Bob’s Economic Plan To Rebuild Connecticut
A Five-Step Plan endorsed by President Reagan’s Economic Advisor Dr. Arthur Laffer
Connecticut is in Economic Free Fall
Connecticut is in absolute crisis.
High Taxes – We have the highest tax burden in the nation. We in Connecticut have to work four weeks longer than the average American just to cover our tax bills! We need to work until May 21 – vs. April 23 on average (as reported by the Tax Foundation)
Out of Control Spending – Despite five tax increases since 1992, we have a growing, $3.5 billion budget deficit and a pension plan which is underfunded by $74 billion.
Job Losses – Since introducing a state income tax in 1991, we have had the slowest job growth in the entire nation – with 6,600 jobs lost in October 2017 alone.
Decline Population – More people are leaving Connecticut than any other state (except West Virginia). In the last 10 years, we have lost $6 billion in adjusted gross income from people moving to Florida alone!
A Dysfunctional Government – the current fiscal year budget was 117 days past due, and it included $881 million in “unidentified savings” and was already more than $200 million out of balance only a month after it was signed into law.
Connecticut Democrats have followed a policy of “Tax & Spend”.
Bob’s Five-Step Plan to Rebuild Connecticut
Step 1: Phase out corporate income tax and business entity tax over 2 years
- Eliminating the Corporate and Business Use taxes, reducing regulatory interference will provide stimulus for companies to rediscover everything our state has to offer.
- Our corporate tax raises less than 5.0% of the state’s total tax revenues, but Connecticut is uncompetitive with its neighbors and rivals. Repeal is an affordable and important way to carve a competitive niche relative to economic development marketing.
- In recent months, the headquarters of GE, Alexion, and Aetna left. Bristol-Myers and Konica Minolta have also announced plans to depart.
- Since 1991, we have seen the slowest job growth in the entire nation. We lost 6,600 jobs in October 2017 alone.
- Our labor force participation continues to decline – only 66% of the adult population is working or looking for work – 1/3 are on the sidelines.
We need a bold statement – a bona fide competitive advantage – to get businesses to start here, expand here, and relocate to Connecticut – and quickly – so that the number of jobs, number of businesses, and labor force participation all start moving in the right direction again.
Step 2: Phase out state income tax over 8 years
- Introduce an across-the-board income tax cut over eight years tied to the attainment of revenue targets.
- Our income tax destroys growth! For the 15 years preceding the Connecticut State Income Tax (1976 to 1991), our state economy grew faster than any other state. For the 25 years after the tax (1991-2016), our growth is 46th in the nation.
- Since 1960 only 11 states have introduced a state income tax. In each of those 11 states, every economic metric is down – population, gross state product, and total tax revenues. Adding an income tax reduced gross tax revenues – in every instance!
- A study by the Cato Institute showed that over 5 years: the 5 states that increased taxes the most had zero job growth and the 5 states that decreased taxes had the most job growth at 10.8%.
Massachusetts did it! They lowered the tax rate to 5.1% and since then, population, employment, personal income and tax revenues have all gone up!
Step 3: Eliminate the gift and estate taxes immediately
- The majority of states have already done away with both the gift and estate taxes as they drive residents to other tax-free states!
- We are the only state with both an estate and a gift tax!
- They raise only about 1 percent of the state’s total tax revenues each year – but cost so much more than that in the slowing of our economy.
- These taxes are causing more people to leave Connecticut than any other state (except West Virginia).
- An astounding $6 billion of adjusted gross income has left for Florida alone in the past 10 years.
We want our retirees to stay here! They create jobs, pay taxes, donate to charities, buy goods and services and sustain our state’s economy.
Step 4: Embrace zero-based budgeting to reduce spending
- Zero-based budgeting starts with a “blank piece of paper” not an already bloated budget with special interests and sacred cows baked in.
- You add back in only the services absolutely needed while finding creative ways to do things cheaper.
- Even with “fixed” costs like debt service and SEBAC, 20 to 25% of CT’s budget is “discretionary.”
- With a two-year budget exceeding $40 billion, there are plenty of opportunities to identify savings and efficiencies.
- Review every department and agency for waste, fraud, and abuse
- Reward, with whistleblower protection, employees with cost savings ideas.
- Contract out public services to the private sector, starting with the DMV
- Consider more public-private partnerships to share the cost of aging infrastructure
- Reduce SEBAC – lower staff via attrition, defined contribution plan for non-vested employees, “revisit” overall contract extension.
Step 5: Enact a Taxpayer Bill of Rights.
- Impose term limits for state legislators (5 terms/10 years) and the governor (2 terms/8 years).
- Allow for a recall of state officials who are not living up to campaign promises, getting the job done or representing their constituents properly.
- Impose a constitutional amendment to require a supermajority to enact any tax or fee increase.
- Allow citizens the rights of referendum and recall.
- Require more transparency around private interests receiving tax payer dollars.
Our constitution never intended for political office to be a “job for life.” We need better accountability around the actions of our representatives and a mechanism to force fresh thinking on how to solve problems.
It Can Work
Lower corporate taxes will bring companies and jobs back to Connecticut.
Lower individual taxes will increase disposable income, resulting in more consumer demand and businesses will expand to meet that demand.
Eliminating the gift and the estate tax will stop the exodus of high tax paying residents to Florida and other low tax states.
Zero-based budgeting will force a fresh perspective on what costs are truly needed and what can be eliminated.
A Taxpayer Bill of Rights will ensure accountability around government officials to best represent their constituents or be removed from office.