via Zoom
Rep. Anne Hughes (via Zoom)

Labor unions, advocates, and state Rep. Anne Hughes want to make sure the wealthy pay “their fair share” to help Connecticut get out of a recession caused by the COVID-19 pandemic.

The group says it sent a letter to Gov. Ned Lamont, Democratic lawmakers and community leaders to build support for a tax increase when the legislature returns next year.

Hughes, D-Easton, heads the Progressive Caucus and said she knows that with a $2.5 billion Rainy Day Fund the revenue shortfall is projected to be about a $4.5 billion over the next four years.

She said they don’t have a percentage in mind, but it could be a combination of personal wealth and top personal income tax before any more essential services are cut. She said the pandemic changes things and she believes they will be able to get more support from moderate Democrats than they have in the past. She said millionaires migrating out of the state and taking their wealth with them is changed by the pandemic.

In 2017, two years after the last income tax increase, revenue from Connecticut’s top 100 taxpayers was down 45% and personal income tax revenues were down $450 million from projections.

Some lawmakers on both sides of the aisle say the last 2015 income tax increase didn’t net the state the anticipated amount of revenue because so many people have fled the state.

But there’s still a difference of opinion when it comes to the question about whether higher taxes are actually driving the migration patterns.

“We have been really complicit in policy violence in our tax structure and our economic structure,” Hughes said. “We’re asking the frontline workers to risk their lives and yet now we’re looking at possibly cutting some of those essential services.”

Rev. Josh Pawelek said they need the wealthy to contribute a greater share of their wealth to sustain a state budget that works for everyone.

He said growing income inequality is morally unsustainable.

“Asking for a tax increase on the wealthy is not class warfare,” Pawelek said.

But for those families that were struggling before the pandemic, “it certainly feels like class warfare,” Pawelek added.

He said asking for a progressive tax structure doesn’t prevent anyone from being wealthy.

Connecticut’s tax structure has been criticized for its lack of progressivity by the group.

However, there’s little data from which to draw those conclusions.

The last tax incidence report from the Connecticut Department of Revenue Services was released in 2014 and it was based on data from 2011. That was former Gov. Dannel P. Malloy’s first year in office.

The last tax incidence report showed that about 725,200 taxpayers with an average adjusted gross income $48,948 per year had an overall tax rate of about 23.6% in 2011, and about 15,050 taxpayers with an adjusted gross income of between $600,000 to $2 million per year paid a tax rate of about 7.69%.

In January, CT Voices for Children, a group on Monday’s call, released a report that called for increasing the personal income tax rate on those earning more than $5 million a year from 6.99% to 8.49%.

In addition, it called for raising taxes on multimillion-dollar estates in the top 5 percent of the wealth distribution and increasing tax credits for working- and middle-class families.

Groups like the Yankee Institute for Public Policy disagree that increasing taxes will solve Connecticut’s problems.

“Raising taxes in response to this economic downturn ignores twelve years of Connecticut’s economic and fiscal history – and will only chop any chance of recovery off at the knees,” said Carol Platt Liebau, president of Yankee Institute for Public Policy. “Connecticut now has an opportunity to gain wealthy residents fleeing New York City and thereby increase its high-income tax base. Raising taxes on the wealthy – for the fourth time in 12 years – will only hasten the outmigration of Connecticut’s wealth to other states and cause those looking for refuge from the city to think twice.”