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April 30, 2015

Businesses fret over Dem’s tax hike proposals

File photo The State Capitol in Hartford

Business lobbyists are condemning a budget proposal from the Finance, Revenue & Bonding Committee that would increase taxes and eliminate or limit certain exemptions for Connecticut businesses and wealthy residents.

The proposals would raise nearly $2 billion in new tax revenues over the next two fiscal years, according to an analysis of the legislative proposal released Wednesday by the Office of Fiscal Analysis.

That amount would be offset by a proposed lowering of the state’s sales tax, as well as other measures.

One of the largest revenue generators in the committee’s proposal is an elimination of sales tax exemptions for CPAs, veterinarians, golf courses, various consultants, engineers, architects, dry cleaning, computer and data processing services and other types of service-based businesses. That would add $485.5 million in state revenue in fiscal 2016 and $617.3 million in fiscal 2017, according to OFA.

A two percent supplemental tax on capital gains for high earners would generate $345.6 million over two years.

The committee concurred with Gov. Dannel P. Malloy’s proposal to limit companies’ use of loss carryforwards to 50 percent of net income, which would raise $246.4 million over the next two years.

The finance committee also proposed raising the top marginal income tax rate to 6.99 percent, up from 6.7 percent, to generate $102.4 million and $94.7 million in state revenue, respectively, in fiscals 2016 and 2017.

The finance committee would also reduce the biennial business entity fee by half, resulting in a total loss of $20 million, and reduce the 6.35 percent sales tax in two phases over the next two years, ending at 5.35 percent.

The sales tax proposal would cost the state more than $955 million over the next two years.

The committee’s proposal follows a spending plan from the Appropriations Committee earlier this week, which found an additional $514 million in expenditures by redefining the state’s spending cap.

The Connecticut Business & Industry Association blasted the proposal, calling it an affront to voters who supported the spending cap.

“It will make it infinitely more difficult to attract the investment we need to grow jobs,” CBIA said.

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