{"id":183010,"date":"2021-05-28T11:00:36","date_gmt":"2021-05-28T11:00:36","guid":{"rendered":"https:\/\/theintercept.com\/?p=357802"},"modified":"2021-05-28T11:00:36","modified_gmt":"2021-05-28T11:00:36","slug":"pressure-mounts-to-tax-the-rich-in-connecticut","status":"publish","type":"post","link":"https:\/\/radiofree.asia\/2021\/05\/28\/pressure-mounts-to-tax-the-rich-in-connecticut\/","title":{"rendered":"Pressure Mounts to Tax the Rich in Connecticut"},"content":{"rendered":"

In the wealthiest<\/u> state in the country, a legislative fight is brewing over whether to tax the elite residents who bring the state its superlative. Connecticut boasts<\/span> the<\/span> third-largest center for hedge funds<\/span><\/a> in the world, <\/span>14<\/span><\/a> resident billionaires, and trifecta control for the Democratic Party, including a supermajority in the state Senate and a near supermajority in the House. In April, the state\u2019s <\/span>Finance and Revenue Committee approved a package with tax cuts for poor and middle-class residents, financed largely with new taxes on households earning more than $500,000 per year.<\/span> But the General Assembly ends June 9, and Connecticut\u2019s Democratic\u00a0Gov. Ned Lamont has declared that he will veto any such move.\u00a0<\/span><\/p>\n

\u201cGovernor Lamont has been clear for months: <\/span>Connecticut doesn\u2019t need more taxes, we need more taxpayers,\u201d said spokesperson Max Reiss in a statement to The Intercept.<\/span><\/p>\n

Connecticut isn\u2019t just the nation\u2019s wealthiest state \u2014 it\u2019s also among the most unequal ones, with the top 1 percent out-earning the rest <\/span>by more than 42 to 1<\/span><\/a>. Affluent towns like Darien and Greenwich stand in stark contrast to the realities of deeply poor cities like Hartford and Bridgeport. (Lamont, a multimillionaire who grew his personal fortune through the telecommunications industry, lives in Greenwich.)<\/span><\/p>\n

<\/div>\n

\u201cI think sometimes people think they know more than they know,\u201d said Rodney Wade, a pastor from Waterbury, Connecticut, who has been advocating for the tax increases through a labor, faith, and grassroots coalition known as<\/span> Recovery for All<\/span><\/a>. \u201cAnd when you don\u2019t understand the language and the issues, then you believe that you have the answers. At the end of the day it boils down to who has your ear, and what we\u2019ve learned is it\u2019s been hard to get the governor\u2019s ear, compared to his buddies.\u201d<\/span>\u00a0<\/span><\/p>\n

Connecticut\u2019s state legislature isn\u2019t the only one in the Northeast to recently lean into a progressive revenue campaign, and advocates are hoping that their neighbors\u2019 wins will help them with leverage. Last year, New Jersey became one of the first states<\/span> to pass a millionaires\u2019 tax<\/span><\/a>, increasing state income taxes on millionaires by nearly 2 percentage points while also creating a new annual rebate for families earning less than $150,000.<\/span><\/p>\n

This past spring, New York lawmakers also succeeded in passing new legislation to tax the state\u2019s highest earners and corporations, something New York Democratic\u00a0Gov. Andrew Cuomo had long resisted. All told, the legislation will raise $4.5 billion in new revenue, in part by increasing the personal income tax rate on individuals making over $1 million.<\/span><\/p>\n

\u201cEvery time a state rejects the notion of austerity and leans into raising revenue, it\u2019s more wind in our sails,\u201d said<\/span> Charles Khan, the organizing director at Strong Economy for All, a labor and community coalition in New York. \u201c<\/span>So seeing New Jersey do that last year, and seeing [Gov. Phil Murphy], a former Goldman Sachs exec sign it \u2014 that really helped.\u201d<\/span><\/p>\n

Activists and lawmakers in Connecticut are pushing increases on the wealthiest households <\/span>that would generate <\/span>about $760 million<\/span><\/a> annually, plus a tax on digital ads that could generate an additional $162 million per year.<\/span><\/p>\n

Carol Platt Liebau, president of the Connecticut-based conservative think tank Yankee Institute for Public Policy, told The Intercept that the proposed tax increases would \u201cmake the state more dependent than ever on volatile investment income\u201d and argued that in the past, when such revenues haven\u2019t materialized, the state turned to less-targeted tax hikes that hit the poor harder. According to Liebau, the newly proposed tax increases \u201ctarget people who are extremely mobile and often have the option to move their residence to a lower-tax state.\u201d She pointed to an analysis from her think tank\u00a0showing<\/a>\u00a0that Connecticut still hasn’t recovered the number of high-earning households it had before the Great Recession. It \u201cbarely\u201d\u00a0remains<\/a>\u00a0the wealthiest state, the think tank warns.<\/p>\n

