Connecticut Senate Bill SB00420

Connecticut 2017 Regular Session

• Introduced: 1/19/17
• Refer: 1/19/17

Caption

An Act Phasing Out Income Tax For Pension Income Over A Five-year Period.

Impact

If enacted, SB00420 would significantly alter the state tax landscape, particularly affecting Title 12 of the general statutes concerning income taxation. The phased reduction would lead to a complete elimination of income tax on pension earnings by the end of the five-year term. Proponents of the bill argue that this would enhance the financial well-being of retirees and stimulate the economy by allowing seniors to retain more of their income, thus potentially increasing local spending.

Summary

SB00420 aims to phase out income tax for pension income over a five-year period. The proposed legislation outlines a structured reduction in tax liability, suggesting a 20% decrease in the taxable amount of pension income each year. Introduced by Senator Hwang, this bill addresses the financial concerns of retirees who depend on pension income, aiming to provide fiscal relief and encourage economic stability among the elderly population. The formal objective of this bill is to alleviate the tax burden placed on retirees.

Contention

However, the bill may face opposition from fiscal conservatives and budget analysts who express concerns about the long-term effects on state revenue. Critics argue that a reduction in income tax for one specific demographic could lead to budget shortfalls, thereby impacting public services and programs relied upon by all citizens. Furthermore, the bill raises questions about equity in tax policy, as it may disproportionately benefit higher-income retirees who receive larger pension payouts.