HARTFORD -- The middle class is getting a break at the expense of the wealthy. That’s the key development under the tax proposal Democrats revealed Wednesday.
The Democratic tax package differs from Gov. Lamont’s plan. It expands the 6.35% state sales tax to only five new areas instead of the dozens the Governor proposed. “We’re happy that some of those sales tax exemptions that were hurting the middle class and the Governor proposed are not in there,” said House Republican Leader Rep. Themis Klarides.
But to accomplish that, Democrats propose a Capital gains tax on the state’s wealthiest 1%. “Because we are making a lot of cuts and we are asking a lot of the middle class and working poor in our state to pay a little more but there hasn’t been to date over the last couple of years an ask of the ultra-wealthy in our state to pay more,” said Democratic Rep. Josh Elliot.
The Governor doesn’t support that. The proposal maintains the hospital tax and ads a surcharge for paper and plastic bags. It increases the tax on vaping, alcohol, and digital downloads. “You are now going to be paying a tax from the ringtone on your phone to the rotisserie chicken you buy in the store,” said Klarides.
Sugary drinks is off the list. “The fear was that this actually again hurts the people living in these urban centers,” said Rep. Elliot.
In another curious move, Democrats have proposed capping the revenue from the new car sales tax that gets deposited into the Special Transportation Fund at 18%. The Governor’s proposal would have eventually deposited 100%. Republicans say it proves Democrats are intentionally starving the fund to create a need for tolls. “This notion that we need to take a billion dollars out of your pocket in tolls on a yearly basis is just a fallacy. It’s not true,” said Rep. Klarides.
Republicans say they likely won’t come up with their own budget. “We’ve done it before and it’s been immediately dismissed,” said Rep. Vincent Candelora, the House Deputy Republican Leader. House Speaker Joe Aresimowicz said, “There will always be a seat at the table as long as they are willing to engage in the process.”
The budget also sets the stage for big bills. But there was a hint from the House Speaker that some of that debate might not be finished in the next 4 weeks. “I’m willing to come in for special session to do sports gambling and recreational marijuana if we don’t finish it by the end,” said Aresimowicz.
As for some other tax highlights, Democrats propose eliminating the gift tax and business entity tax. They’re also proposing a local meals tax of 1% which would go back to cities and towns. They’ll also dip into the rainy day fund for about 100-million dollars.