
A new report on income trends shows that income inequality grew more in Connecticut than any other state in the nation.
Real income for the poorest families in the state has declined since the late 1980s by 17 percent, while the wealthiest families have enjoyed an increase in their real income of 45 percent, according to a joint report from Connecticut Voices for Children and the Center for Budget Policy and Priorities in Washington D.C.
While the poor were getting poorer and the rich were getting richer, middle-income families saw little change in their real incomes. According to the report, the income of families in the middle grew just 5.1 percent.
Click here to view the chart, or keep reading about the report below.
The average income of the wealthiest fifth of Connecticut families is 8 times greater than the income of the poorest fifth, compared to 4.6 times in the late 1980s, the report found.
The states with the biggest increases in income disparities since the late 1980s are Connecticut, Rhode Island, Massachusetts, Alabama, New York, Kentucky, Maryland, Kansas, New Jersey and Washington.
The Center for Budget and Policy Priorities portion of the report found that many states made their tax systems more regressive during the 1990s. Early in the decade, when a recession created budget problems, states were more likely to raise sales and excise taxes than income taxes. Later in the decade, when many states cut taxes in response to the strong economy, nearly all chose to make the majority of the cuts in their income taxes rather than sales and excise taxes.
Last year in Connecticut a progressive income tax package passed both the Senate and the House, but was vetoed by Gov. M. Jodi Rell. While Democrats had majorities in both chambers they were unable to find enough political will to override the veto. So instead of shifting the income tax burden to those who make more than $200,000 a year through a progressive income tax, the legislature balanced the budget on a cigarette tax increase.
On Monday Sen. President Donald Williams, D-Brooklyn, and Speaker of the House James Amann, D-Milford, said there was no proposal to change the income tax structure in the state this year.
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However, the Finance, Revenue, and Bonding Committee has proposed a new tax on deliveries, which came as a surprise to both Williams and Amann.
Williams said he would like to see some more details about the proposal. “How much money would it raise?” he asked.
“No one is ready to endorse or sign onto it until there’s more information,” Williams said.
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