Millionaires: ‘Raise the taxes. We aren’t going anywhere’
HARTFORD — Gov. Ned Lamont has shied away increasing income tax on wealthy Connecticut residents, but 10 of the state’s top earners have written a letter asking the governor to do just that.
“This is not altruism on our part, it is advocacy for the ambitious policies needed to make Connecticut prosperous for everyone,” stated the 10 members of Fair Share Connecticut, a group of wealthy residents committed to creating a fair tax system directed by Philip Vander Klay, of New Haven.
The letter was sent to Lamont and the members of the Connecticut General Assembly on May 14, 2019, as a formal request to be part of the solution to Connecticut’s financial crisis. Their three-pronged proposal is estimated to generate $1 billion in revenue for Connecticut.
The plan includes a new bracket for couples earning
$5 million and individuals earning $2.5 million as well as raising the marginal rate 3 percent.
The second prong will raise the top tax bracket — couples making over $1 million — by 2 percent.
Finally, the plan will raise the second-highest bracket — couples making over $500,000 — by 1 percent.
The letter sought to dispel the millionaire migration myth and stated that the Connecticut’s migration issues are the result of lower and middleincome families.
The state Department of Revenue Service confirmed in a May 2017 report about Connecticut’s migration trends stated that lowerincome residents migrate out of Connecticut at higher rates than high-income earners and this data was confirmed by the IRS.
The report also states that there has been an increase in tax filers leaving Connecticut across all income levels since 2007. The most significant departures were those earning between $50,000 and
$100,000 and those earning $5 million and above.
The letter counters the claim that millionaires are the ones fleeing Connecticut for sunny Florida and instead suggests that wealthy people will stay in the place that made them wealthy, regardless of the taxes.
“This is where their jobs, connections, and friends reside, so losing a small percentage of their substantial income is not an important driving factor,” the letter stated. “Raise the taxes. We aren’t going anywhere.”
Earlier this month, the Finance, Revenue and Bonding Committee suggested a 2 percent surcharge on capital gains of Connecticut’s wealthiest citizens in 2021. Lamont disagreed with this portion of the package.
“I don’t think it’s good policy,” Lamont has said. “For 25 years we’ve said we’re going to tax capital gains, dividends and interest income at the same rate. This would break sort of a 25-year tradition.”
After reviewing the letter, Lamont still doesn’t believe increased income taxes are the answer.
“As the authors of the letter point out, Connecticut still hasn’t recovered the jobs it lost during the last recession,” Maribel La Luz, Lamont’s spokeswoman, said. “We lag behind our neighboring states, and the only way out is to create more good paying jobs and opportunities for our residents and families. We cannot tax our way to growth. The Governor doesn’t want to increase income taxes on anyone, particularly as we continue the economic rebuilding phase of our recovery.”
Rep. Jonathan Steinberg, D-Westport, said that the state should take a more “holistic” approach to the state’s economic problems.
“Whether you are talking about the payroll tax which is very popular, the estate tax, whether you are talking about creating new capital gains, it needs to be done with a consideration of what’s best for Connecticut from a strategic standpoint,” Steinberg said. “These one-offs drive me a little crazy so we should be having a more holistic conversation.”
According to a report from Fair Share Connecticut, Connecticut’s wealthiest residents are enjoying the benefits of economic growth while “soaking” the middle class.
“The top 1 percent have garnered 100 percent of income gains generated since the end of the Great Recession,” reads the report. “That means that income has remained stagnant for the other 99 percent of Connecticut residents.”
Fair Share Connecticut points to states like California as proof that their plan will succeed. Their letter cites an article from Real Clear Politics stating that California’s governor, Jerry Brown, was able to turn the state around by passing Proposition 30, which raised sales taxes and income on high-income residents.
“With these increased taxes in place, the state quickly climbed out of its fiscal crisis and grew from the eighth to the fifth largest economy in the world,” stated the letter.
Lastly, the millionaires hoped to debunk the myth that Connecticut is a “high tax state.” Their letter mentions a report from the U.S. Bureau of Economic Analysis for fiscal year 2015 in which Connecticut is ranked as the ninth lowest when it comes to government-imposed taxes and fees.
The letter closes by suggesting that Connecticut’s problem isn’t high taxes, but rather who carries the burden of the taxes.
“Our problem is that our taxes fall too heavily on working- and middleclass families,” the letter stated. “The simple truth is that our proposed income tax increase on Connecticut’s wealthiest residents is good for our state.”