Standing shoulder-to-shoulder amongst the freshly pressed shirts at Sedgwick Cleaners in West Hartford eight Senate Democrats unveiled a plan that they say will help protect small businesses and grow jobs in the state.
Their plan includes suspending the $250 business entity tax levied on some ‘Mom and Pop’ type small businesses for two years, calls for the consolidation of several economic development agencies, and creates a revolving loan fund for small businesses. The plan does not completely eliminate the business entity tax, which brings in between $35 and $38 million a year. But it would suspend it for some small businesses. The threshold of what “small business” means has yet to be defined by lawmakers.
In order to make up for the lost revenue from the suspension of the business entity tax on some businesses it will create a new tax on Connecticut residents who received federal TARP funds. TARP is a program the federal government used to purchase assets and equity from financial institutions to strengthen its financial sector after the subprime mortgage crisis.
Under the Democratic plan bonuses of $1 million or more will be subject to a temporary 2.47 percent surcharge for income years 2010 and 2011.
The money then would be put into a revolving loan fund where small businesses could apply for a loan.
“Some of the big firms on Wall Street were able to get taxpayer money in order to solve their problems, but they still haven’t started lending money to small businesses in the amount and quantities necessary to grow the jobs here in Connecticut,” Sen. President Donald Williams, D-Brooklyn, said.
“We are going to seek restitution from Wall Street. Take some of the taxpayer money back in a form of a surcharge on those huge bonuses that folks on Wall Street have been getting and then have that money go to the small businesses in Connecticut,” Williams explained Monday.
Just how much money the state may be able to collect from Wall Street executives that live in the Connecticut is still unknown. But Williams believes that the state could recover about $20 to $30 million alone from Goldman Sachs employees, who received a total of $24 billion in bonuses.
“Without seeing the numbers from OFA we’re confident this is going to raise a significant amount of revenue,” Williams said.
Dana Gordon, the owner of Sedgewick Cleaners, said suspending the business entity tax isn’t about the $250, it’s about the inequity of the tax.
“I have to pay the same tax UTC [United Technologies Corporation] pays and my revenue is no where near theirs,” Gordon said.
Senate Minority Leader Pro Tempore Leonard Fasano, R-North Haven, said he agrees with three out of the four proposals. The one Republicans don’t agree with is the extra tax on the TARP bonuses.
Twenty percent of the people in this state already pay 80 percent of the taxes, Fasano said. Forcing them to pay more is going to force them to move out of the state.
As for the budget crisis, Fasano said the Republicans and Democrats have to sit down together to resolve it. Right now, “it’s partisan politics at its worst.”
“People are tired of the partisan bickering,” Fasano said.
Williams said he did reach out to Senate Minority Leader John McKinney regarding the economic development solutions both parties agree on, but didn’t receive a response. Fasano said Williams has yet to respond to their December request for bipartisan budget talks.
“It’s a two pronged approach here: balance the budget and preserve jobs,” Williams said. “We’re going to roll up our sleeves and do a lot of things folks aren’t expecting,” such as eliminating the Department of Motor Vehicles.
“There’s only 11 DMV’s in the United States, not every state needs a DMV,” Williams said hinting at an idea he may resurrect again this year.
“There will be program cuts, I predict. You’re going to see some very significant cutting and consolidating this session.”
Fasano said he’ll believe it when he sees it.
“By not addressing this budget crisis, we’re not moving the state forward,” Fasano said. “Let’s sit down and talk.”