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1 Jared Walczak, Prepared Testimony for the Connecticut Joint Committee on Finance, Revenue, and Bonding 1 (2019)

handle is hein.taxfoundation/ptestct0001 and id is 1 raw text is: The Tax Foundation is the nation's leading independent tax policy research organization. Since 1937, our research, analysis, and experts have informed smarter tax policy at the federal, state, local, and global levels. We are a 501(c)(3) nonprofit organization. ©2019 Tax Foundation Distributed under Creative Commons CC BY NC 4.0 Editor, Rachel Shuster Designer, Dan Carvajal Tax Foundation 1325 G Street, NW, Suite 950 Washington, DC 20005 Prepared Testimony for the Connecticut Joint Committee on Finance, Revenue, and Bonding Jared Walczak, Tax Foundation, April 10, 2019 Chairmen Fonfara and Rojas and Members of the Committee: I'm here before you today to testify on H.B. 7410, and to speak more broadly-but briefly, I promise-on the need for tax reform in Connecticut. There's no question, I think, that Connecticut faces serious challenges. But if an outsider just took a glance at the statistics, that might come as a surprise. This is an affluent state by any measure, but let's just pick one: at $74,561, Connecticut has the highest per capita income of any state in the country. And at $7,220 per person, the state has the second-highest state and local tax collections per capita in the country, behind only New York, and about 50 percent higher than the national average. Now, being an affluent state does mean less federal aid, but even then, Connecticut ranks 9th on revenue per capita-and doesn't have many of the expenses that are associated with higher reliance on federal grants, like large Medicaid populations. The short version here is that Connecticut has an affluent population, high tax collections, high total revenue, and a highly progressive tax code-I'll get to that in a minute-but it isn't working. Connecticut is feeling the pressure of sustained outmigration of individual and businesses alike. To those outside the state, it's often perplexing, which is perhaps why The Atlantic asked What on Earth is Wrong with Connecticut? in 2017, while Slate, somewhat less inquiringly, declared Something Has Gone Wrong with Connecticut. Businesses are relocating. Individuals are uprooting, particularly high net worth individuals whose absence on the tax rolls is felt intensely. Too often, the response to this exodus has been to raise taxes on those remaining, which only hastens future departures. Instead, this body should look at ways to restructure the tax code to reduce impediments to growth and business retention. The tax code is by no means the only reason for departures from the state, but it is an important contributing factor, and vitally, it is one within the power of this body. Improvements to the economic efficiency of the tax code are sorely needed, and I'd like to take just a couple of minutes to walk through a few of the reforms reflected in H.B. 7410. 202.464.6200 taxfoundation.org

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