Property Tax Reductions, Closing Loopholes, and Fair Tax Policy

PROPERTY TAX REFORM

• Connecticut can no longer rely on exorbitant property taxes to pay its bills; we cannot afford it, and it contributes to Connecticut’s dubious status among the states with the greatest income inequality. In the long run, we should eliminate local property taxes in favor of a statewide property tax, which would reduce inequality and maintain local control of schools, but result in efficiencies that would result in a tax cut for two-thirds of Connecticut residents.
• In the short run, we should lower the maximum mill rate for Motor Vehicle Taxes. Currently, those in Bridgeport, Trumbull, and Monroe pay more in tax for the same car than those in the state’s wealthiest communities. We can address this by further lowering the maximum mill rate.
• We should also expand the Circuit Breaker program, which provides state-based tax relief to seniors. We should relax the income requirements to qualify for these programs so that more in our district can qualify and expand it beyond senior citizens to give a property tax break to working class and middle-class families.

CLOSING LOOPHOLES

• Connecticut should generate more state and municipal revenue by closing costly loopholes that disproportionately benefit the very wealthy. For example, we should eliminate the carried interest loophole. While we need to encourage entrepreneurship and investment in Connecticut, hedge fund managers ought to play by the same rules as everyone else. Currently, hedge fund managers in Connecticut pay half the taxes of ordinary residents. The earnings of wealthy hedge fund managers currently are currently taxed as interest income, which means that they are taxed at a 20% rate rather than at the normal rate of 39.8%.
• Also, we should address the fact that many tax-exempt organizations, including Connecticut’s wealthiest private universities, are being used for commercial or quasi-commercial purposes. We should enact legislation clarifying that when tax-exempt organizations use property that generates a profit, it should not be tax exempt. Closing this loophole will allow cities such as Bridgeport and New Haven to generate substantial additional revenue.

FAIR TAX POLICY

Connecticut must work toward a more just and equitable tax policy. Connecticut relies too heavily on regressive taxes and does not compel the state’s wealthiest residents to pay their fair share. According to Connecticut Voices for Children, working class families pay an effective tax rate three times higher than the top one percent, but the top one percent in our state make 40 times as much as the average worker in pre-tax income. This can be alleviated by implementing the plan proposed by Fair Share CT that would raise the top tax rate to 9.99 percent on couples earning more than 5 million dollars per year rather than cutting necessary services. With this additional revenue, we could expand the child tax credit and the property tax credit for working people. When Massachusetts implemented their version of this tax, many expressed the concern that it would not generate the desired income because the wealthy would simply move. However, exodus of wealth people has not occurred, and the new tax generated $1.8 billion for Massachusetts in 2024, much more than predicted. Connecticut could anticipate similar results.