Tuesday, December 12, 2006

Amann: Millionaire's Tax off the Table for Now

Surplus May Turn to Deficit by 2008

Those expecting the new supermajority in the General Assembly to raise taxes on the rich, as they've been threatening to do for years, may be in for a disappointment:
Raising taxes is not on House Speaker James A. Amann's (D-118) radar screen, and Gov. M. Jodi Rell has been warning the legislature not to spend the state's ballooning surplus.

"I don't know why anybody would be talking about raising taxes now," Amann says. "The economy is doing well and we're in surplus. The gross 2005 receipts bill on diesel products to pay for highway improvements generated way over our estimates. The trucking industry supported the bill, but nobody could have foreseen the increase in the price of petroleum products."
"If somebody brings it up, I'll listen," he says. "But it would have to be a heck of a good reason."(Singer)

Some good news is that, according to Rep. Cameron C. Staples (D-96), House chairman of the state Finance Committee, property tax reform will be a priority for the upcoming session. Whether this means some sort of great and complicated tax reshuffling or something more permanent remains to be seen (I'm betting on the former, by the way).

There is some bad news, however. The situation which is leading Amann to dismiss the Millionaire's Tax now won't last long:
Between October and November the state budget surplus almost doubled to $486.5 million, according to the state Office of Policy & Management (OPM).

Budget shortfalls, however, are forecast as soon as fiscal 2008 by OPM and the legislature's Office of Fiscal Analysis. (Singer)

Expect the Millionaire's Tax to make its glorious return when we arrive in Budget Shortfall Land.

Singer, Karen. " The Rich Get Poorer?." Business New Haven 11 December, 2006.


Anonymous said...

Here we go again. The revenues are not measured against current liabilities just as the current surplus is an isolated number when you consider the bonded debt and the unfunded long term retirmenet fund liabilities.

Anonymous said...

Universal Healthcare should be the most important issue in our state. Let's shake a leg!

Anonymous said...

Posturing. He wants Gov. Rell to raise the issue of higher taxes.

Anonymous said...

High taxes on cigarettes and alcoholic beverages is good public policy. They serve to make harmful behavior more costly. And they are easily escaped. I don't smoke, I don't pay the taxes.

High taxes on gasoline are also good public policy. They serve to lessen use of a valuable resource. Unfortunately, Americans feel 'entitled' to cheap gas, and the point where higher costs actually dampen demand is well above current retail prices. Just about everyone agrees that less use of foreign oil is positive for the U.S. But just about everyone wants everyone else to make the effort to conserve.

Anonymous said...

Actually the millionaire's tax has been off the table for quite some time now.... The General Assembly had managed to get it down to about $250,000 the last I knew.

In any case as was mentioned above it will be back fairly soon. Probably looking more like a hundred thousandaire's tax.

Anonymous said...

The current service budget deficit mentioned by OPM and the Governor is not large by typical standards. Usually the gap at this stage of the game is over a billion dollars. State agencies pad their budget requests and do worse case. This year the budget request was well over 10% higher than the current year budget. It will be easy to pare down 4% or 5% of excess request which will close the current services gap. The whole discussion about the pension liability focuses on what they state is paying in. This should be balanced with a discussion about restructuring pension plans.

Anonymous said...

Raising the income tax rate would really hurt some members of the super majority -- seats in Fairfield, Simsbury, madison, Stamford/New Canaan, North Stonington -- just to name a few.

Anonymous said...

While raising cigarette and alcohol taxes are not necessarily bad from a public health perspective (because if they have the right effect, less people buy them), they are bad from a revenue standpoint. If people buy few cigaretts and alcohol because of higher taxes, they don't end up providing a stable revenue source. This is why Amann and others have opposed this taxes in the past--not because of the public health effect but because, plain and simple, it's not a way to fund budgets.

Anonymous said...

It's more importan to raise revenue than to promote the public health. Got it.

Anonymous said...

"High taxes on gasoline are good public policy."

I used to be a believer in that as well, but now I have to say that were I a member of the Connecticut House of Representatives, I would vote against an increase in the gas tax.

Why? It's regressive. Poor people pay more proportionally, and that's bad public policy. Poor people, and middle-class people, who commute in their cars, drive their children to school in their cars, etc., would feel a gas cost increase much more than the Gold Coast soccer mom who would hardly notice the slightly higher charge on her Mobil Platinum card.