August 20, 2018
Other Voices

CT must reverse course to prevent outmigration

Chuck Cumello

It's hard to imagine that there were so many gubernatorial candidates in Connecticut given the daunting task of trying to reconcile the perilous state of the state's finances.

The next chief of state will be dealing with a multibillion-dollar deficit on day one. There will be no easy solution but looking at our state finances from the perspective of a wealth management and financial planning firm, if the state was a person, their long-term plan in its current form would fail, and they'd be informed they have a spending problem.

If it were a revenue issue, certainly the two largest tax increases in the state's history and the second-longest bull market in the country's history would have solved that.

Our revenue challenges come primarily due to the high number of residents leaving the state. The two largest age groups leaving the state are young people fresh out of college, not good for the future, and residents who have reached retirement age, not good for the present. In fact, a survey from Essex Financial of over 1,000 Connecticut residents found that only a quarter (25 percent) plan to live in Connecticut after retirement, while the remainder plan to leave or remain unsure if they will stay. We have found that one of the primary reasons as to why people well into retirement leave is because they want a tax-friendlier location. It seems the only audience that doesn't understand this is our representatives in Hartford.

Connecticut's legislature needs to be reminded that in order to retain people post-retirement it's important to create an attractive economy where retirees don't have to worry about taxes depleting their nest eggs.

The greatest fear when thinking about retirement savings for Connecticut residents is that they won't have enough saved to maintain their lifestyle (27 percent), or that they will outlive their savings/run out of money (27 percent), according to the Essex Financial survey. As things currently stand in Connecticut, a person's social security income is partially taxed, withdrawals from retirement accounts are fully taxed, and public/private pension income is fully taxed.

For business owners, the reality is that the economic system in Connecticut impacts their ability to operate effectively as they end up bearing the brunt of taxes or mandates imposed by the state. Business owners face similar issues as retirees because high taxes, coupled with the high cost of living and state mandates and regulations, make it difficult for many entrepreneurs to turn a profit.

Our state is one of a very few that has not enjoyed the fruits of the national economic recovery. To turn things around, Connecticut officials need to come together to make a change to help businesses recruit and retain employees, keep retirees here for the long run and to make this a state people want to run toward, not away from.

Big problems require big bold solutions.

Want to get the attention of the wealthy, who we most certainly want to stay in this state? Get rid of the estate tax. Want to make everyone in the state happy? Privatize the DMV. Change the narrative of how the state is perceived for individuals and businesses, come together to lower the tax burden on everyone. Create an environment of growth, innovation and entrepreneurship.

We live in a spectacular state with beautiful beaches, ski resorts, wonderful woodlands and a location between New York and Boston that literally puts the world a two-hour car or train ride away. Our schools and medical care are among the best in the country. It is a beautiful place to raise a family. Most, if not all of the issues that caused our current situation are man made, which means they can be fixed.

Change requires vision and courage. I hope Hartford is capable of that as the alternative is very frightening.

Chuck Cumello is the CEO and president of Essex Financial.

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