Tax Freedom Is Slipping Away

April 30, 2009

Relax, Connecticut. Take a load off. Put your feet up. Hey, you’ve earned it.

What you’ve earned is enough income to pay your annual obligation to government.

According to the nonpartisan Tax Foundation, April 30 is “Tax Freedom Day” for Connecticut. That’s the date when citizens finally have enough money to cover the cost of the public sector at the local, state, and federal levels.

Developed by businessman Dallas Hostetler in 1948, the concept of Tax Freedom Day was willed to the foundation, which now conducts exhaustive research to annually compile results for the states, as well as the nation.

This year, once again, Nutmeggers worked longer than the residents of 49 states to pay their combined tax bill. South Dakotans started working for themselves on March 29. Georgians escaped their tax burden on April 12. Marylanders were freed on April 19.

Connecticut’s far-left establishment peddles the notion that the state’s last-in-the-nation Tax Freedom Day is a result of federal policy. Since incomes are higher in Connecticut than just about anywhere in America, taxpayers are pushed into the IRS’s top brackets.

The claim is true, of course, and a good argument for significant federal tax cuts. But it’s only part of the story. Connecticut has waged a sustained assault of higher taxes on its citizenry at a time when broad wealth-creation in the state has ceased.

The Tax Foundation’s findings are stark. In 2008, the local-state tax burden in Connecticut took a 12.1 percent bigger bite than it did three decades earlier. Nationally, Connecticut’s rank was 27 in 1978, but now it’s 3 -- only New Jersey and New York siphon a greater share of their citizens’ incomes for municipal and state government. (The rank for Florida, the state more Nutmeggers flee to than any other, is 47.)

The disastrous imposition of a levy on wages and salaries (previously, only investment income was taxed) stands out as the marquee tax-policy blunder of the recent era. But the “gift” Lowell Weicker, moonbat Democrats, gutless Republicans, and the amoral Connecticut Business & Industry Association gave taxpayers shouldn’t distract from the smaller screw-ups. State taxes on sales, death, corporate income, cigarettes, alcohol, energy, and telecommunications have also been imposed, expanded, or hiked since 1991.

Cities and towns deserve plenty of blame, too. Connecticut has one of the highest property-tax burdens for owner-occupied housing. Tax Foundation data show that at just over 5 percent of median household income, only New Jersey and New Hampshire homeowners face higher property-tax bills. But commercial and industrial properties are hardly immune. The total revenue collected by the Nutmeg State’s property tax soared by an inflation-adjusted 26.2 percent between 1997 and 2007 -- a decade in which both population and enrollment in government schools stagnated.

The high taxes needed to support Big Government drive away residents. In addition, businesses looking to expand within or relocate to the state take a pass. With fewer income-earning residents and for-profit enterprises, revenue fails to meet projections. Thus, taxes “need” to raised. And the cycle starts all over again.

No one in Connecticut government has enough intellectual candlepower to understand how this rather simple process works. And voters? They continue to elect two types of politicians: extremists who directly benefit from public-sector growth, and “socially liberal, fiscally conservative” types who always manage to keep their commitment to the former, but forget their fidelity to the latter with monotonous regularity.

Unless voters start to embrace candidates who are relentlessly dedicated to pursuing a pro-growth agenda, the fiscal/economic condition of the Land of Steadily Rising Tax Burdens will get much worse, and fast.

Here are just a few reasons why. Earlier this month, a state labor bureaucrat told the Hartford Business Journal that Connecticut’s unemployment-insurance fund “will be insolvent by the end of the year,” given skyrocketing job losses. Then there’s the budget deficits (for the current fiscal year, and the biennium to come), which will expand unless the economy experiences a miraculous turnaround. Throw in unfunded long-term liabilities, which at the local and state levels run into the tens of billions of dollars. Then consider an aging population. The Connecticut Data Center projects that the number of retirees in the state will increase by 75 percent by 2030. Old folks demand, and usually get, expensive “public services.” (Remember: The elderly vote.)

Connecticut’s Tax Freedom Day falls on April 30 this year. Without immediate, sweeping, and lasting public-policy shifts, look for it to head toward a date in summer -- or fall -- in the decades to come.  

D. Dowd Muska is a writer, commentator and lecturer. His website is www.dowdmuska.com.

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