Hartford Business.com
May 17, 2008
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Growing economic divides among Connecticut residents damage businesses, contribute to disparities in educational achievement, reduce consumer demand, limit the pool of qualified workers, and make the state a less affordable place to live.
Unfortunately, new reports from Connecticut Voices for Children (“Who pays?” and “Pulling Apart in Connecticut”) indicate that these income gaps are widening and are worsened by our state and local tax system.
Over the last two decades, the income gaps between Connecticut’s wealthy and poor families and between its wealthy and middle-income families have grown more than in any other state. Income trends for low-income families, who lost 17 percent in real income, and middle-income families, who saw little income change, were the worst of any state.
This “pulling apart” of Connecticut’s incomes is exacerbated by the state’s regressive tax system, particularly its reliance on property and sales taxes. The top 1 percent of Connecticut’s families pays less than half the share of their income in state and local taxes that the bottom 80 percent of families pay.
This fairness gap is not just between the very wealthy and the poor. It’s between the very wealthy and most families.
Critics of progressive tax reforms note that Connecticut’s highest earners already pay a significant share of the state’s total income taxes. That is entirely appropriate, because they also earn a similarly significant share of the state’s total income. For example, the top 1 percent of Connecticut’s taxpayers pays 33 percent of all personal income taxes, but they also report 31 percent of total state income.
Connecticut is a state of great wealth. As we head into yet another economic storm, it’s time to recognize that where the state’s economic well-being is concerned, we are all in this together.
Douglas Hall, Ph.D. is associate research director of the Connecticut Voices for Children.
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