For Immediate Release: 8/22/2016
Contact: Zachary Janowski
Mobile: (860) 384-5777
25 years later, study shows how income tax was spent
The income tax lived up to none of its promises
August 22 – Connecticut’s income tax fueled an increase in state spending that exceeded inflation by 71 percent, according to a new Yankee Institute study.
According to the study, the “non-functional” portion of the budget was the fastest growing part of the budget. “Non-functional” spending primarily includes debt payments and fringe benefits for government employees.
Connecticut’s income tax has failed to live up to the promises used to sell it. Taxpayers were told it would solve Connecticut’s fiscal problems, but it didn’t. The state projects billion-dollar deficits for years into the future, and this after many additional tax increases, while property taxes continue to be a burden at the local level.
Taxpayers were told they would get spending restraint in return for the new income tax. Instead, lawmakers have failed for more than two decades to implement the spending cap.
Taxpayers were told Connecticut would get a new start. Instead, the state started heading in the wrong direction. Since the income tax was imposed, residents have voted with their feet – 237,000 more people have left the state than have come to it, taking with them $13.7 billion in taxable income.
“The income tax has become a fixture of our government, but we can turn it around and make good on some of the broken promises,” said Carol Platt Liebau, president of the Yankee Institute. “First, we need to implement the spending cap. Second, we need a flatter, lower income tax that encourages more people to live and pay taxes in Connecticut. Third, lawmakers need to make sure everyone who wants to can work in Connecticut. Together, spending restraint, fairness for taxpayers and a growing economy will help our state prosper once again.”
The income tax did not provide enough money because Connecticut has a spending problem. “Right after the income tax passed, lawmakers took the extra money and increased their credit limit,” said Thurston Powers, author of the study and a Yankee Institute policy associate. “They borrowed $5 billion, but only $1 billion went to pay for things we still have with us today. That led the non-functional category of state spending, which includes debt payments and benefits for state employees, to grow faster than any other part of state government.”
The Hartford-based Yankee Institute for Public Policy works to transform Connecticut into a place where everyone is free to succeed.