To fix state budgets, tax the rich!
Virginia Gov. Terry McAuliffe, head of the National Governors Association, has expressed deep concern about GOP plans to cut taxes on the rich, saying the approach will do great harm to the people of his state. | Stephanie Klein-Davis/AP

Editor’s note: The author wrote this article about the current state budget crisis in Connecticut. It is a timely telling, however, of the story happening in states all across the country and it shows clearly that taxing the rich is the feasible and sensible solution to what is a national problem.

Summer jobs for teenagers have been canceled, state college and university charges keep rising, and every area of public life is affected by the state’s budget crisis — all in the second wealthiest state in the country, with the second highest level of inequality.

Connecticut’s budget shortfall is projected at about $2 billion per year. Yet, the wealthiest residents face a lower effective tax rate than the rest of us, and hundreds of millions are lost every year through corporate loopholes, special exemptions, legal tax avoidance, and outright tax evasion. If the wealthiest households paid at the same rate as the rest of us, more than $2 billion per year would be raised, erasing the deficit!

Despite this, we are told that asking big corporations, millionaires and billionaires to pay their share is off the table. That leaves only one alternative: cut, cut, cut.

What should we cut? Programs for children with disabilities? Kick kids off HUSKY health care? No summer jobs for teens (already happening)? Close state parks and beaches? Raise tuition for higher ed (even more)? Cut Care4Kids so moms lose their jobs when they can’t afford child care? Cut support for cities and towns? End the already-reduced property tax credit?

Individuals and advocates for all of those affected have given eloquent testimony that their programs should not be cut. And they are all right! After years of austerity and crisis, programs have been cut to the bone and there is a huge backlog of unmet needs.

But if taxing the rich is off the table, everyone else is left to fight over the crumbs. This pits towns against cities, workers against retirees, and kids’ education against housing.

Particularly damaging is the blatant attack on public workers, led by Republicans and following the Koch brothers’ playbook. Over several decades, the failure of big corporations and wealthy individuals to pay their share has contributed to severely underfunded pension and health funds, and high levels of debt. Instead of asking state workers to cut back the retirement and health benefits they were promised, why not ask the banks and other bondholders to give up some of the payments they were promised? Why are promises to Wall Street considered sacred, while promises to workers are only good until the next budget shortfall?

Mark Pazniokas, writing in the CT Mirror, gave the “responsible” answer, saying that lawmakers must “focus on reassuring Wall Street credit-rating agencies, corporate C-suites and taxpayers they are capable of balancing the budget.”

I disagree! Connecticut’s lawmakers should focus on meeting the needs of Connecticut’s residents!

There is enough wealth in this state to maintain and even expand the work being done, while keeping promises made to state workers and filling vacancies to allow them to perform their jobs. There have been a number of useful proposals to accomplish this. These include:

  • Increasing the income tax rate on the portion of incomes over $250,000 per year.
  • Closing the “carried interest” loophole.
  • Extending the sales tax to yacht storage, legal fees, and other services mainly used by the wealthy and big business.
  • Reviewing and ending outdated corporate subsidies and tax exemptions
  • Enacting a low-wage employers fee, so that big companies like Walmart that pay less than $15/hr would reimburse the state for the cost of providing services to their workers.
  • Hiring more state Department of Revenue Services (DRS) auditors to cut down on cheating by businesses and high-income households.

Finally, the Trump administration and Republican Congress are preparing to slash taxes for millionaires and billionaires, at the expense of our health care and almost every federal program that helps people.

Gov. Dannel Malloy has stated that he will act to prevent the Trump axe from falling on Planned Parenthood in Connecticut, and to protect other important programs. But funding those programs should not come at the expense of other vital needs. Instead, Connecticut should enact a tax on high earners equal to any tax reduction pushed through by the administration, and use that money to protect programs in Connecticut from federal cuts.

Art Perlo is a member of the State Committee of the Conn. Communist Party USA. He lives in New Haven.


Art Perlo
Art Perlo

Art Perlo lived in New Haven, Conn., where he was active in labor and community struggles. He did research and writing on economic issues in Connecticut, including work with the Coalition to End Child Poverty in Connecticut which helped pave the way for the movement for progressive tax reform in the state. He wrote on national economic issues for the People's World and was a member of the CPUSA Economic Commission.