A good number of people across the country will see some tax relief in the New Year. Unfortunately, the new federal tax law will have a big impact on many of Connecticut taxpayers because of the loss of state and local tax (SALT) deductions from federal income tax returns. Connecticut taxpayers deduct $19,700 on average, second only to New York. Meanwhile, for every dollar Connecticut taxpayers send to Washington, we already only get back about 79 cents.

This is bad for our state, but watching the politicians point fingers and place blame will do nothing to fix this problem. While that’s what career politicians are apt to do, coming from the business world, my first instinct is to look for solutions. The time has come for someone to stand up for the people of Connecticut.

Already, 100 people a day move out of Connecticut. This tax reform plan will make that even worse. We can’t let this trend continue. Instead of the hand-wringing in Hartford and bloviating from Washington, we need real leadership. You do that by understanding the impact of this change to Connecticut and having a sense of urgency to address it. We will need to think creatively to implement ideas that work for our families.

First, let’s be clear that the high tax, large government that Hartford politicians have created must be reinvented. The cost of state government and pension liabilities is sinking Connecticut. We must rethink how we deliver better services at a lower cost to the taxpayer. I have built systems and processes for state and federal governments to do just that. All headwinds point to the need for change from the people and businesses moving out to the continuous Wall Street downgrade of Connecticut’s debt. This tax law only accelerates the downward spiral we’ve been on.

I bring an engineer’s problem‐solving approach, a CEO’s strategic perspective and a business owner’s need for stability and affordability. I believe I have found two workable, short‐term solutions allowing you, the taxpayer, to use other federal tax breaks to keep you whole. Let me be clear that any immediate relief must be matched with real, long‐term structural changes to turnaround our state.

The first solution would allow taxpayers to replace their state and local taxes with a tax‐deductible contribution to a “state charity.” Here is how it would work:

Step 1: Connecticut forms a charity that allows citizens, state government and towns to coordinate their tax payments. The advantage is that any donation to a charitable organization is tax‐free at the federal level. There is precedent for this already set by the Internal Revenue Service.

Step 2: When taxes are due, you would send your taxes to the “state charity” and receive a charitable deduction to offset against your federal income taxes.

Step 3: The “state charity” would then remit your state and local taxes. The net effect is that you would have the same SALT deductions in 2018 as you had last year. This would have to be set up carefully because we know what happens when Hartford politicians get more money without restrictions.

The second solution would involve replacing the state income tax you pay with an employer‐based payroll tax which can be fully deductible. This approach is more complicated than the charity idea. It would most likely need a system of tax credits to be used to match payroll taxes to hit the correct tax rates. There are other complexities, but it is an option to consider.

Let’s be clear, I am not an accountant and know there are details to work out. And I’m sure the lawyers will want to have a say. But I believe this approach is far more productive than what we get from the career politicians who posture to place blame instead of engaging in a debate to find solutions.

As someone that’s started and run businesses, I know it’s better to put our heads together and come up with innovative ideas that will keep more of your tax dollars in Connecticut (as opposed to sending them to Washington, D.C.!) while we work long‐term to reduce your tax burden.

We will move forward together as a state when we have leaders who are willing to roll up their sleeves and come up with ideas that can be tested and challenged. I’m not afraid of that approach. Let’s see if others already in public office won’t be afraid to join me.

Steve Obsitnik of Westport is a candidate for Governor of Connecticut. He is a high‐tech CEO, US Navy submarine veteran and educator.

CT Viewpoints will entertain first-person position statements of candidates for elected office that focus on policy ideas and principles, but will not publish third-party endorsements for candidacies or direct appeals for support. It is our policy to offer all candidates for elective office equal opportunity for comment. The views expressed by candidates are intended for voter education and are not endorsements of, or opposition to, those views by CTViewpoints or the Connecticut Mirror.

Leave a comment