In the past, I’ve written that tax cuts are pretty much always gimmicks, especially during election years. So how about a tax cut for lower and middle-income families during a non-election year, which is what Gov. Lamont’s proposed budget would do? Is that still a gimmick?
Well, yeah. Of course it is. There’s one very clear reason why: the governor’s budget doesn’t raise taxes on the wealthiest.
Now, that’s not to say that cutting taxes for people who could absolutely use a few more dollars out of every paycheck to put food on their tables and clothes on their childrens’ backs isn’t a good thing. It absolutely is! But the governor is proposing these tax cuts because we have a budget surplus, with more surpluses forecast to continue for the foreseeable future. This is a really good place to be in, politically speaking.
But it’s hard to shake the feeling that these days of wine and roses are fleeting, and that the state’s fiscal situation is still a fragile one. Good economic times don’t last forever, as recent history reminds us. The boom years of the 1980s were followed by the desperation of the early 1990s, and the days of surpluses in the 2000s gave way to the decade of crisis we just hauled ourselves up out of. It’s not a matter of if the next crisis will come, but when.
I do give the Malloy and Lamont administrations credit for trying to make that next crisis a little less harrowing than the last one. The state is paying down pension debt and filling up the rainy day fund, for instance, and that will help. But cutting taxes now without offsetting those cuts with raises in revenue elsewhere could absolutely come back to haunt us.
Who suffers when the state has a deficit? Who finds the services they depend on from state and local governments slashed? Who loses their jobs when businesses cut costs or fail? Working people.
The General Assembly should help ensure that the social safety net stays intact in the future by raising taxes on the rich.
“But you can’t do that!” comes the cry from the hills of Simsbury and the mansions of New Canaan. “If you do, we rich people will leave! And if we do, all of that revenue will go with us!”
So let me get this straight. We can’t raise taxes on the wealthy, because they’ll take their money to Florida, leaving us in the lurch.
Annoyingly, that’s a pretty convincing argument at first blush. The top 2% of earners in this state accounted for 40% of the state’s budget in 2020. We can’t afford to annoy them or they’ll up stakes and head for the red states, or at least that’s what they and their mouthpieces in Hartford tell us.
A progressive tax system like ours is good for people at the bottom, but it leaves us intolerably vulnerable to the whims of the people at the top. Gov. Lamont, who is himself a part of this socioeconomic class, has never been in favor of more tax hikes on the rich for just this reason. In part, I’m sure, it’s because he’d like to pay less, but I think it’s mostly because he understands his fellow rich people. He knows very well that there are many of them who can and will move out if they feel they’re being treated unfairly.
Some of the wealthy are firm believers that those who have much should give much in return. There are those who dedicate themselves to charities, foundations, and public service. These are people who are part of their communities, who care for the place and the people that enabled them to be so wealthy in the first place.
But there’s a whole other class of millionaires and billionaires who feel none of that, who have no loyalty or feeling for their communities, who believe that any attempt by the state to make them pay what they owe is theft, and who belong to no society other than that of their fellow rich people. They’re the ones who are threatening to go.
So we either cater to these people or they kneecap us. What a fun hostage situation.
And that’s why we need to raise their taxes anyway. I say we call their bluff. That’s what Connecticut residents want, according to a recent poll that showed large majorities in favor of hiking taxes on millionaires and billionaires.
The rich have an astonishing amount of power in our divided and deeply unequal society. The wealth gap in Connecticut is obscene. Whatever we can do to build more affordable housing, make higher education cheaper and more accessible, drive down the cost of health care, and strengthen our social safety net is worth angering the wealthy.
So be brave, legislators. Listen to the people, and raise taxes on the wealthy at the same time as cutting taxes for the poor. That’s how you do tax cuts that aren’t just a gimmick.