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Opinion: The real ‘takers’ are not poor people, but the rich

(CTMirror.org)

Taxes should not be raised for those who create jobs and spend their money in Connecticut. Most working people in Connecticut spend their money in the Nutmeg State buying fishing rods, furniture, toilet paper, food, cars, fast food, diapers, bullets and what have you. When the average person has money he or she spends it, which creates demand and more jobs.

(CTMirror.org)

For 99 percent of people in Connecticut, tax rates are high enough. However, the approximately 10,900 people in Connecticut who make north of $1 million a year pay a 7 percent marginal rate in state taxes, while their counterparts in California pay a 12.5 percent marginal rate in state taxes. If the wealthiest in our state paid just 2 percent more in taxes (9 percent) for every dollar over one million a year, our budget problems could be greatly lessened.

There are a number of reasons why this is a good idea. First, the wealthiest in our state will not leave because of higher taxes – that is a myth. It is the middle- and lower-income people who will leave. Second, the wealthiest will still be really wealthy; giving another 2 percent to the state coffers off of any income over $1 million will not cause any hardship to these people.

Third, the money in the hands of the rich never “trickles down.” That is another myth. Money works better when it circulates, and average people do that when they spend it. Fourth, the real “takers” are not poor people, but the rich who are in a position to “take” more than others. “Taking” apparently is the American way. We are all fascinated and perhaps envious of those who can get away with it, but those who “take” way more need to give back more.

There is a solution to Connecticut’s budget deficit. California was in worse shape than Connecticut, but in 2012 raised its top marginal tax rate for the very rich and now California has a budget surplus, and the economy is booming.

We need to raise the top marginal state income tax rate by two percentage points.  The rich can pay.

 

David Topitzer lives in Tolland.  This op-ed previously appeared on CTViewpoints.org.

 

8 comments

Matt T March 16, 2019 at 8:02 am

“California was in worse shape than Connecticut, but in 2012 raised its top marginal tax rate for the very rich and now California has a budget surplus, and the economy is booming.”

This correlation is an overreach by correlating increase in top marginal tax rate and economy health. The tech economy has been on fire in the years following the recession, with Apple, Google, Uber, and other similar companies fueling it. As technology advances, that industry grows.

Watch out comparing CT to CA in terms of people wanting to leave or stay. Firstly, they have over 10 times the population that we do with a diverse economy and major cities, so there are many lifestyles and places to chose from as they have something for everybody. Our State is better if you like suburbs near mid sized cities and being in between two economic powerhouses. Their State is gorgeous and has natural beauty that our charming one can’t compete with. Yes we have the coast and rolling hills, but it’s nothing compare with the beaches, national parks, Tahoe, deserts, weather, etc…. The point I’m making is that CA has it’s own distinct culture and for many, it’s a way of life that they know and love regardless of taxes. As a NYer that has recently moved to Norwalk after reverse commuting for years, I can tell you that without work in the State I would not be staying here. It’s not a bad place to live, just other places have better sells be it grand nature, a major city, cheaper cost of living, less traffic. I could see top marginal rate tax hikes annoying people there but it’s a pill they’d swallow. Here, I don’t know if I could say the same.

To knock down CA a notch or two, they also have major issues that we don’t have here. Housing is a rising too fast and creating affordability issues in their metro regions and increasing the homeless population while our homes have stagnated (allowing me as a millennial to buy in Norwalk!)

I think for CT to move forward, we have to recognize our strengths and shortcomings. For Fairfield County, we need to remain cheaper than Westchester in income and property taxes to lure would-be NY residents here to raise families. On that note, we also need to improve access to the city so that these residents have a reasonable commute from Manhattan to make living here not outrageous. Outside of relying on NY for the economy, there should be more regional planning and cooperation for growth vs individual towns having so much say as to their own futures because it’s holding us back. A prime example is connecting route 7 from Norwalk to Danbury or straightening out the rail curves (Darien). These are the hard things our government has to push through to make CT an easier place to do business and foster a more dynamic economy.

