Tax advice for state’s next government

It is time for unrealistic promises and over-the-top spending to be reined in.

Aside from death, nothing in life is as predictable as taxes — especially in Connecticut in recent years. So it’s no surprise that both major-party gubernatorial candidates are wooing voters with promises of tax cuts, even as they accuse their opponent of plotting tax increases, particularly on the middle class. But when the political dust settles and the snow flies this winter, our state will need a governor prepared to submit and adopt tax plans carefully contoured to combat our mounting financial crisis.

That crisis includes a looming biennial deficit of around $4.6 billion; spiraling government-worker pension liabilities; mountains of built-up unfunded liabilities; totally unfunded retiree medical benefits; flat property values; one of the weakest economic recoveries in the nation; and net outmigration of our skilled, young, and high-tax-paying populations. Gov. Dannel Malloy’s massive tax increases precipitated these dire conditions; well-crafted tax plans instituted by the new government can help to ameliorate them.

The first imperative is to stop making things worse. No taxes — whether direct or in the form of tolls or fees — should be raised until Connecticut has addressed the harsh reality that it has promised current retirees outsized benefits and government workers bigger pensions than it can ever realistically pay. More taxes won’t raise enough money; as we’ve already seen, they’ll just drive affluent taxpayers from the state and push Connecticut’s problems from daunting to insupera- ble. Businesses and families will continue to be leery of moving to Connecticut — and downright allergic to buying property here

— until those outyear mortgages on Connecticut’s future are brought down to size. It is time for unrealistic promises and over-the-top spending to be reined in.

The new budget must also reduce or eliminate taxes and fees that generate little revenue while driving hightax-paying families and businesses from Connecticut. Let’s start with the estate tax. Although it brings in comparatively little revenue, it has a significant effect in pushing taxpayers, especially wealthy older taxpayers, out of the state. And they have many choices when deciding where to relocate: all but 13 states, including Connecticut, have repealed their estate taxes.

Connecticut simply cannot afford to be highest-taxed state in the region (or .01 percent below) when it comes to categories like the income tax. Massachusetts has Boston; New York has Manhattan. Connecticut is a beautiful state that we are proud to call home, with many wonderful assets. Its comparative advantage lies in cultivating a competitive environment, with an appreciably lower income tax than its more urban neighbors, where families and businesses can thrive.

Finally, the state should look at reforming the way it permits its municipalities to fund themselves. Perhaps, for instance, municipalities might be granted a constitutionally limited sales-tax authority in exchange for a well-designed property-tax cap that would reduce property taxes proportionally in all locales. Such creative thinking could make for more dynamic — and stable — Connecticut cities, but only if a greater range of revenue options are coupled with strict limits on taxing and spending powers to prevent profligate cities from squandering the opportunity and digging themselves even deeper holes for the future.

Connecticut can save itself. But the path to a fiscally stable and inviting future requires clear eyes, steady hands — and the principled rejection of the blithe promises and tax-andspend mentality that have characterized the mistakes of the past.