HARTFORD — As the Connecticut General Assembly’s special session approaches, the elected legislators must decide whose side they are on. Connecticut is the wealthiest state, with the highest inequality between the wealthy hedge fund managers and financial billionaires, and some of the poorest cities in the country. Will the legislators submit to corporate blackmail, or will they stand up for the working families and the children? Will thousands of kids be denied medical care, youth programs and adequate schools, or will corporate tax-dodgers be forced to pay their taxes?
After a bruising six-month battle, the Connecticut General Assembly passed a budget on June 3. Faced with a large deficit and threatened cuts to a wide range of programs, the budget restores about half of the cuts originally proposed. The budget would be financed by closing corporate loopholes, a small increase in the tax on incomes over $1 million, and a variety changes to the sales and other taxes that impact businesses as well as working class families.
Not included in the package was SB1044, the MacWalmart tax. This would have made Connecticut the first in the country to tax big corporations (like McDonalds and Walmart) for every worker paid less then $15/hour. In addition to raising upward of $300 million per year – a substantial contribution toward avoiding budget cuts – SB1044 would have exerted upward pressure on wages for the lowest-paid workers.
Better Choices for Connecticut, a coalition of labor, community, environment, and non-profit service providers, had urged that the legislature find the funds to avoid cuts by looking at those with the lowest tax burdens – wealthy residents and big corporations. Coalition members pointed out that a recent report (from the state Department of Revenue Services) shows the tax burden on wealthy families is two or three times less than the burden on low- and middle-income families.
Responding to the budget that was passed, the coalition said, “Instead of asking the most of those with the least by cutting programs that support Connecticut’s children and families, our elected officials have made better choices. While the final budget still includes cuts to important human services, lawmakers were able to avoid many of the most difficult cuts by asking a little more of profitable multi-state corporations and the very wealthy in our state.”
One coalition leader summed up the feeling of many: “It isn’t what we would have liked, but there is some progress here, and without all of our efforts it would have been much worse.”
The corporate offensive
But the battle is not over, as corporate forces have launched an offensive against the legislation.
Even before the budget passed, the corporate counter-offensive began. GE, Aetna and other top Connecticut-based corporations issued statements attacking the budget deal and threatening to leave Connecticut. “Rep. Cristin McCarthy Vahey, D-Fairfield, a freshman, found herself surrounded outside the House chamber by two lobbyists and a tax attorney dispatched by her town’s biggest company, General Electric,” according to one news report. Connecticut’s print and broadcast media echoed their complaints.
The corporate anti-tax campaign went national. The day after the budget was passed, Morning Joe featured an attack on Connecticut’s tax system. Indiana’s Republican governor Mike Pence publicly invited GE, Aetna and other corporations to move to his state.
Yielding to corporate pressure, Gov. Malloy called for eliminating or reducing some of the progressive provisions in the budget, at the cost of more than $100 million per year, to be paid for by cutting 1.5 percent from line items in the budget, threatening a wide range of services and programs. Funds for cities and towns, already included in their budgets, are also threatened. The final outcome is due to be decided at a special session of the legislature to finalize the budget, set for June 29-30. The legislature must act before July 1, when the new fiscal year begins.
Challenging the corporate narrative
Progressive forces responded in the media and in the streets. In a press conference, the Better Choices coalition stated, ” Once again, following outcry from a few of our state’s largest corporations, we must remind our elected officials to make better choices. While these corporations claim that Connecticut’s business tax burden is too high, a study by the Ernst and Young for the Council on State Taxation found that Connecticut businesses face the second lowest state and local tax burden in the nation,” and concluded, ” If any ‘tweaking’ is done on the revenue side of the budget, any revenue lost should be replaced by alternate revenue sources from those most able to pay.”
According to Connecticut Voices for Children, a leading advocacy group, “contrary to the loud complaints of some in the corporate community, the budget does not impose outsized demands on big business. When corporations complain of high business taxes, they are elevating fiction over fact.” They cited a study showing “our businesses pay a smaller share of total state and local taxes than in most other states, and get a better return than businesses in most other states in the publicly-funded services provided.”
GE, the most prominent corporate voice attacking the budget, is notorious as one of the top corporate tax avoiders in the state. It also ranks number one in a ranking of the nation’s top tax dodgers. At a demonstration in Hartford, a delegation delivered an open letter to GE demanding that they pay the same taxes as everyone else.
- With days to go before the general Assembly acts, residents can call Speaker of the House Brendan Sharkey at (800) 842-1902; Senate President Martin Looney at (800) 842-1420, and Senate Majority Leader Bob Duff at (860) 240-0414. Urge them not to give in to corporate blackmail, and to avoid budget cuts by passing the MacWalmart bill and making the income tax more progressive on the highest incomes.
- GE and others. (IN Gov. Mike Pence poaching.) Shift debate away from McWalmart. Gov is proposing reducing taxes and making more cuts. That happens in the implementer. This would reduce new revenue in the budget by $224 million. To balance the plan, Malloy is asking lawmakers to authorize him to cut up to 1.5 percent from line items not fixed by contract or to make the cuts themselves.
- “Damage was limited.” State Rep. Sharkey called the new spending plan “a transformative budget” that makes crucial investments in property tax relief and transportation. He said the budget dedicated a portion of sales-tax revenue to cap local property taxes on vehicles in about 60 of Connecticut’s 169 cities and towns, bringing fairness “to the single-most heinous tax that we impose.” Context – rich and corporations pay the least.
- Contrary to the loud complaints of some in the corporate community, the budget does not impose outsized demands on big business. When corporations complain of high business taxes, they are elevating fiction over fact. Consider the most recent report on business taxes by the Council on State Taxation, a trade association for major corporations including GE, which found that Connecticut tied for the second lowest state and local business tax burden in the county with taxes at 3.4percentof gross state product (compared to 5.8percentin New York and 5.1percentin New Jersey). It found that our businesses pay a smaller share of total state and local taxes than in most other states, and get a better return than businesses in most other states in the publicly-funded services provided.
- Special session Call for activists to phone. June 29-30(?).
- Other bills like 2nd chance and body cameras tied up.
Photo: Connecticut residents protest GE’s tax avoidance in Hartford. Tom Connolly.