\n\"Gov.\n

Gov. Ned Lamont speaks at a press conference at the University of Connecticut School of Business Graduate Learning Center in Hartford, Conn., on Jan. 13, 2020.<\/p>\n

\nPhoto: Brad Horrigan\/Hartford Courant\/Tribune News Service via Getty Images<\/p><\/div>\n

For decades, efforts to raise revenue by taxing a state\u2019s wealthiest residents have been met with arguments similar to Liebau\u2019s. Resistant lawmakers and local business groups warn that taxing the rich too much would drive the wealthy to move away altogether, leaving the state with even less revenue than they started with. The other common refrain is that higher taxation is an issue for the federal government to address, not something that can be tackled on a state-by-state basis.\u00a0<\/span><\/p>\n

Both arguments sound true at first blush: Adjusting federal tax policy would be a major game-changer, while at the same time, the wealthy already avoid the full cost of their tax bills.<\/span> Earlier this year, a team of researchers from the London School of Economics; the University of California, Berkeley; Carnegie Mellon University; and the IRS<\/span> put out a new analysis<\/span><\/a>, estimating that the richest 5 percent of Americans hide more than 20 percent of their earnings each year from the federal government.\u00a0<\/span><\/p>\n

But in recent years, a growing number of advocates and researchers have begun to push back on these talking points, <\/span>homing in<\/span><\/a> especially on the fear that state tax policy significantly drives residential migration patterns. (Climate preference appears to be a much greater factor.) One Cornell University sociologist analyzed tax return data and found that the rich rarely change the state where they live. Just 2.4 percent of millionaires move across state lines each year, and of those, only\u00a01 in\u00a08 were chasing lower taxes \u2014 or 0.3 percent of millionaires overall. \u201cSo tax flight is not a figment of our imagination, but it is greatly exaggerated,\u201d<\/span> wrote the researcher<\/span><\/a>, Cristobol Young. \u201cThis fraction of moves is too small to matter, especially as New York continues to grow new millionaires faster than any leave.\u201d<\/span><\/p>\n

“Tax flight is not a figment of our imagination, but it is greatly exaggerated.\u201d<\/blockquote>\n

Khan, of Strong Economy for All, said his group\u2019s work in New York has also revealed how state-based reforms can impact federal conversations. \u201cWhen we can pass model-type legislation in blue states, it further moves the constituencies of those House and Senate members to be in favor of taxes,\u201d he said. \u201cSo we\u2019ve seen it does help us on the national level.\u201d<\/span><\/p>\n

Zohran\u00a0Kwame Mamdani, a New York state assembly member who supported raising taxes, said his legislative colleagues often argued that taxation was a national responsibility and not their fight. His colleague Yuh-Line Niou, who also pushed for tax increases, added, \u201cWe heard that since there\u2019s going to be dollars coming from the federal government, we don\u2019t have to raise this money. <\/span>But what we\u2019ve said over and over is, well, that\u2019s going to be a one-time infusion, and we need funding in perpetuity.\u201d<\/span><\/p>\n

In February, lawmakers, unions, and community groups from New Jersey, New York, Connecticut, Pennsylvania, Rhode Island, and Massachusetts convened for a \u201c<\/span>legislative teach-in<\/span><\/a>\u201d to strategize on how to wage the most successful campaigns. More recently, dozens of legislators from those states signed on to a letter calling to end tax breaks for the wealthy and push more progressive state tax systems.<\/span><\/p>\n

Connecticut advocates with Recovery for All say the proposed tax increases could go a long way toward funding housing, social services, and health care. \u201cThe funds could help finance more school counselors, support for paraprofessionals, food availability because some students need meals also at night and on the weekends,\u201d said Jeff Leake, president of the Connecticut Education Association. Callie Heilmann, co-director of the grassroots group Bridgeport Generation Now!, added that the wealth tax could help support an alternative to policing. \u201cWe want to fully fund our mobile crisis teams so they can operate 24\/7,\u201d <\/span>she said.<\/span><\/p>\n\n <\/iframe>\n \n

The tax increases<\/u> on the table in Connecticut are more modest than advocates sought even a few months ago. In early 2021, progressive lawmakers<\/span> introduced<\/span><\/a> legislation<\/span><\/a> in both chambers to generate $4 billion-plus from the state\u2019s wealthiest residents and corporations. Hundreds<\/span> turned out in March<\/span><\/a> to testify in support.<\/span><\/p>\n

Sen. John Fonfara, a Democrat from Hartford \u2014 the poorest city in Connecticut \u2014 and one of the finance committee\u2019s co-chairs, had originally aimed to raise taxes on households earning more than $140,000 annually, but he told The Intercept he couldn\u2019t garner enough support from his colleagues for that. Still, the legislature has \u201cnever pushed anything of this magnitude before,\u201d and he credits the Recovery for All coalition for pushing him to think more seriously about progressive taxation.<\/span><\/p>\n

