Tonight, Governor Malloy will go to Middletown for his 17th and final town meeting on his statewide budget tour. As the legislature’s Appropriations and Finance Committees prepare to vote on the Governor’s budget in the next two weeks, will the Governor make any changes to the budget plan he provided to the General Assembly two months ago.
For entrainment purposes, at least, the most memorable meeting may have been the one in Greenwich at which irate taxpayers complained about the new 3% tax on luxury items and the Governor’s decision to remove the sales tax exemption for storing boats.
However, for Connecticut’s middle income families the most interesting development occurred when the Governor spoke to the CTMirror’s Mark Pazniokas following last week’s meeting in Danbury.
Malloy told the CTMirror that he was well aware of the frustration middle class families had about his tax proposal and that while he would not support any additional taxes, he might reconsider shifting the burden of how those taxes are raised.
Great news for Connecticut’s middle income families but there was one extraordinary follow-up that hasn’t gotten much attention.
While Malloy said "I've always acknowledged the final package will be somewhat different from what the original proposal is, but the framework is not going to change,” it was the follow-up that deserves attention.
Pazniokas wrote that Malloy “declined to go into details about what a more progressive tax structure might look like…but then he acknowledged the consistent complaints he has received about how heavily his proposed income-tax increases would fall on the middle class.”
And while Malloy said that his Administration was reviewing those complaints he “seemed resistant, however, to raising the top rate much, if at all, above the 6.7 percent.”
Instead he went back to his basic talking points that Connecticut must remain competitive with nearby states and that New York’s top income tax rate of 8.97 percent will fall next year to 6.85 percent.
So here is the trick question. If Malloy isn’t willing to raise the rate on the wealthy, but does want to reduce the excessive burden on Connecticut’s middle class, where does he go to get the money?
Let’s hope this isn’t the case, but if he doesn’t want to get additional funds from the rich, then the only other place to get it would be from the poor and that would mean backing off of his proposed Earned Income Tax Credit (EITC) for Connecticut low-income working families.
While there hasn’t been a lot of debate to date, twenty-three states (including all of our neighbors) and the federal government have EITC programs which are widely recognized as the most effective anti-poverty policy because they encourage people to work rather than collect government benefits. In fact, Republicans (except in Connecticut) have long supported the EITC, which was created during President Gerald Ford’s term and was dramatically expanded by President Ronald Reagan.
Malloy’s EITC plan would put about $108 million into the pockets of low-wage workers which would not only help them make ends meet in this Great Recession but would serve as an instant stimulus for local economies. The real impact of a state EITC is that it increases wages for low-income workers without employers having to increase their payrolls.
So it’s more than a little troubling to think that Governor Malloy’s response to the call for reducing the burden on middle-income families would be to increase the burden on the working poor while once again letting the wealthy pocket their windfall from the extension of the Bush Tax cuts.
Hopefully Malloy will clarify his position in tonight’s final town meeting.