Connecticut House Bill HB05657

Connecticut 2023 Regular Session

• Introduced: 1/18/23
• Refer: 1/18/23

Caption

An Act Establishing A Capital Gains Surcharge.

Impact

The implementation of this bill would result in a modification of existing tax statutes within Connecticut, directly affecting higher income earners. Supporters of the bill argue that the surcharge is a fair approach to taxing investment income predominantly earned by wealthier individuals and would help in addressing income inequality. It is projected that the additional revenue generated from this surcharge could be allocated to public services and programs that benefit the broader population.

Summary

House Bill 05657 proposes the establishment of a capital gains surcharge, specifically a 5% surcharge on the net gains from the sale or exchange of capital assets, as well as on dividend and interest income. This surcharge applies to taxpayers whose Connecticut adjusted gross income meets or exceeds the threshold amount defined for the highest marginal tax rate. The intent of this bill is to generate additional revenue for the state, particularly from affluent individuals who benefit from capital gains and investment income.

Contention

However, the proposal has received criticism from various stakeholders, including business advocates and opponents of higher taxes. Critics argue that imposing such a surcharge could deter investment in the state, adversely impacting economic growth and job creation. There is concern that higher taxes on capital gains could lead to increased financial burdens on those who might reconsider their investment strategies or relocation due to unfavorable tax conditions. This friction points to a larger debate about balancing fiscal responsibility, taxation, and economic development in Connecticut.