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Saturday, February 27, 2010

Everybody is a Revenue Target When State is in the Red

By Keith M. Phaneuf


Fed up with telemarketing calls? The next one could help Connecticut pay its bills.

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Looking to buy a used gun? The state might get in the business of selling weapons seized by the police.

And if you’re not paying your fair share of taxes—at least in the state’s view—lots of folks in Hartford are thinking of ways to take care of that, too.

There’s no shortage of ideas circulating at the Capitol to help erase the red ink that’s plaguing state finances, as legislators test options never considered before, or revisit ones abandoned long ago, in hopes of striking fiscal gold.


“I expect we’re going to see every kind of bill this year,” said Rep. Cameron Staples, D-New Haven, co-chairman of the tax-writing Finance, Revenue and Bonding Committee. “We’re probably going to look at a wide range of creative options.”

And given that tax hikes aimed at a broad population base normally are taboo in a legislative election year, the range of “creative options” is particularly wide this session.

Rep. Tim O’Brien, D-New Britain, never bought the argument that the wealthy would flee Connecticut if the state were to enact a more progressive income tax. But just in case, he has a solution: the mansion tax.

O’Brien’s proposal would levy a state property tax of $10 for every $1,000 of assessed value over $1 million - if the mansion’s owner does not already pay state income taxes. For example, if a millionaire with homes in Connecticut and Florida, where there is no state income tax, claims residency there, a big tax bill still will be due back here.

“The advantage of having a mansion tax is that you can’t move a mansion to Florida,” O’Brien said, adding that if a millionaire tries to sell a Connecticut mansion, only another millionaire likely could afford it.

Most of the proposals on file at this point don’t have detailed fiscal analyses attached to them yet, since the 2010 General Assembly session is just over three weeks old. O’Brien said he wants any revenues raised by a mansion tax dedicated toward debt service, which approaches $2.2 billion in the current state budget.

The General Law Committee is taking aim at telemarketers who intentionally call households and businesses included on the state’s anti-phone solicitation registry, better known as the “Do Not Call List.” The bill mirrors a federal telemarketing statute right down to the $11,000 fine.

“That’s a pretty large number and I’m not sure that’s going to be our final number,” said Rep. James Shapiro, D-Stamford, co-chairman of the committee. “But for some people I’m sure it’s not high enough. This would be for the hardcore, repeat offenders.”

State government used to raise revenue from a different kind of offender nearly two decades ago, when it auctioned off firearms seized by state police and otherwise scheduled for destruction.

The practice ended in 1992 and Rep. Stephen Dargan, D-West Haven, said he isn’t sure why. The Public Safety Committee, which Dargan co-chairs, has raised a bill that would again authorize auctions for any weapons deemed appropriate by the Department of Public Safety.

State Police Lt. J. Paul Vance, spokesman for the department, said Thursday he was unfamiliar with the proposal but would work with Dargan’s committee, declining further comment.

Rep. Shawn Johnston, D-Thompson, wants to make sure all big winners at the Foxwoods Resorts and Mohegan Sun casinos give Connecticut a share of their jackpot. The casinos already withhold federal income taxes and report winnings to the Internal Revenue Service when patrons win more than $2,500.

Using that federal data, Connecticut can track its own residents who fail to report casino winnings on their state income tax returns, but it does not pursue out-of-state winners.

Johnston, whose hometown borders both Massachusetts and Rhode Island, said he isn’t sure how much in annual casino winnings escape Connecticut, but state government deserves a cut of prizes those prizes that cross the border.

“I’ve got next-door neighbors who live in other states,” he said, adding they still pay Connecticut income taxes if they work here. “Why is it different if they win at the casino?”

But Chuck Bunnell, Mohegan tribal chief of staff, predicted such a move would come back to bite Connecticut in the wallet by discouraging out-of-state patrons from visiting here, adding that neither New Jersey nor Rhode Island require state income tax withholding at their casinos.

Others insist their motivation has nothing to do with raising revenue, but if the legislation helps to balance the budget as well, so much the better.

Sen. Toni Harp, D-New Haven, co-chairwoman of the Appropriations Committee, insisted she wasn’t trying to carve out a new revenue stream for state government when she proposed adding an extra percentage point to the 6 percent sales tax on soft drink sales.

“It’s really more of a public health issue,” she said. “Childhood obesity is a real problem and I’m trying to hopefully make people think twice when they shop.”

Fed up with motorists who flout the most basic of driving rules, Sen. Michael A. McLachlan, R-Danbury, proposed doubling the fines for three of the most common violations.

That would mean the maximum penalty for driving without a license, or for driving an unregistered vehicle, could jump from $200 to $400. And motorists who drive without insurance could pay up to $2,000, instead of $1,000.

And Shapiro is backing a bill to make sure government receives what already is due. His measure would cross-reference any state lottery prize claim worth $5,000 or more against the state’s tax delinquency records.

“It’s just common sense,” he said, adding that many voters likely assume government already does this. “People have a duty to pay their fair share.”


Posted 02/27/10 at 03:02 PM  Permalink


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spend less money?  nah, that’s crazy talk!

Posted by Paul S Greenberg on February 28, 2010 at 01:17 PM | #

Good point. These ideas are basically short-term, especially without long-term cutting of expenses, however politically painful that might be.  With increases in the amount of money drained from people (such as the number of taxes nibbling at people’s financial resources), this state would likely discourage new inflow of wealth, whether from new residents or businesses.  It would, on the other hand, be likely to encourage people to look to other places to work, to live, or to play.  That might not hurt too much right now, but over time it would not bode well for our future.

Posted by Judy Starr on February 28, 2010 at 09:06 PM | #