Opinion: Why Connecticut lags: Part One

Fred Carstensen
Fred Carstensen

Fred Carstensen is an economics professor at the University of Connecticut.

It is quite frustrating to see an almost continuous repetition of the mythologies that people invoke to explain Connecticut’s economic malaise. The three mythologies are 1) Connecticut is a high tax state; 2) housing is too expensive; 3) energy costs are too high.

Even to the extent they are true, they have virtually no relevance to charting a path to full recovery. This post only addresses the first question of tax burden. Later posts will address the other two mythologies. And at the conclusion of each post I will suggest what the real reasons for Connecticut failing for more than 25 years to create net new jobs and a strong business climate.

Tax burdens: the most recent Ernst & Young analysis of business tax burden, aggregating state and local taxes, puts Connecticut as SECOND LOWEST in the nation, trailing only Oregon. It is true that tax burdens varied dramatically among businesses, and we need to look at tax incidence comprehensively. But it is simply not the case that Connecticut has high business taxes on average; they are among the lowest in the nation.

See the complete story at CT News Junkie.



6 responses to “Opinion: Why Connecticut lags: Part One”

  1. John Hamlin

    Article misses the point that unnecessary business regulation and high taxes on everyone make recovery hard. Of course as a state employee and an employee of UConn, the author does not look to public employee unions as an issue and he advocates for more expenditure on higher ed. A self-interested perspective trying to pose as unbiased and academic. Don’t buy it.

  2. EveT

    A real eye-opener in the full article: “The mythology [promulgated by CBIA] finds its primary support in the Tax Foundation studies. But …. Because many of the highest income Connecticut residents work in New York City and thus pay both New York state and New York City income tax, those taxes are counted against Connecticut; because many wealthier households in Connecticut own property in Florida or on Martha’s Vineyard, the heavy property taxes they pay there are counted against Connecticut. If you read the Tax Foundation study closely, you find that the study makes this exact point.”
    Next time someone repeats the CT high-tax myth, it will be important to remember this point.

  3. Screwed Taxpayer

    This story is fabricated bunk. There are several states without income tax. How exactly can a state with one of the highest income taxes, which small businesses have to pay, be 2nd from the bottom?
    Backing up John Hamlin’s point, CT Secretary of State maintains a laundry list of fees, aka taxes, that businesses have to pay from the excessive regulations Hartford makes.
    Moreover, CT is sagging because we pay too large a portion of our society to sit around and do nothing. Imagine if welfare queens did just 5 hours of volunteer work a week cleaning things up or helping out seniors and children. Imagine how much better society would be if prisoners were trained to build roads instead of learning how to commit more crimes. Imagine how much further ahead we would be.

  4. John Levin

    “Imagine if welfare queens did just 5 hours of volunteer work a week cleaning things up or helping out seniors and children.” Seriously? The “welfare queen” driving the cadillac to pick up her welfare check was the myth originated by Ronald Reagan. It is a complete utter myth. Here you go:

    In 1996, former President Bill Clinton pledged to “end welfare as we know it,” and AFDC morphed into TANF—Temporary Assistance to Needy Families. A five-year time limit was introduced, and mothers were required to work 30 hours per week or risk losing their benefits. States’ funds were capped, pressuring them to slice welfare rolls.

    The effect was that thousands of single moms were promptly shoved off the program: “The legislation reduced the number of poor single mother families served by 63 percent within 10 years, effectively removing it as an important program in the nation’s safety net for the poor,” – Robert Moffitt, an economist at Johns Hopkins University

  5. Keith Rodgerson

    Carstensen is a refreshing counter to the current deluge of business climate nonsense this election cycle. He is reviled by politicians and respected by everyone in the economic development field.

  6. Screwed Taxpayer

    @John Levin….and the economy was roaring then. What’s your point? I’m for the safety net, not the hammock. Reasonable people concur.

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