UBS may move some people -- Is anyone surprised?

The head line in the local news is that banking giant UBS may move hundreds of workers out of its Stamford offices. Leaders like Governor Malloy (who used to be mayor of Stamford) claim to be shocked by the prospect. Why is that? Since taking office in January, Malloy has moved aggressively to raise taxes throughout the state, but with a big focus on the high end of the income spectrum. That means that the big advantage that Connecticut had with regard to tax rates when UBS moved here in the late 1990's is all but gone. There is no real difference anymore between the top income tax rates in New York and Connecticut. Back before Connecticut had a state income tax, Stamford was able to rebuild the entire downtown of the city based upon luring large corporations whose executives wanted to excape from the high New York tax rates. Even after the state put in an income tax, there was still a major differential in rates between Connecticut and NY. The flow of companies relocating dwindled, but it did not stop. With the latest moves by Malloy and the Democrats, the flow is starting to reverse.

The most important industry in Connecticut insofar as tax contributions through the income tax is concerned is the combination of banks and hedge funds in Greenwich and Stamford. To the extent that the Obama economy has not damged these industries, the Malloy tax rates are now driving them out.