Revenue Options are Key to Addressing Budget Shortfalls and Supporting Thriving Communities
Long-term investments in children and families have been the cornerstone of the state’s prosperity. To preserve these investments and support long term economic health, a balanced approach to the upcoming biennial budget must include new resources.
The report finds three challenges with the current revenue system:
- Income tax collections on corporate profits in Connecticut have dropped from 13.2 percent of general fund revenues in 1991 to less than 4 percent of overall tax collections in 2015, mainly because of the growth of business tax credits and tax avoidance.
- Sales tax revenue decreased from nearly a third (31.9 percent) of total general fund revenue to a quarter (25.2 percent) in 2015 as a result of a failure to keep laws up to date with an economy that consumes far more services than it did 40 years ago.
- The overall state and local tax yields an effective tax rate that is higher for low-income than for wealthy taxpayers - increasing wealth disparity in a state already ranked third in terms of income and wealth inequality. READ MORE