Connecticut House Bill HB05094

Connecticut 2018 Regular Session

• Introduced: 2/14/18
• Refer: 2/14/18

Caption

An Act Concerning The Personal Income Tax And An Employer Compensation Tax.

Impact

The potential impact of HB 05094 on state laws includes a fundamental restructuring of how income tax is applied at both individual and employer levels. By replacing the personal income tax with an employer compensation tax, the state could see shifts in both economic behavior and revenue generation. Advocates believe this approach may stimulate economic growth, particularly for lower and middle-income employees, as they would retain more of their earnings. However, there is significant concern regarding how businesses will react to this tax change, particularly smaller employers who may struggle with the increased financial obligations.

Summary

House Bill 05094 aims to amend the current tax structure by eliminating the personal income tax on wages while introducing a new progressive employer compensation tax. This shift is intended to mitigate the tax burden on individuals and instead place responsibility on employers based on their compensation levels. The proposed changes will leverage existing personal income tax tables to define the rates for the employer compensation tax, leading to a more nuanced taxation strategy that varies according to employer compensation, thereby aiming to ensure fairer tax contributions from businesses.

Contention

The bill has sparked debate among lawmakers and stakeholders, with notable contention surrounding the potential implications for employment and business operations. Proponents argue that the shift encourages employers to offer better compensation packages while minimizing personal tax liabilities for workers. Conversely, opponents fear that the new tax structure may disproportionately affect businesses that may not be able to absorb the additional employer compensation taxes easily. This brings into question the sustainability of such a tax model in maintaining balanced state revenues while promoting job growth and economic stability.