Taxing the wealthy is the right thing to do — and necessary

More and more millionaires have come out and declared that they want to pay their fair share. Now, that message is just starting to percolate at the Capitol. We’re seeing the realization set in: Asking wealthy residents to step up and pay their fair share isn’t just the right thing to do; it’s the necessary thing to do.

Recently, a group of Connecticut millionaires stated “they should pay a larger percent of the tab for running Connecticut.”  Moreso, they “find it deeply troubling that…Connecticut’s leaders are refusing to ask its wealthiest citizens to pay more in taxes and are instead proposing damaging cuts to important services.”

Another group of upper-income residents called for “a balanced solution that includes an increase in taxes for those of us in the top 5 percent.”

This week, Rep. Daniel Rovero heard the call. He acknowledged that our tax code needs to be more competitive. He noted that an income tax increase on Connecticut’s wealthiest citizens is in fact “a fairer tax” than regressive proposals like an increase in the sales tax. Rep. Rovero is right. He is also right to acknowledge that cuts to municipal aid and eliminated tax credits are merely backdoor tax increases on working families.

The governor and all legislators should take note.

Nationally and in Connecticut, the carried interest tax loophole, which enables wealthy hedge fund and private equity managers to pay almost half the effective tax rate that everyone else pays, has been highlighted as one of the most egregious examples of an unfair tax code benefiting the rich at the expense of everyone else. This costs our state over $520 million annually that could contribute to our schools and hospitals. Fortunately, as the drumbeat for tax fairness and a sustainable budget grows, so too does the number of millionaires declaring that they are ready to contribute their fair share.

Even some prominent Connecticut hedge fund managers are joining the call for fairness. Greenwich investment magnate Paul Tudor Jones of Tudor Investment Corporation stated through a spokesman that “carried interest should be taxed as ordinary income.” Peter Schiff, CEO of Westport’s Euro Pacific Capital, agrees, noting that hedge funds don’t create many jobs and certainly won’t go anywhere if they lose their loophole.

It’s time for more legislators to step up and respond to the growing number of wealthy residents asking for the opportunity to contribute their fair share to the wellbeing of the state.

There cannot be a fair and sustainable budget without fair and sustainable revenue. Many of our wealthiest citizens are already asking to be taxed fairly, but our politicians need the courage to get it done. Voters across the state now must speak up and give them that courage.

Carlos Moreno is interim state director of the Connecticut Working Families Party.