Connecticut Senate Bill SB01136

Connecticut 2019 Regular Session

• Introduced: 4/24/19
• Refer: 4/24/19
• Report Pass: 5/1/19
• Refer: 5/13/19
• Report Pass: 5/20/19

Caption

An Act Establishing A Credit Against The Estate Tax And Requiring Recommendations For The Establishment Of A Social Impact Bonding Program.

Impact

The proposed legislation would amend existing estate tax laws, significantly impacting how estates are taxed in Connecticut. By creating this tax credit, the bill aims to stimulate investment into social impact projects while alleviating the financial burden on estates. Proponents believe this could lead to increased funding for programs that address issues such as recidivism reduction, educational improvement, and housing affordability. However, it could also complicate tax calculations and require additional oversight to ensure the effectiveness of the investments made under this program.

Summary

Substitute Bill No. 1136 aims to establish a credit against the estate tax for investments made by decedents in social impact bonds and venture capital funds. This bill seeks to encourage investments in programs aimed at improving various social outcomes, particularly in distressed municipalities, and is part of a broader initiative to promote economic development. Specifically, it allows for a reduction in the estate tax based on the amount invested in these bonds or funds, provided the investment has been held for at least five years before the decedent's death. The bill reflects a progressive approach to taxation by linking estate tax relief to socially beneficial investments.

Sentiment

Overall, the sentiment surrounding Bill No. 1136 tends to be supportive among those who advocate for innovative funding solutions to social problems. Supporters argue that by incentivizing investment in social bonds, the state can address pressing community needs while generating tax revenue through estate tax collections. Conversely, critics may express concerns over the potential for misuse of tax credits or believe that the focus should be on broader economic reforms rather than targeted incentives for wealthier estates.

Contention

The main contention arises from the equity of providing tax credits that favor certain investments over others, raising questions about who benefits from such amendments. Additionally, skepticism exists regarding the effectiveness of social impact bonds in delivering on their promised social outcomes. Critics argue that the success of this mechanism relies heavily on effective program management and that the state must be cautious in implementing such credits to avoid significant revenue losses without tangible benefits.