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Fifteen Years of Folly: The Failures of Connecticut's Income Tax
Hartford, August 22, 2006 -- Today the Yankee Institute for Public Policy releases "Fifteen Years of Folly: The Failures of Connecticut’s Income Tax."
Written by Philip Gressel Fellow for Tax and Budget Policy D. Dowd Muska, the paper documents the negative consequences of the broad-based income tax narrowly passed by state legislators and signed by Governor Lowell P. Weicker on August 22, 1991:
* the income tax failed to produce fiscal stability -- when the state entered a recession at the turn of the new century, budget deficits returned, and with them tax hikes, heavy borrowing, and the complete withdrawal of Connecticut's "rainy day fund"
* the state's tax burden continued to rise significantly after 1991, and tax hikes as well as entirely new levies were adopted
* revenue from the income tax did not lead to property-tax relief -- between 1991 and 2003, Connecticut property-tax collections rose 19.8 percent
* the "spending cap" enacted to control state expenditures was riddled with loopholes, and has been violated again and again by governors and lawmakers
* contrary to the claims of many income-tax supporters, not one of the nation's non-income-tax states followed Connecticut's lead
* Connecticut job growth has been nonexistent since 1991 -- the Federal Deposit Insurance Corporation recently concluded that since the early 1990s, "no other state … has had such stagnation in employment"
* personal-income growth slowed significantly in the Nutmeg State in the post-1991 era
* median household income in Connecticut has fallen, in inflation-adjusted terms, since 1991 -- nationally, median household income has grown
* over 240,000 native-born citizens fled Connecticut between 1990 and 2002, and in the 1990s, no state lost a greater percentage of its 18-to-34-year-olds
"Dowd's paper is the latest example of our organization’s groundbreaking policy research," said Yankee Institute Executive Director Lewis M. Andrews, Ph.D. "The Institute's work is not mired in the failed 'tax, borrow, and spend' policies of the past, but founded on pro-growth, limited-government strategies that promise a brighter future for Connecticut."
Several of the nation's leading tax experts endorsed the findings of "Fifteen Years of Folly."
"We've known for some time that an income tax is the most destructive type of levy a state can impose," said Americans for Tax Reform President Grover Norquist. "The Yankee Institute's research on Connecticut's income tax only confirms this. The Nutmeg State took a giant step backward, both fiscally and economically, when it began to tax wages and salaries."
"The Yankee Institute's 'Fifteen Years of Folly' provides more proof that massive tax hikes do not solve chronic fiscal problems," said National Taxpayers Union President John Berthoud, a Connecticut native. “Nor are they good for a state's economy. Connecticut's workers, families, and businesses have paid a heavy price for the mistake Nutmeg State politicians made on August 22, 1991."
"Connecticut was a low-tax state before the institution of the personal-income tax," said Tax Foundation Staff Economist Curtis Dubay, another Connecticut native. "Dowd Muska has done the important work of pointing this out and showing how runaway spending is the cause for the burgeoning tax burden in Connecticut."
Muska will discuss "Fifteen Years of Folly" on the WTIC News Talk 1080 AM program "Sound Off Connecticut" with host Jim Vicevich this morning at 11:00. Additional appearances have been booked with Connecticut stations WDRC, WICC, WGCH, and WATR.
The Yankee Institute for Public Policy is a nonprofit, nonpartisan, research and education organization that creates new ideas for lower taxes and better government in Connecticut. "Fifteen Years of Folly" can be downloaded for free from the Institute's website.
Muska is available for print, radio, and television interviews. Contact the Yankee Institute at info@yankeeinstitute.org or (860) 297-4271.
WARNING: File size is large, so download time will vary depending on your connection speed.
D. Dowd Muska is the Yankee Institute's Philip Gressel Fellow for Tax and Budget Policy.
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The Yankee Institute for Public Policy, Inc. is a nonpartisan educational and research organization founded more than two decades ago. Today, the Yankee Institute's mission is to "promote economic opportunity through lower taxes and new ideas for better government in Connecticut." The Yankee Institute for Public Policy, Inc. is classified by the IRS as a 501 (c) (3) public charity. Contributions are deductible to the extent allowed by law.
