Republicans might raise Connecticut taxes, too
O ne thing clear about Republican plans for tax reform is that time is of the essence, before we voters can grasp the full impact of changes destined to siphon money from the middle class and further enrich the richest Americans.
After all, why slow down the first overhaul of the nation’s tax system in decades with discussion, deliberation, public hearings, facts?
If you are trying to rig the system in alignment with how states voted in the last presidential election, punishing blue states like Connecticut, and rewarding red states, you might be sure and do it fast, before the next campaign season begins.
Kevin B. Sullivan, Connecticut commissioner of revenue services, noted in letters this week to Democrats in the state’s Washington congressional delegation, that Connecticut residents would take it on the chin in both Senate and House proposals for tax reform.
And not only might many Connecticut taxpayers pay more in federal taxes, but tax reform that eliminates deductions for things like payments to retirement accounts could mean those taxpayers would pay more Connecticut income tax, too.
Using statistics about what Connecticut residents reveal in their tax filings, Sullivan noted that, in the House reform plan, 75 percent of the tax cut goes to the top 1 percent, who would pay, on average, 8.5 percent less. Others would see a small 1.2 percent reduction, while many Connecticut taxpayers will actually owe more.
Not too much to like there, unless you are wealthy.
The elimination of the deduction for state income tax is worth an estimated $8.7 billion to mostly middle-income Connecticut taxpayers.
That represents a lot of new federal taxes, money that Connecticut residents aren’t going to spend here at home.
Similarly, capping deductions for local property taxes at $10,000 will increase federal taxes for a significant number of Connecticut taxpayers who claim $4.9 billion, Sullivan wrote.
Completely eliminating the deductibility of state and local taxes would cost middle income Connecticut taxpayers $13.8 billion, the commissioner wrote.
Curiously, some of these proposals also could lead to Connecticut residents paying higher Connecticut taxes, since the state’s income tax is based on adjusted gross income as reported on your federal return.
That means if federal tax reform limits or eliminates contributions to retirement plans, for instance, that would raise a taxpayer’s adjusted gross income, as well as the amount of tax due to Connecticut.
Sullivan told me Tuesday that pegging the state tax to adjusted gross income tends to be simpler than formulas that some other states use, since those also might vary with other common deductions, like local taxes.
He added that it is unlikely that the state would change its own system in light of federal tax reform, even though some taxpayers, not a significantly large number, may end up paying a lot more to the state.
Targeting blue states for more tax punishment in changing the federal tax system must not be a strategy that worries Washington Republicans long term, as they rush through these changes.
But that’s not true for Connecticut Republicans who need to face voters here at home.
The GOP attack on health care for millions of Americans failed in part because the impact reached across all states, and Republicans who needed to vote on it felt the heat.
That’s not so true with tax reform that geographically targets Northeast and West Coast states that tend to vote Democratic.
Here at home, it will be necessary to remind all the Connecticut Republican candidates who want to hold state and local offices what their colleagues in Washington have wrought.
It could be that whatever tax reform Congress ekes out this winter could be a fine rallying cry next year, for the state’s Democratic candidate for governor.
It’s so interesting to think that, here in Connecticut, Republicans may soon be the party of raising taxes, unless you’re very, very rich.