Connecticut Governor Dannel Malloy did the unthinkable for a Democrat: He admitted taxing the rich does not work. The state has witnessed “two high-end tax hikes in the past six years.” So the wealthy in Connecticut have done what any sane person would choose to do: LEAVE.
Now the state faces a $2.2 billion deficit as income state revenue continues to collapse. WTNH reported:
It’s happening because the state of Connecticut depends too much on its wealthy residents, and wealthy residents are leaving, and the ones that are staying are making less, or are not taking their profits from the stock market until they see what happens in Washington.It’s been ten full days since the April 18th tax filing deadline, and workers at the state tax department are still processing returns coming in the mail. Even though about 90 percent of all Connecticut residents file electronically, many still send their checks for taxes due in the regular mail. It now looks like expected revenue from the final Income filing will be a whopping $450 million less than had been expected.“Next year it looks like our first year budget, fiscal ’18, now instead of having a $1.7 billion deficit to address, it’s now about $2.2 billion,” said Senate President Pro tem Martin Looney (D-New Haven). And it has a major impact on the current budget year that ends in just two months.
Connecticut has collected $235 in its “Rainy Day Fund” for emergencies. Somehow officials need to “find $215 million in the next few weeks just to balance the books on the current year.” WTNH continued:
Governor Malloy added, “The reality is that in Connecticut we get most of our money from very few people and that can produce some very wild swings.”The Governor is calling for an immediate hiring freeze and review of all current spending and will meet with legislative leaders from both political parties in a sort of first round budget summit early next week.
Stats have shown that “the income tax paid by Connecticut’s top 100 taxpayers this year fell by an astounding 45 percent compared to last year.”
So exactly how will officials solve this crisis? Very simple: SLASH THE BUDGET.
Ben Barnes, Malloy’s budget director, admitted the state needs to cut the budget. From The Hartford Courant:
“We need to take immediate action to reduce spending between now and June 30 to reduce our current-year deficit as much as possible to prevent the need to borrow to meet expenses. We also need to develop new, additional approaches to further reduce spending in order to balance the budget for the years ahead,” said Ben Barnes, Malloy’s budget director. “Our budget, which already demanded painful choices, has just become about $600 million worse in FY18 and $864 million worse in FY19. We cannot afford business as usual.”
Malloy told reporters that officials have no plans on borrowing money. After all, he said, the state is “pretty good at clipping expenses.”
Yeah…that’s why your state has no money.
Republicans leaders stated that they have warned the state government that the high taxes would force out the rich. The Hartford Courant continued:
Members of the Connecticut Hedge Fund Association recently testified to the legislature’s finance committee that high-profile, Greenwich fund managers Edward Lampert and Paul Tudor Jones have moved their operations out of Connecticut to Florida for tax reasons. Lampert and Jones are two of the best-known managers in the investment business.House Republican Leader Themis Klarides of Derby said a few departures at the highest levels can have a disproportionate impact.”All it takes is a couple,” Klarides said. “Everybody isn’t leaving. We’re all here. But it doesn’t take that many — when you’re relying on high earners to that extent. … It matters if a couple of people leave.”
Simple economics: Stop spending. STOP SPENDING. Also, don’t punish the rich.
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