Still on the tax-un­friendly list — but im­prov­ing

The Norwalk Hour - - BUSINESS - Dhaar@hearst­medi­act.com

Con­necti­cut has moved down — that’s a good thing — since 2015, when it came out as the No. 2 Least Tax-Friendly State, fol­lowed by a No. 3 show­ing in 2016, then last year’s No. 9 fin­ish.

Con­necti­cut has once again landed on the Ki­plinger 10 Least Tax-Friendly States — but just barely, and we passed New Jer­sey this year.

The 2018 list has Con­necti­cut as the 10th worst, switch­ing places from the 2017 rank­ings with the Gar­den State, which is now No. 9.

Top­ping the list, same as last year, is Min­nesota with its state in­come tax rang­ing from 5.35 per­cent to 9.85, Ki­plinger re­ported. New York, with its own high in­come tax, is also in the worst 5.

Con­necti­cut has moved down — that’s a good thing — since 2015, when it came out as the No. 2 Least TaxFriendly State, fol­lowed by a No. 3 show­ing in 2016, then last year’s No. 9 fin­ish. The rea­son for the big drop in 2017 was not a tax change but a change in the way Ki­plinger mea­sured, CT News Junkie re­ported.

That shows that the out­comes de­pend heav­ily on the meth­ods, but Con­necti­cut de­serves its sta­tus. The state is tagged not just for an in­come tax top­ping out at 6.99 per­cent, but for tax­ing ad­justed gross in­come rather than fed­er­ally tax­able in­come.

And of course we have some of the high­est lo­cal prop­erty taxes along with the 6.35 per­cent sales tax, and no short­age of sin taxes.

On the bright side, the per­sonal fi­nance and busi­ness fore­cast­ing pub­lisher said, cities and towns in Con­necti­cut can’t tack on their own levies for pur­chases.

Why did we pass New Jer­sey? Noth­ing much changed ex­cept the fed­eral tax re­form, which lim­its de­duc­tions on state and lo­cal taxes to $10,000. That did the trick, Ki­plinger’s se­nior on­line ed­i­tor said in an email, be­cause New Jer­sey has higher prop­erty taxes, on bal­ance — mean­ing res­i­dents there will lose more fed­eral de­duc­tions.

Sort­ing out the likely ef­fects of the Trump tax re­form was a big chal­lenge this year, Ki­plinger’s David Muhlbaum said in the email.

The top 5 Most TaxFriendly States are, in or­der, Alaska, Wy­oming, South Dakota, Flor­ida and Ne­vada, with only the first two switch­ing spots from 2017.

Con­necti­cut also fares poorly in Ki­plinger’s best and worst tax states for re­tired peo­ple.

Data sources in­clude the Tax Foun­da­tion, which ranks Con­necti­cut as 4th worst for busi­ness tax cli­mate. But as with all these pop-top lists, it’s just a quick snap­shot. Ac­tual re­sults may vary.

For ex­am­ple, Mass­a­chu­setts is in the mid­dle of the pack, best in the North­east along with Penn­syl­va­nia, be­cause of its rel­a­tively low, flat 5.1 per­cent in­come tax. But you could end up pay­ing more there than in Con­necti­cut if you have mod­er­ate in­come, or if you have short-term cap­i­tal gains (12 per­cent, ig­nored by Ki­plinger), or if you live in a high-tax town.

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