I have recently had the privilege of serving on a legislative commission studying Connecticut tax policy. The opportunity to share ideas with some of the brightest minds in the state was energizing and provocative.

In doing some initial calculations, I observed that our state appears to derive a surprisingly low portion of its total tax revenue from corporate income taxes, compared to some other states. I decided to expand my sample and found, compared to a cohort of other states including New England and all of the east, Connecticut tax policy has looked, over time, substantially less to corporations for revenue and increasingly more to individuals and households.

To be sure, there are dozens of revenue devices that might be labelled as “taxes’ and each state employs its own regime of labels and categories. To make my policy comparison as uniform as possible, I used the Census Bureau Annual Survey of State Government Tax Collections and measured the share of total of tax revenues in each year from 2005 through 2014 for the U.S. as a whole as well as Connecticut, Delaware, Florida, Georgia, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, South Carolina, Vermont, and Virginia.

A calculation of the share of total taxes of both individual income taxes and corporate income taxes to the total tax revenue of each state yields a useful sense of the tax policy in each state over the ten year period examined, Connecticut stands out as not only reducing the share of revenue derived from corporate taxes, but reducing that burden at an annual rate in excess of 31 times the average rate of the other states in our study.

In the last ten years, the share of Connecticut revenue derived from household taxes has gone up at a rate over nine times faster than the average of the cohort studied here.

It is worth review. The share of Connecticut tax revenue from individuals and households has risen an average of .532 percentage points each year for ten years. That same share has risen about .058 percentage points annually in the rest of the New England and eastern states.

In the same way, Connecticut has reduced the share of taxes it receives from corporations an average of just over a tenth of a percentage point per year for a decade, while the rest of the states in our sample have seen no effective reduction at all. This, even though the rate of business establishment in Connecticut has consistently outpaced businesses closing or leaving the state for the last several years.

Businesses take costs associated with a location into account too, of course. Taxes are one of those costs. In 2010, the Congressional Budget Office reported that the average effective federal income tax rate on households was 18.1 percent. The Government Accountability Office reported that large, profitable corporations had an average effective federal income tax rate of 12.6 percent for the same period. Thus, the federal tax burden, as a portion of income, is substantially higher on families than it is on corporations.

Living and doing business in our state involves consideration of many factors, some individual to the family or business, others addressable by policy. I suggest that the direction of our tax policy is worthy of discussion.

Dan Smolnik is a tax attorney in Hamden. The opinions expressed here  are exclusively his own.

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