Connecticut Looking For New Tax Revenue to Counter Rising Debt and Deficits

5 Mar 2018

Lawmakers Review Malloy Tax Plan – Hartford Courant, 2018/03/02

A key legislative committee debated Friday over Gov. Dannel P. Malloy’s revenue package that covers hiking taxes on cigarettes, gasoline, real estate sales and hotel rooms.

As the state is facing a deficit of nearly $200 million in the current fiscal year and higher deficits in the future, the tax-writing finance committee is facing a deadline of April 6 to craft a tax package in order to balance the state’s budget.

As part of the budget, Malloy is also proposing establishing highway tolls in Connecticut for the first time in three decades and raising the gasoline tax by 7 cents per gallon over four years.

The SALT deduction in the new federal tax plan is also a factor.

The new law, signed by President Donald Trump, imposes a cap of $10,000, but many large properties in Fairfield County and around the state have real estate taxes of more than $10,000 per year. The owner of a waterfront mansion in Darien, for example, can pay as much as $80,000 per year in property taxes.

Sullivan said that 66 percent of the $10.8 billion in impact in the SALT deduction is from people with incomes ranging from $200,000 to $500,000 per year.


Utility Companies Lowering Rates Because of Tax Bill

10 Jan 2018

The narrative of the tax bill is that it would only help the super rich. Not exactly…

Utilities cutting rates, cite benefits of Trump tax reform – Washington Examiner, 2018/01/09

Energy suppliers like Washington’s Pepco, Baltimore Gas and Light, Pacific Power, Rocky Mountain Power and Commonwealth Edison said they plan to give hundreds of thousands of customers a rate cut due to the tax reform.

In one announcement typical of those from the utilities sharing their tax benefits, Pacific Power said, “The benefit of this tax cut should be passed on to our customers – and we will work with our regulators and stakeholders on the best way to do that.”


The Rich Are Leaving Connecticut

8 Jan 2018

Editorial: Connecticut’s Money Is Moving Out – Hartford Courier, 2018/01/03

Those who moved out of Connecticut from 2015 to 2016 took with them more than $6 billion in adjusted gross income, or AGI. People who moved to Connecticut brought with them only about $3.36 billion in AGI. The total net loss to Connecticut: $2.7 billion. In one year. That was in the top five of all states, regardless of population.

The states that poached the most taxpayers from Connecticut were New York (8,202 tax returns) and Florida (7,944). The average adjusted gross income for those who left for New York was $111,653. That’s pretty bad, but it’s nowhere near as shocking as Florida, where the average return from former Connecticut residents was $253,187 in adjusted gross income.

That means more than $2 billion in income moved from Connecticut to Florida from 2015 to 2016, more than twice as much money as moved to New York.

You can legislate taxes… you can’t legislate every human response… at least not yet…

Southwest Airlines Rewarded Employees in Response to the Tax Bill

5 Jan 2018

There were 17 companies that rewarded employees in various ways since the passage of the tax bill. Here is #18…

Southwest Airlines cheers tax reform, announces cash bonuses for all employees – Washington Times – 2018/01/02

Southwest’s Chairman and Chief Executive Officer Gary Kelly announced on Twitter Tuesday evening that every person who started working for Southwest Airlines prior to Dec. 31, 2017, will soon receive a $1,000 cash bonus on Jan. 8, 2018.

“We applaud Congress and the president for taking this action to pass legislation, which will result in meaningful corporate income tax reform for the transportation sector in general, and for Southwest Airlines, in particular,” Mr. Kelly said in a short video shared on Twitter. “We are excited about the savings and additional capital, which we intend to put to work in several forms — to reward our hard-working employees, to reinvest in our business, to reward our shareholders, and to keep our costs and fares low for our customers.”

“I am also proud to report that we have donated an incremental $5 million to charitable causes as a result of tax reform,” Mr. Kelly added. “Throughout 2018, we will work with our charitable partnerships to put this money to work in the communities we serve and where our employees work and live.”

Private School Deduction in the Tax Bill

4 Jan 2018

This is how we learn what’s in the tax bill. We get little snipets here and there…

Losing Students, Private Schools Try to Change – Wall Street Journal, 2017/12/29

The Republican tax overhaul, signed into law last week, is expected to help families with children in private schools by providing a new tax break, possibly helping with enrollment.

The bill expands the use of Section 529 savings plans beyond college to allow up to $10,000 to be spent annually on tuition and qualified expenses for elementary or secondary public or private schools

Some supporters of public schools fret that the expansion of these accounts could shrink the public-school population and funding. But private school supporters—who broadly support the change—also agree it will primarily benefit wealthier families who can afford to save money for their children’s education.

“It’s a step in the right direction,” Education Secretary Betsy DeVos told reporters earlier this month. “But it doesn’t address the needs of parents who are from lower incomes and does not empower them in significant ways.”

Explaining the State and Local Tax Changes in the New Tax Bill

2 Jan 2018

This blog explains the importance of the State and Local Tax (SALT) changes that go into effect with the new tax bill. This statement seems to be a key.

The bottom line is that high-tax states no longer will be able to jack up taxes, using federal deductibility to spread some of the burden to low-tax states.

And this from an LA Times exerpt quoted in the blog…

There’s no credible justification for the federal government subsidizing California’s highest-in-the-nation state income tax — or, for that matter, any local levy like the property tax. Why should federal tax money from people in other states be spent on partially rebating Californians for their state and local tax payments? Some of those states don’t even have their own income tax, including Nevada and Washington. Neither do Texas and Florida. …federal subsidies just encourage the high-tax states to rake in more money and spend it.

In other words, some people in high tax states would tolerate high state taxes because it was all being deducted from their federal taxes… but not anymore. Only the first $10,000 of state taxes paid will be deductible. Now these states will need to face their high tax rates, or possibly see a mass migration to lower tax states. Read the blog for further info.

Restricting the Deduction for State and Local Taxes Is a Big [Expletive Deleted] Deal – International Liberty, 2018/01/02

Trump Downsizing Cabinet Departments

2 Jan 2018

How the Trump era is changing the federal bureaucracy – Washington Post, 2017/12/30

Nearly a year into his takeover of Washington, President Trump has made a significant down payment on his campaign pledge to shrink the federal bureaucracy, a shift long sought by conservatives that could eventually bring the workforce down to levels not seen in decades.

By the end of September, all Cabinet departments except Homeland Security, Veterans Affairs and Interior had fewer permanent staff than when Trump took office in January — with most shedding many hundreds of employees, according to an analysis of federal personnel data by The Washington Post.

Even though Congress did not pass a new budget in his first year, the drastic spending cuts Trump laid out in the spring — which would slash more than 30 percent of funding at some agencies — also has triggered a spending slowdown, according to officials at multiple departments.

Take note…

The White House is now warning agencies to brace for even deeper cuts in the 2019 budget it will announce early next year, part of an effort to lower the federal deficit to pay for the new tax law, according to officials briefed on the budgets for their agencies. One possible casualty: a pay raise that federal employees historically have received when the economy is humming.

So all of the CBO scoring and the concern for increasing the debt by $1.4T may never materialize.

Here’s the data for the size of the Cabinet from 1940-2014.

Historical Federal Workforce Tables