Lamont, Dems headed toward tax clash
HARTFORD — Gov. Ned Lamont and fellow Democrats are headed toward a major clash as 63 Democratic legislators have signed a letter calling for a tax increase on the investment income of the state’s wealthiest residents — an idea he has repeatedly rejected.
Lawmakers sent the letter Thursday to Lamont, backing a proposed 2 percentage point surcharge on investment income for couples earning more than $1 million a year and individuals earning more than $500,000. Taxes on capital gains are currently paid through the personal income tax, and the top rate would go to 8.99 percent, up from the current 6.99 percent.
“The proposal to add a surcharge on capital gains does not penalize the wealthy, but rather makes our system fairer and more equitable,” the legislators wrote. “Since the Great Recession, Connecticut’s top 1 percent has garnered 100 percent of increased income and received a windfall from the Trump tax cuts. Meanwhile, the middle class has seen their incomes stagnate as they continue to shoulder a disproportionate tax burden. Rather than asking the middle class to dig even deeper into their pockets, we should ask those paying the lowest percentage of their income in taxes — and who have the most disposable income to spare — to pay their fair share.”
But Lamont essentially drew a line in the
sand, saying he is strongly against raising taxes on the rich.
“Look, there’s no wiggle room on that,” Lamont said Thursday. “We would be almost twice the capital gains rate of Massachusetts. We’d be a lot more than Rhode Island, maybe even be a little more than New York. We would not be competitive.”
Lamont’s budget relies heavily on expanding the sales tax to include additional items and services without raising the 6.35 percent rate. When asked his response to Democrats who say they will not vote for a budget without a capital gains tax increase, Lamont responded, “I’ve got to tell people that it’s not going to raise us money. It’s going to do just the opposite. I’ve got to tell people we’ve got to live within our means. I’ve got to tell people that would be the fifth big tax increase in a decade or so. That’s not a trend to get this state moving again.”
With budget talks occurring behind the scenes at the Capitol, Lamont is pushing toward finishing
the two-year, $43 billion spending plan by the end of the legislative session on June 5.
“We’re going to get a budget done,” he said. “It’s a progressive budget that gets this state growing again, and I really want to get that done on time. That would be the first time in a long time. Not at 4 o’clock in the morning. How about at 5 in the evening? So we can go out and celebrate.”
The letter signers included 56 House Democrats and 7 senators.
Rep. Josh Elliott of Hamden, an outspoken member of the House Democratic Progressive Caucus, said about 10 to 15 more legislators are in favor of the surcharge, but “they didn’t want to be public.” As a key proponent of the tax, Elliott said he personally checked with all 91 House Democrats to gauge their support.
“Ned is not the only negotiating partner in the room,” Elliott said. “We are co-equal branches.”
Like Lamont, Elliott and other legislators want to finish the budget process by June 5.
“We don’t want to come back for special session,” he said. “We were here for 100 days and didn’t pass a single piece of legislation.”
Elliott said a key factor is the state’s wealthiest residents have benefited more than other citizens from President Donald Trump’s tax cuts.
“They did better than they’ve ever done,” he said. “It’s not just billionaires that we’re talking about. … The budget bill is asking from everyone except the wealthy.”
House Majority Leader Matt Ritter, D-Hartford, said the recent improvement of tax collections and projections will make a budget deal easier to reach. For example, the state is now projecting an additional $350 million in tax revenue next next year and $400 million in the year after that. As a result, the deficits to close are smaller than originally expected, which Ritter described as “budget gamechangers.”
House Speaker Joe Aresimowicz, D-Berlin, said he could not predict whether the capital gains tax increase will be included in the final budget agreement.
“We’ll see,” he said. “The whole budget is a compromise.”