Department of Economic and Community Development Commissioner Joan McDonald said Friday that the Democrat-controlled Finance Committee’s proposal to impose a 30 percent surcharge on corporate taxes, in addition to its proposal to eliminate the sales tax exemption on computer and data processing services will cost the state 2,670 job per year over the next 10 years.
“We have only begun evaluating all the impacts of the Finance Committee’s tax plan, but just a few of the elements in their proposal could result in a $3.4 billion decline in our domestic gross product and the loss of thousands of jobs,” McDonald said.
“Right now is the wrong time to slow economic growth and kill jobs by strangling our businesses with a network of new taxes,” McDonald said.
When Democrats unveiled their proposal, Sen. Eileen Daily, D-Westbrook, said the 30 percent surcharge would only apply to businesses making a profit.
“The tax proposals would also result in a drop in personal income of $250 million a year for 10 years at a time when consumer spending will be critical to regaining our economic health,” McDonald said. “These proposals would have the combined effect of severely impacting Connecticut’s economic recovery.”
“The tax proposals would also result in a drop in personal income of $250 million a year for 10 years at a time when consumer spending will be critical to regaining our economic health,” Commissioner McDonald said. “These proposals would have the combined effect of severely impacting Connecticut’s economic recovery.”
The analysis by the Department of Economic and Community Development utilized Regional Economic Models, Inc. in Amherst, Mass. to reach its conclusion regarding the tax proposals.
The study showed that the imposition of a 30 percent corporation tax surcharge will:
-result in the loss of, on average, over 470 jobs a year for the next 10 years;
-trigger a decline in the state’s gross domestic product by $74 million a year for the next 10 years;
-result in a $39 million drop in personal income a year for the next 10 years; and that:
-Connecticut will continue to feel the negative effects of a 30 percent corporate tax surcharge for at least 7 years beyond its three-year life.
The study also showed that elimination of the sales tax exemption on computer and data processing services could:
-increase costs on Connecticut’s 1,500 information technology firms, making them less competitive with similar firms in other states;
-impact every business that uses IT services as they may go elsewhere for services;
-result in the loss of, on average, over 2,200 jobs a year for the next 10 years;
-trigger a decline in the state’s gross domestic product by $270 million a year for the next 10 years; and
-result in a $219 million drop in personal income a year for the next 10 years.