Connecticut House Bill HB05105

Connecticut 2018 Regular Session

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

Caption

An Act Adjusting The Rates Of The Sales And Use Taxes And The Personal Income Tax.

Impact

If enacted, HB 05105 would significantly impact state tax revenues and the overall fiscal landscape of the state. The reduction in the sales tax might be viewed favorably by consumers, as it could lower the cost of goods and services in the immediate term. However, the increased rates on the higher income brackets may incite debate regarding its effects on higher earners, potentially discouraging wealth accumulation and investment within the state. The mixed approach of reducing one tax while raising another aims to provide more equitable taxation, targeting relief for lower-income individuals while increasing contributions from those with greater financial means.

Summary

House Bill 05105 proposes adjustments to both the sales and use taxes and the personal income tax rates in response to the state's financial needs. Specifically, the bill aims to reduce the sales and use tax rate to 5.9%, while simultaneously increasing the top two marginal rates of the personal income tax to 8.9% and 8.99%. This shift in tax policy reflects a strategy to balance revenue sources while potentially easing the burden on lower-income taxpayers through a reduction in sales tax rates.

Contention

Debates surrounding HB 05105 likely center on balancing the needs of diverse constituents. Proponents may argue that the changes will create a fairer tax structure that benefits the majority, particularly low to middle-income residents who will face lower sales tax costs. Conversely, opponents may raise concerns about the implications for high earners who might feel the increased personal income tax burden is disproportionate, possibly resulting in an exodus of affluent taxpayers in search of more favorable tax climates elsewhere. This contention highlights the ongoing challenge of tax policy where the need for revenue must be weighed against taxpayer sentiment and economic incentives.