Over the last few weeks, there has been a confrontation of sorts between the Connecticut legislature and governor Lamont. The subject is spending, bonding and taxes. It may not sound interesting to most people, but it is a battle that will determine whether the collapse of the Connecticut economy will be rapid or slow.
The Democrat controlled legislature has move forward on two measures. In the House, there was committee approval for a plan that would take control of the issuance of bonds by the state and give it to the legislature. Governor Lamont wants to limit new borrowing in the next year to "only" 1.3 billion dollars, while the legislature wants a much higher figure. Right now, the state has one of the very highest levels of debt of any state in the country. The budget consistently runs up deficits. CT is about to the point where its credit rating will collapse down to junk. Any increase in the amount of outstanding debt is a mistake.
Meanwhile a House committee also approved a measure to place a 2% surtax on capital gain income for wealthy tax payers. Governor Lamont says he opposes this measure, but he hasn't said he would veto the measure if passed. As a result, the plan for this surtax moves forward inside the legislature rather than there being any focus on some other way to balance the budget (like actually cutting some portion of state spending.) It's worth remembering that a 2% capital gains tax on the wealthy will likely force a big chunk of the hedge fund industry to leave its home in Fairfield County. Stamford and Greenwich became the third largest center of the hedge fund industry worldwide (after New York and London) principally because of what used to be the proximity to New York and what used to be the best regional tax structure for firms of this sort. A capital gains surtax is aimed directly at hedge funds and their employees. For those hedge funds considering a move to Florida (where there are no income taxes), this 2% additional surtax will likely be the final straw. Connecticut will lose a large number of individuals with that departure who currently pay a big chunk of all state taxes. The net effect of the tax increase will be a decrease in revenue for the state.
What all this shows is that the legislature is even less responsible than governor Lamont when it comes to taxes and the budget. None of them are trying to control expenditures. There aren't even any proposals of that sort. Instead, what is being done is a negotiation between an irresponsible governor who focuses only on raising taxes and tolls on the one hand and an even more irresponsible legislature that wants still bigger tax increases on the other hand.
It's sad to say, but it is likely time for people to leave this state. There won't be a big disaster this year, but it's coming in the next few years. When it hits, those who will suffer will not be the politicians or the state employees with their guaranteed benefits, pensions, etc. No, it will be the average state resident who will take the big hit. Taxes will soar. Home values will plummet. Jobs will evaporate. It won't be pretty.
The Democrat controlled legislature has move forward on two measures. In the House, there was committee approval for a plan that would take control of the issuance of bonds by the state and give it to the legislature. Governor Lamont wants to limit new borrowing in the next year to "only" 1.3 billion dollars, while the legislature wants a much higher figure. Right now, the state has one of the very highest levels of debt of any state in the country. The budget consistently runs up deficits. CT is about to the point where its credit rating will collapse down to junk. Any increase in the amount of outstanding debt is a mistake.
Meanwhile a House committee also approved a measure to place a 2% surtax on capital gain income for wealthy tax payers. Governor Lamont says he opposes this measure, but he hasn't said he would veto the measure if passed. As a result, the plan for this surtax moves forward inside the legislature rather than there being any focus on some other way to balance the budget (like actually cutting some portion of state spending.) It's worth remembering that a 2% capital gains tax on the wealthy will likely force a big chunk of the hedge fund industry to leave its home in Fairfield County. Stamford and Greenwich became the third largest center of the hedge fund industry worldwide (after New York and London) principally because of what used to be the proximity to New York and what used to be the best regional tax structure for firms of this sort. A capital gains surtax is aimed directly at hedge funds and their employees. For those hedge funds considering a move to Florida (where there are no income taxes), this 2% additional surtax will likely be the final straw. Connecticut will lose a large number of individuals with that departure who currently pay a big chunk of all state taxes. The net effect of the tax increase will be a decrease in revenue for the state.
What all this shows is that the legislature is even less responsible than governor Lamont when it comes to taxes and the budget. None of them are trying to control expenditures. There aren't even any proposals of that sort. Instead, what is being done is a negotiation between an irresponsible governor who focuses only on raising taxes and tolls on the one hand and an even more irresponsible legislature that wants still bigger tax increases on the other hand.
It's sad to say, but it is likely time for people to leave this state. There won't be a big disaster this year, but it's coming in the next few years. When it hits, those who will suffer will not be the politicians or the state employees with their guaranteed benefits, pensions, etc. No, it will be the average state resident who will take the big hit. Taxes will soar. Home values will plummet. Jobs will evaporate. It won't be pretty.
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