Last week, Gov. Ned Lamont floated the idea of applying sales taxes to groceries as he seeks to bring our state out of its fiscal crisis. I suggest, as others did, that this is not the way forward. Taxing groceries strikes working families where it hurts the most. Families living at or near the poverty line spend most of their money on food, transportation, and housing. Raising the cost of living for those already struggling to get by simply does not make sense.
Here is a more viable solution: consider closing the carried-interest loophole for very wealthy hedge-fund managers who live in the state. Closing this single loophole by asking those who comprise the wealthiest 1 percent of our residents (multi-millionaires and billionaires who garnered nearly 100 percent of the state’s regained personal wealth since the “Great Recession”) to pay a fractional share more of their income would, it is estimated, bring in $520 million in increased revenue.
A much more equitable solution than taking additional income from the middle-class dinner table.
Courtney Bourns lives in West Hartford.
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I hear this periodically in Connecticut but I don’t think those that say it have fully thought it through.
What “carried interest loophole” does the author believes exists in Connecticut? I understand the “loophole” – carried interest is considered “capital gains” rather than “earned income” and therefore taxed at a lower rate at the Federal level which is arguably “unfair”. However, both “capital gains” and “earned income” are taxed at exactly the same rate in CT hence no “loophole” here.
So, reclassify it all you want but it won’t make a difference for CT revenues unless, of course, the author wants to “correct the federal wrong” by collecting “extra taxes” on carried interest in CT. Just imagine how fast all the hedge funds exit the state taking all of their earned income, carried interest, employees and related taxes with them. It’s not that much of a burden to move to Westchester from Greenwich if they don’t just move to Florida while they are at it.
There’s always a better tax right around the corner that will solve our fiscal crisis. Why is there never any consideration given to the spending side of equation? At some point all these taxes do is motivate the “rich” to move to tax-friendlier environs. I would argue that mobile middle class and upper middle class voters and businesses (think family owned small businesses) are also contemplating moving from our tax and spend utopia. I wish I didn’t have to contemplate it myself but the decision is getting easier by the year.