NEWS FLASH - New Report Blows Hole in "Shared Sacrifice" Argument.

by: jonpelto

Tue Mar 08, 2011 at 17:04:47 PM EST

Connecticut Voices for Children, the New Haven-based public policy research organization has put out the most extensive assessment of Governor Malloy's income tax proposal to date.

As has been pointed out on numerous occasions, even after the Connecticut legislature increased the income tax rate on the wealthy, Connecticut richest citizens "pay less than half the percentage of their income in state and local taxes than do most of the rest of us.

Connecticut's low- and middle-income families pay about 10% or more of their total income in state and local taxes while the state's top earners pay only 4.9% of  their income in state and local taxes (after accounting for Federal Tax Deductions).

The new study by CT Voices points out that while the income tax is the fairest way to raise revenues, the Governor's proposal to totally eliminate the property tax credit "as well as increases to the sales tax make the middle class the hardest hit of any income category."

In the end, the report shatters the notion of shared sacrifice and points to the need for the Governor and Legislature to rework the revenue side of the Governor's budget proposal.

Due to the elimination of the property tax credit, a family making $45,000 would lose their entire $500 property tax credit under Malloy's proposal which means that the overall percentage of their income that goes to the state income tax would jump by 1.1% of their income.

At the other end of the spectrum, Connecticut wealthiest would only see their income tax rates increase by 0.4 percent of their income.

CT Voices also conducted a more detailed analysis of the Governor's sales tax proposals and - again - found that the greatest impact would fall on middle-income people.

When the combined income and sales tax increases are taken into consideration, Connecticut's middle income earners would pay 0.9 percent more of their incomes in income and sales taxes while the wealthiest in Connecticut would only see a 0.5 percent increase in their total contribution to Connecticut state government.

More detailed information about the CT Voices study and their recent testimony to the Legislature including their ideas for improving the Governor's proposal can be found at:

http://www.ctkidslink.org/test...