Tax policies can cause — or solve — problems
The grocery tax receded with a retreat choreographed by Gov. Ned Lamont and the Department of Revenue Services. What nonpartisan professionals in the state’s tax department believed for months is no more. Most of us are pleased that a terrible, regressive policy will not be imposed on the people of Connecticut — for now.
The grocery tax and similar gambits aim to raise money in what are intended as quiet increments. The grocery tax became a noisy one. They will be more careful next time. It may come in the budget, or it could arrive with a different interpretation from DRS under pressure from the governor. Any governor.
With this unhappy episode, Lamont has unleashed a dangerous precedent. Governors of Connecticut have usually kept their mitts off the details of tax policy. The governor and the legislature create tax laws, and DRS implements them. A governor intervening on the eve of the imposition of a policy he signed into law to get himself out of a crunch should be unsettling, no matter what you think of the tax. That DRS cooperated with unseemly speed suggests an important redline has been breached.
Some Senate Democrats, who voted to hike the tax on prepared foods that goes into effect on Tuesday, sent emails to constituents taking credit for the DRS about-face. The most hardened veterans of Capitol credit wars guffawed at that. They created the mess, but it was Lamont who got them out of it, for now.
If the legislature wants to do something other than send constituents emails making preposterous claims, it can act. Legislators can go back into session to enact the language they say they intended all the time. Lamont is calling for a special session to clarify a regulation that applies to restaurant workers. He could have added the grocery tax to his request.
The grocery store tax saga came at a difficult time for the governor. He continues to struggle to bridge the chasm of trust between state government and the people of Connecticut. The grocery store tax was one more example of what to the skeptical public finds irritating about state government. It’s always trying to put one over on the public. If Lamont is going to transform wishes into action, he needs to restore public trust. The past two weeks have been a blow.
We are 10 years into an economic expansion after the trauma of the 2008, but Connecticut has still not recovered the jobs lost. The jobs that left paid much more on average than the jobs that have been created. This trend continues to strain state finances because the income tax provides more money for state expenditures than any other source.
The state’s long-term obligations — tens of billions of dollars, although the exact amount is in some dispute — will continue to cause annual tremors in the Capitol and beyond. Extending the period to meet those obligations, as the Malloy administration did, adds to the cost.
One of the most serious longterm challenges facing the state is our demographic crisis. We are in danger of becoming a land without children — like Vulgaria in “Chitty Chitty Bang Bang.” It would be helpful if more retirees stayed in Connecticut, but it’s crucial that we attract young people.
The president of Poland visited Connecticut last weekend. I don’t know if he had a quiet word with Lamont about his nation’s own demographic crisis. Poland’s economy, one of the wonders of 21st century Europe, needs more young people. The get-up-andgoers head for other countries in the European Union.
Poland’s government thinks it can stem the exodus with some innovative tax policy. “Poles under the age of 26 who earn less than 85,528 Polish zloty ($22,547) a year will be exempt from the country’s 18 percent income tax starting August 1,” CNN reported in July.
The reigning political culture in Connecticut is allergic to creative tax policy for anyone who does not possess influence, but this is worth trying. Connecticut could go further than Poland. Set a no-income tax cap at $75,000 for anyone under 30. It might give young people an incentive to come to or stay in Connecticut long enough to plant professional, family, and social roots here. Our leaders need to stop spending time running from their terrible ideas when they’re exposed and start embracing good ones.