Gov. Dannel P. Malloy will sit down later this week with CBIA President and CEO Joe Brennan to discuss the tax package that was approved last week by the General Assembly and then quickly panned by the business community.
Malloy Spokesman Devon Puglia confirmed Tuesday that the governor plans a one-on-one meeting with Brennan.
Brennan sent a letter to Malloy and legislative leaders Friday asking for a sit-down to discuss what he believes are the long-term consequences of the proposed tax increases added to years of bad policy when it comes to economic development.
At a follow-up press conference the day after the legislature approved nearly $2 billion in tax increases, Malloy said there may be an opportunity to clarify some of the corporate taxes included in the budget. However, he didn’t say specifically whether that meant changing them or simply explaining them.
While GE, Aetna, and Travelers have all released statements criticizing the budget, Brennan said those aren’t the only corporations concerned about the impact of the tax increases. He said he’s had private conversations with numerous other large companies that have raised the alarm bell internally.
For each of the state’s major employers, there are “hundreds and hundreds” of smaller companies and thousands of employees that rely on their business, according to Brennan.
“If you take any one large employer out of Connecticut, that has a devastating impact on small business,” he said.
Fresh off its eighth-place ranking in the newly released Forbes Fortune 500 list, up from ninth the previous year, Fairfield-based General Electric has confirmed it is considering taking its business elsewhere.
“We have formed an exploratory team to look into the company’s options to relocate corporate HQ,” the company said Tuesday in a statement. “It is too soon to comment further on the process.”
GE CEO Jeff Immelt sent an email to the company’s Connecticut employees last week lamenting 10 “tough” years trying to maximize profits in the state.
Citing the tax package recently endorsed by the legislature — which Gov. Dannel P. Malloy indicated he’s unlikely to veto — Immelt said the proposed tax increase of approximately $1.9 billion will be the second highest in the state’s history behind the $2 billion tax hike passed in 2011.
“GE is a major employer in the state,” Immelt wrote. “We purchase $14 billion in goods and services from Connecticut companies. Despite this, we have had a tough past decade in Connecticut. Our taxes have been raised five times since 2011, while support for our strategies has been uneven. I believe we should pay our fair share and that all of us should give back to our communities. But, we can compare Connecticut with other states where small and large businesses have a better environment to thrive and compete.”
A 2011 article in the New York Times credited GE’s “extraordinary success” on an “aggressive strategy that mixes fierce lobbying for tax breaks and innovative accounting that enables it to concentrate its profits offshore.”
One of the business community’s bones of contention involves stateside reporting concerns addressed in a new unitary reporting requirement that would crack down on multi-state companies that shift their profits to states with no corporate income tax.
For at least 20 years, the state legislature has introduced combined reporting legislation that some say will close corporate tax loopholes and allow the state to collect hundreds of millions of dollars in taxes.
But others, like Brennan, say it will drive business out of Connecticut.
One of the states ready to pick up Connecticut’s economic development slack is Georgia, where Gov. Nathan Deal jumped on the news of GE’s northern discontent.
The Atlanta Journal Constitution Political Insider blog quoted Deal’s top aide, Chris Riley, saying the governor called the company to let executives know Georgia is “open for business.” It was reported that Deal’s office said the governor would be speaking with Immelt this week.
GE Spokesman Seth Martin would not comment on the status of discussions with Deal or the leaders of any other states.
GE already has a presence in Georgia that includes 5,000 workers in the global headquarters of its energy management business in Cobb County and other divisions, according to the Atlanta Journal Constitution.