens, that is.
Among the nearly 11,700 Connecticut taxpayers who reported at least $1 million in personal income in 2017, average earnings skyrocketed more than 13 percent amid a surging stock market that year, according to newly updated tax data published by the Internal Revenue Service.
Connecticut taxpayers reporting between $50,000 and $1 million in adjusted gross income saw their average earning power stay virtually flat, however, with the IRS reporting similar trends in New York and Massachusetts.
The IRS figures suggest that Connecticut employers have been able to keep pay comparatively in check for most workers, at least as of 2017 with the state having added nearly 10,000 jobs since.
Connecticut was one of just five states nationally to see economic output decline in 2017 as calculated on a percapita basis by the Bureau of Economic Analysis, with growth remaining sluggish as of the second quarter.
With an extra $7.3 billion in the pocket in 2017 for $43.4 billion in total earnings, the $1 millionplus earners became the top income bracket in Connecticut, overtaking some 287,000 people making between $100,000 and $200,000 who had previously had the highest percentage of aggregate income.
Alongside Ray Dalio, Connecticut’s richest billionaire, fellow hedge fund financier Paul Tudor Jones used last week’s Greenwich Economic Forum to call for the nation to find ways for corporations to distribute more of their profits to workers, at the expense of investors and executives.
“It wasn’t by design and it wasn’t because good people did bad things,” Jones said. “It was unfortunately just a natural, unchecked movement because of the fact that we, as a culture, thought that business is where you make your company and that’s all that you do.”
The head of the Hartfordbased Yankee Institute for Public Policy said the strong stock market of 2017 was likely the primary driver for the big gains by Connecticut’s uppermost earners.
She added the state’s recent history of increased taxes and regulations has employers wary of moving jobs to Connecticut, though there are notable exceptions such as Charter Communications, which has rapidly expanded its Stamford headquarters.
“For wages to rise here in Connecticut for middle income and working families, our state needs to foster growth and opportunity — not drive it away through flawed policies,” said Carol Platt Liebau, president of the Yankee Institute. “Measures like a higher minimum wage and paid family and medical leave ... may be wellintentioned, but they force businesses to close and send jobs out of our state — and that hurts middle and low income families the most.”
In his first year in office, Gov. Ned Lamont provided a pay bump for earners on subsistence wages, signing a bill to boost Connecticut’s minimum wage to $15 an hour for most workers over the coming few years.
On last fall’s campaign trail and since, Lamont has vowed to reinvigorate business investment in Connecticut, putting together a panel of executives including former PepsiCo CEO Indra Nooyi to generate ideas and last month naming a “czar” to promote the state to manufacturers.
A Lamont spokesperson did not respond immediately Tuesday on any new proposals the governor plans to introduce in the upcoming legislative session that would improve the ability of state residents to improve their earnings profile in the short or long run.
In Congress, U.S. Sen. Chris Murphy is again touting a proposed Workforce Mobility Act that would limit the reach of noncompete clauses tacked onto employment contracts, arguing they limit the earning power of upperincome workers by creating hurdles to accepting better job offers or starting up a business themselves.
Includes prior reporting by Paul Schott. Alex.Soule@scni.com; 2038422545; @casoulman