Daunting task: Study taxes but not whether they’re too high

Inviting public comment on taxes is always a daunting task, especially on the heels of a new state budget that raises taxes $1.3 billion over two years.

But what about holding a hearing during which citizens are expected not to discuss lowering taxes?

That’s the challenge faced by the legislature’s State Tax Panel, which begins an intensive, four-month-long analysis of state and local levies Wednesday with an economic briefing followed by a public hearing.

The panel, which must report to the General Assembly by January, is not tasked with resolving the big political questions surrounding taxes. In other words, it’s report won’t address whether taxes are too high or too low, or whether certain groups should pay more or less.

The bipartisan panel will meet at 10 a.m., Wednesday, in the Legislative Office Building to receive briefings on state and local taxation and on the economy from Gov. Dannel P. Malloy’s budget office and from the Federal Reserve Bank of Boston.

The panel also will conduct a public hearing from 4 to 8 p.m. in the Legislative Office Building. Individuals and groups also can submit written testimony, and the panel had received more than 100 submissions as of noon on Tuesday.

“I recognize this is a public hearing and the public is free to say whatever they want,” said former Sen. William Nickerson, R-Greenwich, who co-chairs the panel. “But saying, ‘Please enact my favorite tax cut’ – that’s not going to get us very far. Or ‘taxes are too high or too low’ – that’s not going to help us very much either.’”

The bipartisan panel was tasked with working in a very nonpartisan manner. “Our job is to deal broadly, with a global look at taxes,” said Nickerson.

That means studying state and local levies and assessing their impacts in several ways, including:

  • Their effect on economic development, including Connecticut’s ability to compete with other states.
  • The overall complexity of the state and local tax systems.
  • Tax predictability and volatility, the degree to which receipts fluctuate from year to year.

A former co-chairman of the legislature’s Finance, Revenue and Bonding Committee, which has jurisdiction over tax-related bills, Nickerson said the study panel is supposed to avoid the political decisions that are the purview of legislators.

Because of that charge, Nickerson said he expects any panel recommendations will follow a principal of “revenue neutrality.” In other words, they won’t be designed to drive a major increase or decrease in taxation.

“This is the only way to make comparisons between present and future taxation modes,” he said. “The legislature will decide if taxes should be raised or lowered to meet the needs of future budgets.”

State Department of Revenue Services Commissioner Kevin B. Sullivan, a former legislator and member of the panel, said most lawmakers don’t receive deep policy analyses on tax issues.

“I think our point here is to provide those analytics” on tax competitiveness, complexity, volatility and other issues, Sullivan said, and then leave the political decisions on what to do with this data to the legislature. “Our job is to help ensure better-informed policy.”

Still, Nickerson said he expects the panel may nonetheless hear some urging Wednesday to press for lower state taxes.

A conservative public policy group, the East Hartford-based Yankee Institute, is trying to encourage testimony from those “who agree that the tax system is in need of reform,” and “who recognize that taxes are unduly harsh and restrictive on people in this state,” institute President Carol Platt Liebau said Tuesday.

“We’re not in a position of telling people what to say or how to testify,” Liebau said. But the institute is trying to help give a voice to residents and groups who find Connecticut’s tax system overly burdensome.

To increase participation at the hearing, the institute invited those who share this philosophy to register with them in advance of the hearing. It reserved space at the Officer’s Club in the state armory – which is adjacent to the Legislative Office Building and is providing hors d’ouevres and non-alcoholic beverages for those registrants, Liebau said.

“For regular working people who still want to have a voice in their government and its policies, coming to Hartford to testify can be inconvenient and burdensome,” she said. “We also wanted to show these people they are not alone.”

The panel’s other co-chair, former Rep. William A. Dyson, D-New Haven, said that since the group also is looking at tax fairness, it has to expect some public comment to consist of recommendations to raise or lower taxes on one group or another.

Dyson also said that just because the final decision on taxes rests with the legislature doesn’t mean the panel won’t identify any groups that are heavily burdened with taxes.

“We can hopefully make the system better than it was before,” he said. “We can identify a problem and recommend a solution if we have gone through the process, gotten the data, gotten the expert opinions. I think that should be shared with the public.”

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