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Connecticut Lawmakers Approve Responsible Efforts to Raise Revenue

This past week, the Connecticut Legislature took a solid step towards fiscal stability by approving a $40.1 billion budget that includes progressive measures. Despite several elected officials across the states opting to rely predominantly on cuts and failing to either invest in communities or support the middle class, Connecticut Governor Dannel Malloy's insistence on "shared sacrifice" has stood in bold contrast to flawed right-wing budget policies. As the New York Times aptly explains: "As officials in nearby states have become conspicuous converts to the current anti-tax, anti-government fever, Mr. Malloy and Connecticut Democrats are striking a more anomalous course, betting that residents will accept the short-term pain of tax increases if they see a long-term gain of stable government services and fiscal policy."

The budget seeks cost savings in several areas, but also generates billions in new revenue for the state by increasing the marginal income tax rate for joint filers earning $100,000 and over, lowering the threshold for the estate tax from estates valued at $3.5 million to $2 million, raising the hotel, alcohol, and tobacco taxes, and increasing the sales tax. Notably, the budget also creates a refundable state earned income tax credit for working families, funds pension obligations, and provides much-needed funding for critical services and programs.

House Speaker Christopher Donovan commented, "This is a responsible, tough but honest budget that helps solve the budget crisis and moves Connecticut forward. What we passed today was a budget of fair, shared sacrifice. This budget closes our state's deficit and maintains important investments for jobs, education and the elderly.'' The budget now awaits continued negotiations between the administration and unions that are expected to be finalized this Friday.

The developments in Connecticut follow Illinois' passage of higher corporate and personal income tax rates at the beginning of the year. As Progressive States Network has previously documented, progressive revenue generation is economically beneficial, politically feasible, and popular with voters. In 2008 and 2009 alone, over 30 states increased taxes to alleviate fiscal pressures due to the recession, mirroring a general trend of states increasing revenue during recent economic downturns.

Full Resources from this Article

Connecticut Lawmakers Approve Responsible Efforts to Raise Revenue

Connecticut Voices for Children – Impact of the Appropriations Committee's Proposed FY12-13 Budget on Early Care and Education
New York Times – Bucking Trend, Connecticut Budget Deal Raises Taxes, Gasoline Excepted
Progressive States Network – Blueprint: Rebuilding Prosperity for States and Working Families
Progressive States Network – More States Considering Practical, Popular Measures to Deal with Budgets
Tax Credits for Working Families – Connecticut passes a new state EITC
The Wall Street Journal – WSJ/NBC News Poll Finds Support Lacking for Entitlement Reduction

This article is part of PSN's email newsletter, The Stateside Dispatch.
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