The tax cut that isn’t
The payroll tax trial balloon shows it is unworkable and a non-starter
Gov. Ned Lamont’s administration has become a master in the art of the “float,” publicizing a suggested new policy and then waiting to see public reaction before taking a firm position.
Most of the time Lamont does not take a hard position, but he implies that his proposal is a positive one.
It all comes across as being indecisive and, I believe, most of us see it as an abdication of leadership.
The last float relating to a 5 percent payroll tax coupled with income tax relief for some (who are the “some?”) is about the worst idea I have seen in my many years of involvement in, and observation of, state government.
The payroll tax concept is a direct attack on middle-income employers. The explanation around it is somewhat nonsensical since it is nothing but a new attempt for government to take more money directly from the pockets of hardworking middle-income employers.
Look at the arithmetic. Take a relatively small employer with a payroll of $500,000 per annum. A 5 percnt payroll tax would result in a $25,000 payroll tax payment. With a $1 million payroll, the tax would be $50,000. The result would be catastrophic for small business owners.
The proponents of the payroll tax say, “No big deal, the employees will take a 5 percent cut in pay to absorb the payroll tax, in exchange for the proposed reduction in state income tax.” Really? What world are these geniuses living in? The average employee has not much interest in what the employer pays in side benefits. His or her interest is take home pay.
There is absolutely no way employees will absorb the payroll tax hit, with or without a reduction in their state income taxes.
I know that Lamont is now backing away from the proposal. His union friends have told him “no go” on this proposal. Seems it will soon be relegated to a study committee.
The payroll tax concept should be tossed into the trash bin and kept there. Middle-income employers cannot economically handle any additional taxes. This would indeed be the straw that breaks the camel’s back.
It is fascinating that Gov. Lamont is now proposing exactly what he told Republican gubernatorial candidate Bob Stefanowski simply couldn’t be done: eliminate the state income tax. While Stefanowski’s plan lacked sufficient specifics, at least it was focused on reducing government spending and using real savings to fund a tax cut. Gov. Lamont continues to increase spending and proposes to fund it by a smoke and mirrors plan that will surely be denied by the IRS and will never see the light of day.
Lamont should admit it is a bad idea and move on.
Edward L. Marcus is former chairman of the Democratic State Central Committee in Connecticut and former State Senate majority leader. His office is in Branford.
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