Sen. Toni Boucher Troubled By Dip In Revenue From Income Tax Withholding

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State Sen. Toni Boucher, a Republican, is concerned about the state of the budget. Photo Credit: File

WILTON, Conn. – State Sen. Toni Boucher (R-Wilton) released a statement about her concerns about a dip in the state’s income tax withholding revenue, citing her worries about employment and the state budget.

Boucher, a Republican, represents Bethel, New Canaan, Redding, Ridgefield, Weston, Westport and Wilton. She is a deputy minority leader in the state Senate. 

She cited a report in the Waterbury Republican American in her statement.

“The newspaper reported: The state harvested a windfall last year from investors, the self-employed and others who make tax payments every quarter. But revenue from working people who have income taxes withheld from their paychecks is lagging."

Boucher pointed out that the state’s biggest source of revenue is the personal income tax.

"The monthly collection data for the income tax suggests that the major component for the low withholding collection was from the lower than anticipated collection of the tax on holiday bonuses. The reduction in either total or dollar amount of bonuses suggests that company profits are down which in turn hurts our residents who work in New York City.

“In addition to bonuses, the collection from wages and salaries was also down, which could be from lower employment and lower salaries of those employed. In addition, many residents cashed in stocks due to changes in the expiration of capital gains – that inflated revenues as did inheritance taxes, which came in higher mainly due to one large estate that accounted for nearly half of the increase."

Boucher said that both of those occurrences are highly unlikely to reoccur.

“When you couple that with assumed growth of more than 5 percent per year, the editor is suggesting that the biennial state budget is predicated on what may be considered rosy growth rates that will not be achieved. I agree and believe leaders need to take a serious look at how we can reverse this trend.

“Connecticut has stalled at more than 8 percent unemployment for several quarters and has shed 5,000 manufacturing jobs in the past several years. We need jobs. State subsidies for health care and pension benefits are crowding out the good investments that we should be making in manufacturing companies who are the backbone of our economy."

Boucher cited the high cost of living as well as the small job growth in Connecticut. 

“We are already the most expensive state to live in in the continental United States. Add lack of employment and high unfunded liabilities and the concern grows to critical juncture. We must act now with real tax reform, infrastructure investment and proper financial restructuring.”

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Comments (5)

john.real.965:

Which state will declare bankruptcy first, CT or CA?

pat j:

Regnery- if you work in NYC, you pay taxes to NYC in addition to NY state.

evelyn h:

Politicians already know raising taxes reduces consumption and discourages economic activity....at least this is their cry when they increase 'sin' taxes on cigarettes and whiskey.

But, oddly, they seem to forget the same principal applies to all other forms of taxation. Increasing income, sales, property etc etc taxes has the same effect....reduced economic activity. What company would choose to move to Ct instead of lower tax states? Any auto assembly plants in CT? Nope, they are in South Carolina (where CT's once thriving gun plants will be moving!

CUT TAXES BY REDUCING SPENDING PLEASE!

oneofthepeople:

As one who knows that legislators were warned by constituients for years that the policies of even the Rell administration, with a super majority of Dems running Hartford, was a train heading for a cliff, this should not be suprising...
http://www.forbes.com/sites/jimpowell/2013/08/01/how-did-rich-connecticut-morph-into-one-of-americas-worst-performing-economies/>>>
"Connecticut ranks #50 – the worst — in annual economic growth. According to the Department of Commerce’s Bureau of Economic Analysis, Connecticut’s economy contracted for the second year in a row. “Connecticut is the laggard,” reported Connecticut Department of Labor economist Daniel Kennedy. >>>> Between 1996 and 2006 – before the financial meltdown and recession — the number of Connecticut small businesses declined by 2.2 percent, while the average experience of all 50 states was a 10 percent increase. Its small businesses account for about half of the state’s private sector jobs. >>> Government spending is out of control. Two years ago, Connecticut Governor Dannell P. Malloy signed a $1.8 billion tax hike, the biggest in the state’s history, that supposedly would generate enough. But it wasn’t enough for the next budget, enacted this year. It was balanced mainly with gimmicks like shifting some $6 billion of Medicaid spending off-budget. >>>> State Budget Solutions, a think tank monitoring state finances, reported that among the 50 states Connecticut has run up the fourth largest pile of debts per capita — $27,540. >>> Barron’s considered Connecticut to be in the worst financial shape – with debt and pension liabilities a higher percentage of GDP (17.1) than any other state. Factors affecting a state’s business climate include the individual income tax, corporate income tax, sales tax, property tax, unemployment insurance tax and security of private property."

regnery:

"The reduction in either total or dollar amount of bonuses suggests that company profits are down which in turn hurts our residents who work in New York City."

I don't understand this. If someone was working in New York City, then the withholding taxes they'd be subject to would be New York's, not Connecticut's. Therefore, if employees that live in Connecticut but work in New York (anywhere in the state, not just NYC) get lower bonuses, that wouldn't impact Connecticut's withholding receipts, because Connecticut would see none of that anyway.

Bear in mind that if you live in Connecticut but work in New York, you pay your income taxes to Albany, not Hartford. Hartford only receives income taxes from capital gains, interest, etc. as well as from a second job you might have in Connecticut. New York doesn't share these taxes with Connecticut -- if you work in NY state, your taxes fund stuff in NY state, not Connecticut.

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