\u201cI <\/span>candidly admit I had not spent anywhere near enough time with the<\/span> 2014 Department of Revenue Services incidence report<\/span><\/a>,\u201d he said, referring to an analysis that revealed the state\u2019s regressive tax structure. \u201cI now consider that my bible in many respects.\u201d<\/span><\/p>\n

Martin Looney, p<\/span>resident pro tempore of the <\/span>Connecticut\u00a0Senate, acknowledged that changes to the tax code have thus far been modest and incremental. <\/span>\u201cI certainly believe we should take every opportunity to keep advocating for making our tax code more progressive, including having a separate capital gains tax,\u201d he told The Intercept. <\/span>\u201c<\/span>We\u2019re going to continue to advocate for them in our negotiations with the governor.\u201d<\/span><\/p>\n

Business groups, Republicans, and Lamont have continued to stick to their arguments that taxing the wealthy more would be detrimental for the nation\u2019s wealthiest state.<\/span><\/p>\n

Lamont has pointed to the billions of dollars in\u00a0relief funding for the\u00a0coronavirus pandemic coming into Connecticut from the federal government as reason to avoid imposing new taxes. \u201c<\/span>The administration wants us to believe our economic problems just started with Covid,\u201d said <\/span>Fonfara.<\/span><\/p>\n

\u201c<\/span>The discussion is predicated on the belief that Connecticut state government isn’t spending enough money,\u201d said Liebau, of the Yankee Institute for Public Policy. \u201cOur elected officials should be finding better ways to give people their money’s worth, not conjuring up new ways to take more of it.\u201d<\/span><\/p>\n

Lamont\u2019s opposition strikes some Democrats as particularly out of step, since he was one of the<\/span> earliest endorsers of President Joe Biden<\/span><\/a>, and Biden, along with Democrats in Congress \u2014 who have a much slimmer majority \u2014 have made a point of public support for taxing the rich. Lamont\u2019s adamant centrism also stands in strong contrast to the<\/span> progressive mantle<\/span><\/a> he claimed when he ran for U.S. Senate in 2006, campaigning on ending the Iraq War and investing in public education. He moved rightward<\/span>\u00a0just four years later<\/span><\/a>, when he positioned himself as a pragmatic businessperson in his gubernatorial bid.<\/span><\/p>\n

“The ideal approach would be a nationwide approach, but in the meantime there\u2019s a lot we can do. This is not a zero-sum game.\u201d<\/blockquote>\n

Advocates in the Recovery for All coalition are still determining how they\u2019ll ramp up pressure over the next two weeks, but they stress that their work will continue beyond the 2021 budget cycle. \u201cThere\u2019s never been this type of coalition that has worked together before,\u201d said Joelyn Leon, political director of the\u00a0<\/span>Connecticut Employees Union Independent, <\/span>SEIU Local 511. Last week, the coalition<\/span> held a mass rally<\/span><\/a> at the state Capitol in support of the proposed tax increases, and earlier this month, they stormed the governor\u2019s residence in Hartford<\/span> to stage a \u201cdie-in\u201d in<\/span><\/a> support of a more equitable budget. They\u2019re also<\/span> running<\/span><\/a> a series<\/span><\/a> of digital<\/span><\/a> ads<\/span><\/a> to pressure the governor.<\/span><\/p>\n

\u201cWhat New Jersey\u2019s done does help us from a lobbying perspective,\u201d said Jennifer Berigan, the\u00a0<\/span>legislative and political director at Connecticut AFL-CIO. \u201cWhat New York and New Jersey in particular [have] done demonstrates what\u2019s possible.\u201d<\/span><\/p>\n

\u201cYes, the ideal approach would be a nationwide approach, but in the meantime there\u2019s a lot we can do,\u201d said Mamdani of New York. \u201cThis is not a zero-sum game.\u201d<\/span><\/p>\n

The post Pressure Mounts to Tax the Rich in Connecticut<\/a> appeared first on The Intercept<\/a>.<\/p>\n\n

This post was originally published on The Intercept<\/a>. <\/p>","protected":false},"excerpt":{"rendered":"

While Democratic Gov. Ned Lamont threatens a veto, an emboldened wealth tax movement is gaining ground state by state. <\/p>\n

The post Pressure Mounts to Tax the Rich in Connecticut<\/a> appeared first on The Intercept<\/a>.<\/p>\n","protected":false},"author":246,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[],"_links":{"self":[{"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/posts\/183010"}],"collection":[{"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/users\/246"}],"replies":[{"embeddable":true,"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/comments?post=183010"}],"version-history":[{"count":1,"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/posts\/183010\/revisions"}],"predecessor-version":[{"id":183011,"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/posts\/183010\/revisions\/183011"}],"wp:attachment":[{"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/media?parent=183010"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/categories?post=183010"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/tags?post=183010"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}