I’m told the statement attributed to Albert Einstein about repetition and insanity might have actually been spoken first by someone else. Notwithstanding the uncertainty over its authorship, the quote is no less applicable to the current state of economic reality in Connecticut.
A group calling itself the Coalition for Democracy, Unity, and Equality last week called on lawmakers to reject the premise of Gov. Dan Malloy’s state-of-the-state speech earlier this month. Malloy, you may recall, said he would oppose any effort to raise taxes to fix a now-chronic problem: deficits as far as the eye can see. That includes a nearly $570 million budget gap in 2017 and another nearly $700 million deficit projected for 2018.
Malloy instead raised the specter of shedding thousands of state government jobs — some through layoffs and some through attrition. Malloy budget chief Ben Barnes grimly described the job losses in the neighborhood of “several thousand.” By my count “several thousand” could amount to 10 percent or more of the state’s 46,000 workers. My guess is the governor is at least partly bluffing in order to get the unions, which he is currently bargaining with, to reopen their contracts.
Be that as it may, the coalition makes some valid points. Yes, there are “unmet needs” in state government. Yes, the cuts are “potentially devastating to workers” and their families, with an accompanying ripple effect that could do everything from drive down real estate values to dampening the consumer spending that drives much of the state’s economy. But what is their alternative?
Here is the laundry list the coalition presented at a news conference last week, as reported in CT News Junkie: “paid family leave; a fee for large corporations that don’t pay their employees $15 an hour; higher corporate taxes; a soda tax, more affordable housing, and expansion of collective bargaining rights.”
In other words, in an era of austerity, we want more. And we want someone else — basically, anyone who makes more than we do — to pay for it. That’s a tough agenda to sell as the state looks at underperforming income tax receipts, a sluggish economy, net outmigration and a parade of businesses exiting the state for friendlier environments.
Yes, Malloy has an obligation to improve the quality of life in the state and to protect those who cannot protect themselves. But he also has an obligation not to scare away those who contribute the most to make the state’s vast entitlement machine possible.
I carry no brief for the wealthy and the big corporations. They can afford to pay more in taxes. I supported Gov. Lowell Weicker’s income tax in 1991 on the premise that taxation is like a tripod with sales, income and real estate each making up a leg. When one is much shorter or longer than the other (at the time we had no state income tax at all), the system becomes highly unstable and revenues very undependable. So when Weicker agreed to reduce sales and corporate taxes in exchange for the income tax, I held my nose and supported it (of course, both sales and corporate taxes have since risen, but that’s a story for another time).
But I am concerned that if we continue to make Connecticut less attractive to live and do business in, even more of the well-heeled will simply fly the coop. And where would that leave us?
Take Fairfield County, where the lion’s share of the state’s income and corporate tax receipts come from. We can complain all we want about the robber barons of Connecticut’s Gold Coast, but without them we would be up a creek without a boat.
In 2013, the top 10 wealthiest towns sent nearly $2.18 billion in income taxes to the state treasury. That’s more than the bottom 133 municipalities combined. To wit, Greenwich’s 26,000 taxpayers paid $847 million in state income taxes, or 14 percent of the statewide total. Meanwhile, Greenwich only comprises about 1.7 percent of the state’s population. The results are similar for other wealthy towns across the state.
It remains to be seen whether Connecticut’s wealthy will flee the state if subjected to another round of tax increases. Some reputable studies suggest a strong correlation between loss of wealthy residents and increasingly higher taxes, while others insist the notion is a myth. But economists agree that people do tend to leave states where the economy is poor and job growth sluggish — and that describes Connecticut in a nutshell.
If we don’t stop doing what we’re doing, then Einstein’s apocryphal quote will be more relevant than ever. To the Coalition for Democracy, Unity, and Equality, I say we need the government we can afford; no more, no less. We’ve seen three massive tax increases in the last 25 years, along with plenty of smaller ones and, despite repeated promises, they have done nothing to stabilize our finances. Either we cut thousands of state jobs (I’d put mid-level managers at the top of the chopping block) or those currently employed by the state must make concessions, or some combination of the two. The current situation is utter madness.
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