Statement: Budget Plan Protects Wealthy Individuals, Weakens Working Families

In response to Governor Dannel Malloy’s budget plan address delivered on Wednesday, February 8, 2017

Lindsay Farrell, Director of Working Families Organization:

Today, the Governor sent a $1.3 Billion invoice to everyone in the state – except our richest high net worth individuals. Despite what the Governor says, this budget plan does not allow communities to “lift each other up.” In reality, it’s poor, working and middle class people that will lift up the wealthy by shouldering the larger burden of balancing the budget. Rich people are off the hook.

The Governor’s budget plan aims to generate revenue from the people who can afford it the least. Even where on the budget plan it appears that wealthy people are tapped to contribute towards fixing the budget deficit through property tax increases, its poor people that will be hit the hardest because they can afford it the least.

  • Cutting the state Earned Income Tax Credit will raise taxes on close to 200,000 low-income families in our state.
  • Middle class and poor homeowners are asked to take another cut on the property tax credit.
  • And this budget assumes $700,000 is sacrifices from social workers, caretakers for people with disabilities, employment counselors and our public safety workforce.
  • Last year, after our state budget made $900 million in cuts to poor and middle class families, and laid off over 2,000 workers, we saw our state economy take a huge hit with over 13,000 layoffs between June and December.

Essentially, this plan will weaken our economy by lightening the pocketbooks of the vast majority of residents in the state, the residents that actually drive economic growth.

By and large, Governor Malloy’s budget plan shields the state’s high net worth individuals because of this belief, as he’s stated before, that raising taxes on wealthy people “punishes success.” The problem is that “success” at the top hardly benefits the middle and working class people that enable it. As a state, we’re over reliant on big business and the finance sector, and there’s the unrealistic expectation that if these sectors remain healthy, then everyone else will benefit. Well, the stock market is booming, profits are up, and we have 18% more millionaires in the state than 7 years ago. Yet, the middle class is stagnating and wealth disparity is still among the highest in the nation. It’s simple supply and demand: when regular folks have more money to spend, our economy grows.

We can raise the revenue we need to narrow the budget deficit simply by making our tax code more equitable, and we hope our legislature will stand up to the Governor to do so. For example, closing the “carried interest” tax loophole would help stabilize Connecticut’s unbalanced revenue structure in which the wealthiest families pay half the effective tax rate than the poorest families. Taxing carried interest fees similarly to how other income is taxed can contribute $520M/yr, and narrow Connecticut’s $1.5B deficit by more than one third. Right now, billionaire financiers in CT pay lower tax rates than everyone else. Fixing the budget is all hands on deck. Millionaires and billionaires should carry their own weight. That’s a good start.