This policy change would launch a two-year study of Connecticut’s $16 billion-a-year tax system – a move some legislators have predicted could be the most dramatic overhaul of state finances since the income tax was enacted 23 years ago.

A study panel would begin work this August, update the General Assembly in January and finish its review by January 2016.

The study is expected to analyze:

  • Tax fairness and volatility;
  • How the system affects the state’s economic competitiveness;
  • And, whether Connecticut relies too heavily on local property taxes.

Connecticut had relied for decades on its sales tax to provide the chief source of non-federal funds for its government, with taxes on corporations, capital gains and estates providing important supplemental revenue. Fuel taxes were – and remain – the chief means to pay for road, bridge and rail upkeep.

Things changed dramatically 23 years ago when lawmakers and Gov. Lowell P. Weicker Jr. adopted a flat tax on income and lowered the sales tax. They also got rid of a double-digit tax rate on investment income, which instead was subjected to the top income tax rate at the time – 4.5 percent – a big tax break for some of Connecticut’s wealthiest households.

Meanwhile, the property tax remains the chief source of revenue, along with state grants, for city and town budgets.

Keith has spent most of his 31 years as a reporter specializing in state government finances, analyzing such topics as income tax equity, waste in government and the complex funding systems behind Connecticut’s transportation and social services networks. He has been the state finances reporter at CT Mirror since it launched in 2010. Prior to joining CT Mirror Keith was State Capitol bureau chief for The Journal Inquirer of Manchester, a reporter for the Day of New London, and a former contributing writer to The New York Times. Keith is a graduate of and a former journalism instructor at the University of Connecticut.

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