TL;DR – CT is not CA, for better and worse. Skeptical of increased tax rate correlating to fixing our budget woes. We need stronger state and regional planning to foster business and movement of people.

Piberman March 16, 2019 at 10:54 am

Check out Zillow. Some 4,000 homes are listed for sale in CT’s Gold Coast – an unprecedented number. Check out Yankee.org. Billions of taxable income are leaving CT as the over taxed wealthy see a dismal future here. No amount of taxes on CT’s several hundred thousand wealthy families are sufficient to maintain the nation’s top salaries/benfits for CT’s public State and Municipal unions.

High taxes on the wealthy also discourage major investment in CT’s languishing suburban economy with its depressed major cities. By and large CT’s wealthy class do not invest in CT. Why ? Because by conventional standards CT is a failing State. And likely to remain such until it can collectively control its public and municipal spending. And that’s not on our horizon. Just higher taxes and a ontinuing Exodus.

New Caanan provides a special example of CT’s “tax folly”. It’s 2nd highest valued property remains on the market for 2 years despite a 50% mark down from its purchase price during the 2008 Recession.
Here in Nowalk we see the same. Last year almost 100 million dollar plus homes were sold in Norwalk. Wealthy residents are exiting CT and its ever higher destructive tax levies.

College freshmen economics students learn the folly of excessively taxing the rich. Sadly CT’s leaders do not.

Red headed movie star March 16, 2019 at 11:03 am

Well said.My husband & I thought we could stay in CT through retirement but due to President Trump’s new tax law and Ct’s changes, we have to leave. We can not afford as middle income residents to use our IRA’s & savings to pay over $15,000.00 a year in property taxes (Norwalk, after reval last fall, if they don’t raise the mill rate)) and $16,000.00 federal and state taxes.
Very very discouraging…we have come to this conclusion in the past few days.

Red headed movie star March 16, 2019 at 11:28 am

Hi Matt, Congratulations on the purchase of a home in Norwalk. I own a duplex in Calif. as well as Home in Norwalk (see other comment) 13.5% income tax in Calif per my son. Calif’s climate and lifestyle is wonderful. We were going to retire to Ca. & live in one apt. but it is not fiscally feasible…the CalPers & CalSTRS funded pensions are in the same fix as CT. Not enough money contributed to sustain the payout of state employee pensions.I know because I am a retired Calif teacher…to add insult to fiscal injury, I had worked in business and have Social Security benefits, but due to the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO) Fed legislation I am only able to receive half of $1200. SS benefit per month, $659.00. Many middle class Calif residents are leaving to avoid the high taxes. One of the major tech co is opening a large facility in Arizona…Google or Apple. I fear Calif fiscal stability just as I live through CT’s issues. Enough of my rant.

AL March 17, 2019 at 9:46 am

Being a displaced Californian with roots going back generations, I must say you do not know what you are talking about. Comparing CA to CT is apples to oranges. California is a nation state. Connecticut…well, if they did not have two votes in the senate this state,they would be totally ignored.
Fixing Connecticut is not going to happen any time soon.They are a perfect example of one-party rule failing the public.
As Winston said, you can’t tax yourself into prosperity.

Faba McCoon March 17, 2019 at 12:08 pm

Arguing against regressive tax increases that increase the proportional burden on those least able to pay is an excellent point. But blaming the rich for the problem and calling them “takers” is inane.

The problem is our elected officials who have continually overspent and whose only solution seems to be more taxes. There should be loud voices all across Connecticut insisting on budget cuts and controlled spending, not just raising taxes. Should a tax increase for the highest income brackets be considered as part of the package? Sure, but taxing groceries and adding tolls are just another way to suck money out of those who can least afford to pay more.

Holden Caulfield March 18, 2019 at 1:24 pm

No one here (writing the post or reacting to it via comments) makes $1 million a year. No one here would be affected by a marginal tax of an additional 2% OVER $1mm a year in income. Ignore the CA comparison and let the general point of the article sink in. You can do it.

Eleanor Lx March 18, 2019 at 2:49 pm

This should not be rocket science. High taxes continue to flush out the wealth to lower tax states to the detriment of all.

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