Tuesday, February 15, 2011

Are extreme tax hikes during a recovery brave or foolish?

CT Governor Dannel Malloy has released his budget and it is a doozy. In an attempt to close the budget gap, he is proposing huge tax increases on nearly everyone and everything.

In one of the largest and most wide-ranging tax increases in Connecticut history, taxes on income, cigarettes, alcohol, gasoline, and estates would all increase under Gov. Dannel P. Malloy's budget proposal to be unveiled Wednesday.

The current 6 percent sales tax would also rise for the first time since the state income tax was created in 1991 - to 6.25 percent...Malloy is also seeking to eliminate the sales-tax free week, which is popular among families as it is held in August for back-to-school shopping. Overall, Malloy is proposing more than 50 different tax changes in a package that would increase taxes by $1.5 billion in the first year and $1.34 billion in the second year.

The taxes are so wide-ranging that they would touch anyone who earns a salary, drives a car, gets a haircut, buys clothing, sleeps in a hotel, takes yoga lessons, pays for a manicure, smokes cigarettes, drinks alcohol or takes a poodle to get a haircut.
I am not sure what to think of the governor at this point. On the one hand, this is a courageous move in the era of the Tea Party. While CT is about as blue as they come, there are plenty of anti-tax protesters ready to come out in force. On the other hand, this seems sure to stifle any nascent economic recovery in the cradle and drive businesses out of the state altogether.

Then again, "brave" and "foolhardy" are not always mutually-exclusive terms. Here's hoping the CT Congress can moderate these terms into something the state can live with. Otherwise, it may be time to think about checking out job opportunities elsewhere.


BowHunter said...

This is what happens when you run a surplus for so many years. Jody let the state run large surpluses almost every year she was in office. This is like steroids to politicians. They drove up spending, endorsed pet projects, and created new legacy costs. What was the big deal? We were running a surplus!
We should have cut our revenues (lowered taxes) to bring it in line with our needs. Instead we increased our needs and now can't pay for them in a down turn. The legislature must think we are pretty stupid. I have already left CT and am looking forward to the day when I can unburden myself of my CT rental property. In the mean time I will try to tighten my belt and pay the higher property taxes and take an even bigger loss on my rental. Did I mention I loath tax and spenders from both sides? Their actions had directly affected my family who was already living as tight as we could. It will now decide how many days my girls can attend pre-school. Loathing.

quizwedge said...

CA would welcome you, but I doubt you'd be better off. Our politicians keep trying to increase revenue with more taxes only to find it doesn't bring in as much as they thought. I think there may have even been a time when tax revenue went down after an increase.

Kalashnikat said...

Let me guess...Jody and Dannel are...ooh, this is tough,...Democrats?

BH said...

Jody was a populist Republican Lieutenant Gov. until Gov. John Rowland had to resign due to a coruption scandal in 2004. She served as Gov. until 2011 when she did not seek re-election.

How hard would it have been to google it instead of looking ignorant and snarky?