The Register Citizen (Torrington, CT)
CT mansion tax, higher levies on the rich, school consolidation in top senator’s plan
The mansion tax is back – pitched once again by the Senate leader and longtime captain of tax progressives in the General Assembly, Sen. Martin Looney.
Never mind that Looney, the New Haven Democrat and president protempore of the Senate, saw his 2021 house-tax proposal die under withering attacks from the center and the right. That plan called for a state surcharge on any house or apartment worth more than $428,000 – not just mansions.
This time around, Looney’s mansion tax plan truly is a mansion tax. It would levy a state charge on dwellings worth at least $2,143,000 – those assessed at more than $1.5 million. It’s part a package of seven sweeping, taxand-spending reform bills Looney has proposed on his own, just as any state legislator could do.
Under Looney’s twotiered mansion tax, the owner of a house worth $3 million would pay a new state tax totaling $800, regardless of the town where the house was located. The owner of a $4 million house would pay an extra $2,900 and the owner of a house valued at $5 million would pay a surcharge of $5,000 to the state – all on top of their local property taxes.
Also on the Looney List: a plan to raise the top state income tax rates by as much as one-half of 1 percentage point to a maximum of 7.49 percent; add a capital gains tax for wealthy residents; and lower the rates for middleclass taxpayers by onehalf of 1 percentage point, from 5.5 percent to 5 percent.
Looney well understands that Connecticut’s state government is in line to see a $3.1 billion budget surplus this year on top of maintaining a $3.4 billion rainy day fund, after a 2021-22 fiscal year that yielded a $5 billion surplus, on top of federal money still flowing by the billions for infrastructure and pandemic relief.
We’re rolling in dough until a recession hits, which is why Looney said he’d like to see the income tax rate hikes delayed until
2025.
And he knows Gov. Ned Lamont, a fellow Democrat, has been clear that he opposes new or higher taxes on residents. That doesn’t faze Looney.
“We’re at somewhat of a disadvantage in that we only tax income, we don’t tax assets,” Looney told me, explaining the logic behind the mansion tax. “At the highest level, people are able to determine their income.”
Reforming the whole state
Another hot-button issue in one of Looney’s bills: Towns with fewer than 25,000 residents – nearly three-quarters of all Connecticut towns – would see less reimbursement for school construction if they were not part of a regional school system and more reimbursement if they joined a regional system. A similar but stricter plan by Looney in 2021 drew sharp criticism.
The new and higher taxes would serve several purposes for the 40-year veteran lawmaker. First, Looney has long sought to equalize the tax burden, which penalizes taxpayers throughout the middle class. Second, Looney has long tried to stabilize the tax base by capturing a fair tax from extremely wealthy people who shelter their income.
And not least, Looney wants the state to be able to pay for programs – especially money transfers to lower-income people – that even a state with a large operating surplus could not adopt. Looney’s latest mansion tax proposal would bring in about $40 million a year, he said, and the proceeds would go toward accelerating a long-planned equalization of state education aid to poorer communities.
Also on Looney’s List: A plan to raise the assessment that cities and towns charge on real estate from 70 percent of value to 75 percent. This would not raise taxes overall, as it would let municipalities lower tax their rates. The math is complicated but it would increase taxes for owners of the most valuable properties and lower payments for the least valuable real estate.
I asked Looney whether he felt like a bit of a flamethrower, proposing dramatic reforms that would seem to have little chance of passing, at least this year, even though he’s the leader of Senate Democrats — easily one of the five most powerful state officials.
On the contrary, he told me. “I’m trying to advance a discussion where people will almost always say this is a direction we should go,” Looney said. “It may
be outside what is current expressed opinion but it is not outside the currently held opinion.”
Political standoff
Certainly it’s not a view held by Republicans. “You’ve got a state budget that is at historic levels of overtaxation and the majority doesn’t think they’re picking pockets enough,” said Senate GOP Leader Kevin Kelly, R-Stratford. “Why? They can’t abridge their spending, that’s why.”
Kelly agrees the tax system needs to be fairer and he says the way to do it is to cut taxes for the middle class, period. “You really have to ask, when is enough enough? The people in my neck of the weeks are crying Uncle……they’re screaming for help.”
Lamont, for his part, has learned the hard way that going against Looney is a really good way to see his own agenda derailed. “Gov. Lamont will present a budget that invests in the people of Connecticut, makes our state more affordable for families and includes a middle-class tax cut. Gov. Lamont looks forward to sitting down with Sen. Looney and the other legislative leaders on how best to achieve those goals,” spokesman Adam Joseph said, carefully, in response to Looney’s proposals.
As for the votes in Looney’s Senate, 24 of 36 seats are held by Democrats, many of them progressives — including Sen. John Fonfara, the finance committee co-chairman, who backed a similar mansion tax plan last year that did not pass, and has butted heads with Lamont over the governor’s refusal to raise taxes on rich residents.
“We have a big enough majority that opinion does not have to be unanimous,” Looney said. “We need to advance these discussions because obviously these items get foreclosed if they are not proposed.”
In other words, you can’t win if you don’t play. The question is, will Looney’s tax plans survive in any form?
Greenwich is ground zero
By itself, a mansion tax could make sense if it’s used to lower other taxes. It would add a relatively modest charge to a small number of households.
The Multiple Listing Service, a real estate registry, showed more than 5,000 houses and individually owned apartments worth $2 million or more on Monday; an exact number wasn’t available. The vast majority were in Fairfield County and many of those were in Greenwich, which, the listing showed, had — sit down for this — 3,267 properties worth at least $2 million.
As for a hike in the highest income tax rates, that should be a desperation move only, as we’ve seen a few times when the coffers were dry. The issue is whether wealthy residents exit the state when taxes they can well afford rise. There is evidence on both sides of that argument.
Here are more details of Looney’s bills:
• The mansion tax would collect 1 mill, or $1 per $1,000 of valuation, for assessments over $1.5 million; and $2 per $1,000 of valuation, or 2 mills, for assessments over $2 million.
• The 6.9 percent state income tax rate would rise to 7.2 percent. That applies to married couples filing jointly who make and single filers making $250,001 to $500,000. Those filers would also pay a capital gains tax surcharge of 0.75 percent.
• The highest earners, over $1 million a year for couples or $500,000 for singles — would see their state income tax levy jump from 6.99 percent to 7.49 percent. That group would pay a 1 percent surcharge on capital gains.
• The income tax rate would drop to 5 percent for people in the middle class paying a 5.5 percent rate – a change Lamont is likely to propose.
• Revenues from the 1 percent tax surcharge on restaurant meals and prepared meals in grocery stores, about $104 million, would go to the cities and towns where they were located.
• School construction grants would increase by up to 20 percent to towns that targets.
• The earned-income tax credit of 40.5 percent of the federal credit for lowincome residents ($43 million a year) and the child tax credit of $250 per child, as much as $750 per family ($125 million a year), both in effect this year only, would be made permanent.
Looney views his tax plan, including the mansion tax, in the sweep of history. Around 2000, when he was co-chairman of the finance committee, he proposed what was then viewed as a radical plan to raise income tax rates on the highest earners. “One of the great points of pride was being attacked by name by Rush Limbaugh,” he said of the conservative radio personality who died two years ago.
Years later, that tax plan passed.