Connecticut is doing very well in fiscal terms, and has no deficits or looming financial problems. In fact, the state has more than $260 million in surplus, which has both Democrats and Republicans discussing how to give about $200 million of it back to some of the state’s taxpayers.
Minority Leader Lawrence Cafero, R-Norwalk, said Wednesday that “we want to do what we can to extend a helping hand to those who need it most.” He said Republicans want to offer taxpayers a credit for up to $500 per household for any out-of-pocket medical expenses, and up to $500 per household for home heating assistance.
He said the heating assistance tax credit would not apply to renters, whose heat is often included in their monthly rent.
Cafero said both tax credits would be based on 2007 tax returns. He said that if the eight legislative committees that may take up the proposal opt to move their deadlines up three weeks, the General Assembly will be able to pass the tax credits by March 19—in time for the April 15 tax filing deadline.
Tuesday, Senate Democrats unveiled their one-time, middle class property tax credit based on income. Democrats also revealed plans for a new state earned income tax credit for low-income families, mortgage relief, home heating assistance, and tax breaks for some small businesses. Click here for that report.
Republicans and Democrats agree on getting rid of the business entity tax, and they also broadly agree that they will give taxpayers a credit using an estimated $200 million in state surplus funds.
Republicans said they already proposed getting rid of the business entity tax, which is paid by all businesses in the state, in 2003, a year after it was adopted to close a budget deficit. The tax adds about $30 million to state budget revenue each year. Discussion include keeping the tax for large corporations, while elminating it for small business.
Gov. M. Jodi Rell is on board with eliminating the small business tax.
Cafero said Republicans are willing to work with Democrats on all of these ideas as long as they stay under the statutory spending cap and don’t raise or create any new taxes.
Senate Republicans will release their own plan at 1 p.m., Thursday at the Legislative Office Building. It almost goes without saying that House Democrats will weigh in on the debate too.
Rell will open the 2008 legislative session Wednesday, Feb. 6, with a speech that lays out her priorities.