If enacted, HB 05274 will amend Title 12 of the general statutes, introducing explicit taxation on capital gains for higher-income individuals. This could result in increased revenue for the state, which may be allocated toward public services. Supporters argue that the surcharge could help address budgetary shortfalls, enhance educational funding, or support health care initiatives, thus benefiting the broader community. However, there is concern that it could discourage investments among high income earners, potentially slowing economic growth in the state.
Summary
House Bill 05274 proposes the establishment of a surcharge of one and one-half percent on capital gains, specifically targeting taxpayers with a Connecticut adjusted gross income at or above the threshold for the highest marginal tax rate. This legislative move aims to increase state revenues by levying an additional tax on profits derived from the sale or exchange of capital assets for wealthy taxpayers. It is presented as a measure to ensure that those with higher incomes contribute a greater share towards funding state services and initiatives.
Contention
The bill may face opposition from various stakeholders, primarily those in the business community and financial sectors, who argue that imposing higher taxes on capital gains could disincentivize investment and harm economic growth. They may contend that taxes should be structured to promote investment rather than penalize successful capital transactions. Additionally, discussions may arise surrounding the fairness of taxing capital gains differently than earned income and whether it aligns with broader tax policy goals within Connecticut.
An Act Increasing The Highest Marginal Rate Of The Personal Income Tax And Establishing A Capital Gains Surcharge To Provide Funding For Certain Child-related, Municipal And Higher Education Initiatives.
An Act Establishing A Capital Gains Tax On Certain Endowment Funds Of Institutions Of Higher Education And Concerning The Use Of The Revenue Generated.