Gov. Lamont proposes first state income tax cut in nearly 30 years
The last time Connecticut cut the state income tax, we were all doing "The Macarena." On Monday, Gov. Ned Lamont proposed the first rate cut since 1996.
"This is the biggest tax cut since the dawn of the income tax in the state of Connecticut," Lamont said at a morning news conference in East Hartford.
Since Lamont is proposing a rate cut, taxpayers wouldn't have to do anything to see the savings.
"Rather than a lot of rebates and credits, this is something you're going to see in your paycheck," the governor said.
Lamont's proposal would lower rates for Connecticut's bottom two tax brackets. On the first $10,000 you earn, the tax rate would drop from 3% to 2%. For the next $40,000 you earn, it would go from 5% to 4.5%.
How much could you save? Single filers could keep up to $300 more each year, or about $20 per paycheck. Joint filers could keep double that amount.
"More money to the paycheck is definitely something I'm not opposed to," said Bryan Sequeria, of Norwalk.
The Lamont administration estimated almost two-thirds of taxpayers will pay less, saving about $440 million total each year. The state's wealthiest taxpayers – single filers making more than $500,000 per year or joint filers earning more than $1 million – won't benefit because the state tax code offsets their lower tax backet savings.
The state's poorest residents stand to be the biggest winners. Combined with a bigger Earned Income Tax Credit, which Lamont proposed last week, families making less than $50,000 per year wouldn't owe any state taxes at all.
"We really need a break right now with all that is going on," said Sharen Williams, of Stamford. "And when you look at the paycheck, you want to cry most times because they're taking more than you even earn."
But the relief won't be immediate. The tax cut wouldn't kick in until January 2024.
"As we pay down our pension debt, we expect $440 million in savings. So, we need to get that in order to provide this tax cut, which is about that amount," said Lt. Gov. Susan Bysiewicz.
State lawmakers applauded the proposal but may fight for changes.
"As a Republican, I'm delighted to see the governor embracing an idea that we put forward last year," said state Rep. Holly Cheeseman (R-East Lyme), the top Republican on the legislature's tax-writing committee. "We would like to see this affect more filers and more families."
Lamont's tax cut is getting support from conservative state senators too.
"Senate Republicans appreciate the governor's proposal to cut taxes for middle class families who are all feeling the pain at the pumps, at the supermarket and when they open their energy bills," state Senate GOP leader Kevin Kelly said in a statement." Senate Republicans proposed $1.2 billion in tax relief last year, but our plan was rejected by majority Democrats in the Legislature. Connecticut taxpayers deserve significant and immediate widespread tax relief, and Republicans will continue to fight for them."
Meantime, some progressive Democrats would rather offer credits specifically aimed at the working poor. But Lamont said it's time to keep the tax cut simple.
"You don't have to apply for this; you don't have to fill out the forms," he said. "You will see a reduction in your withholding, which means you'll be keeping more of what you earn."
Monday's announcement is part of a larger tax relief plan; Lamont's other proposals include helping small businesses and property owners hurt by the federal government's new $10,000 cap on state and local tax deductions.
Lamont will present his proposed state budget on Wednesday. Then, the governor and state lawmakers will spend the next four months negotiating a final tax and spending package.