Of the 1.45
million taxpayers in the Connecticut, according to the Office of Policy and
Management, the biggest portion, 77 percent, fall into the 5 percent and 5.5
percent tax brackets, which ranges in adjusted gross income from over $20,000
to $100,000 for joint filers.
A boost in the sales tax, which now covers a slew of new items, is 6.35 percent
up from 6 percent, the first change in two decades and the first thing
residents ran up against since they went into effect in July and covered such
things as clothing under $50 and manicures.
The biggest impact of the income tax changes will be felt by those making more
than $250,000 as they pay almost 66 percent of the tax, according to the state
Office of Policy and Management.
Nancy Andrews, spokeswoman for the CBIA, said they have put out information on
the changes to try to make sure their members are informed of how this will effect their businesses.
Andrew Markowski, the state director of the National
Federation of Independent Business, said “our members are furious” about the
boost in taxes since the majority of small businesses are limited liability
corporations subject to the income tax.
“The bottom line is most of these businesses operate on very thin margins. This
will impact how they plan for next year and beyond. Long-term calculations
could mean relocating out of state,” mainly down South, Markowski
said.
Fred Carstensen, an economics professor at the
University of Connecticut, said the marginal tax rate changes in Connecticut are fairly
small.
“Increased taxes in general have a relatively small impact on
people’s behavior in the short run,” although that could change long range.
Right now, he said people migrate from Connecticut
to Massachusetts and New York all the time despite their higher
taxes.
“Taxes are not as powerful a motivator as some would like to claim,” Carstensen said. He said the biggest impact of the
increased taxes in Connecticut
is that it mitigates against service cuts and massive
layoffs.
Malloy has threatened to eliminate 6,500 jobs, which could
mean more than 4,300 layoffs if he doesn’t get $1.6 billion in savings from
state workers. A positive vote on a concession package is now more
likely since the State Employees Bargaining Agent Coalition revised its bylaws
and a clarified deal is soon going back out for a second shot at approval. Continued...http://www.nhregister.com/articles/2011/07/24/news/doc4e2b7320c6c09451017589.txt?viewmode=2