Republican Tom Foley, who lost the governor’s office by a small margin last year, launched the Connecticut Policy Institute this week with a white paper on the state’s income tax.
It contends that raising the income tax to reduce the state’s budget deficit would be a costly policy error. The paper claims Connecticut is a special tax case with a disproportionately small and mobile base of high income taxpayers, many of whom live in Connecticut because the state’s income tax is lower than its neighbors.
The paper estimates that raising the income tax one percentage point would reduce the size of this tax base by ten percent over ten years, resulting in negative revenue generation of $13 million in year ten, $2 billion less in state GDP, and 15,000 fewer jobs.
“Talk of raising the income tax even further is scary when it is clear that doing so would cost the state and its citizens dearly,” Foley said. “We hope good policy prevails over politics as the state legislature prepares to approve the 2012 budget.”