Senate Leadership
April 16, 2007
Non-partisan Analysis Shows Democratic Budget Saves Low- and Middle-class Taxpayers Hundreds of Dollars
Joint and single filers save substantially compared with governor’s plan
An analysis conducted by the non-partisan Office of Fiscal Analysis and released today shows that the Democrats' proposed 2008-2009 biennial budget will save joint income tax filers earning $200,000 or less, and single income tax filers earning $150,000 or less, several hundred dollars--and some more than $1,000--compared with Republican Gov. M. Jodi Rell's proposed taxing and spending plan.
The savings are based on the Democrats' proposed, progressive income tax structure which reduces the tax on low- and middle-income families and doubles the property tax credit to $1,000, compared with Gov. Rell's proposed across-the-board income tax hike and halving of the property tax credit.
"This is more solid evidence that our proposed plan is better, fairer, and smarter than the governor's income tax proposal, which hits Connecticut's poorest citizens and our middle-class families with significant tax increases instead of the tax relief we provide," said Senate President Pro Tempore Donald E. Williams, Jr. (D-Brooklyn). "This is the fundamental tax reform, and the fundamental tax relief, that Connecticut taxpayers expect and deserve. An income tax cut of $600 or $1,300 per family, for example, as proposed by the Democrats, coupled with our investments in education and health care, is certainly the better-balanced budget plan. I look forward to a serious discussion with the governor on the merits of our plan and on our commitment to improving the lives of Connecticut's citizens."
"When the state income tax was first implemented 15 years ago, it was intended to provide more reliable revenue for years to come--and it has served dependably all these years--but the state's needs have grown in 15 years, especially in the areas of health care and energy, and this adjustment to the state's revenue portfolio has become necessary," said Sen. Eileen M. Daily (D-Westbrook), who is co-chair of the legislature's Finance, Revenue and Bonding Committee. "We're delighted about the tax package we've assembled to provide considerable relief to an overwhelming majority of state residents while providing for the needs of all state residents."
"We're committed to making sound, structural changes on the revenue side of the budget so the state is well-positioned for the future, and this formula is an important first step in that direction," Sen. Daily added.
The OFA analysis (attached) shows that for joint income tax filers earning between $40,000 and $200,000 in annual adjusted gross income (AGI), the annual income tax savings under the Democrats' plan ranges from $87 (at $40,000) to $1,407 (at $100,000) to $835 (at $200,000) compared with the governor's plan.
For single income tax filers earning between $25,000 and $150,000 in annual adjusted gross income, the income tax savings under the Democrats' plan ranges from $8 (at $150,000) to $124 (at $25,000) to $1,055 (at $60,000) compared with the governor's plan.
And despite the governor's recent assertion to the contrary, the income tax savings' continue even with the proposed elimination of the sales tax exemption on clothing items under $50.
Based on a review of U.S. Census data (a 2003 estimated population of 3.5 million and a 2000 average household size of 2.5) and OFA budget data (an estimated $138 million in sales tax exemption revenue in 2008), it is estimated that the average Connecticut household saves approximately $98.57 per year by not paying the 6% sales tax on clothing items costing $50 or less. This equates to the average Connecticut household spending $1,645 per year on clothing items costing $50 or less.
"Even with the elimination of this sales tax exemption, the typical Connecticut family is still going to see hundreds of dollars in annual tax savings compared with the governor's plan," Sen. Williams said. "It's time to end the partisan rhetoric and start focusing on budget facts. It's also time to begin the long-delayed debate about income tax fairness. Our philosophy- and it represents a sea change here in Connecticut--is that those who can afford much, much more should be asked pay just a little bit more, and take some of the burden off of those hardworking, middle-class citizens who make up the vast majority of taxpayers and who fuel Connecticut's economy. Democrats believe that's fair. We hope to bring the governor around to our point of view."
Download the OFA analysis.
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