Joe Scarborough took time out from solving the problems of the world on his MSNBC Morning Joe program to focus on the state where he makes his home, Connecticut.
“It was an economic magnet, but Connecticut is one of the worst tax states in the country for businesses,” Scarborough said. “And now they are coming back asking for another tax raise.”
He is one of the wealthy whose accountants will be working overtime to deal with the new Connecticut budget that includes nearly $2 billion in tax increases, including a $700 million increase in business taxes.
Any politician worth his or her salt knows an opportunity when they see one. Governors Mike Pence (R) of Indiana and Greg Abbott (R) of Texas are no exception to that rule. As soon as they heard some of the biggest businesses in Connecticut were upset with the higher tax burden, they set off in pursuit of General Electric, Aetna Inc. and Travelers.
With the latest budget, the Connecticut legislature has now increased business taxes five times since 2011, forcing companies in the state to pay the fifth highest tax rate in the nation.
Pence and Abbott both wrote letters to the corporate leadership of GE, Aetna, and Travelers, inviting them to tour their states that both said offered tax advantages Connecticut could no longer provide.
Bloomberg reported Abbott’s letter boasted of a $3.8 billion tax-cutting package approved by the Texas legislature in May that included a 25 percent cut in the business franchise tax. That alone should save companies in Texas a total of $2.5 billion, Abbott wrote, in the next two years.
“Businesses in Indiana grow with confidence, while businesses in high-tax states like Connecticut operate in fear of seeing their piggy banks raided,” wrote Pence. “On behalf of 6.7 million hardworking Hoosiers, we are constantly meeting with companies around the world that are choosing Indiana and enjoying an instant spike in earnings. With Connecticut taxes skyrocketing, it’s important to remind businesses that Indiana is here to help as a state that works.”
Indiana economic development officials also paid for a full-page ad in the Wall Street Journal pitching GE, Aetna Inc., and Travelers on the advantages of moving their corporate operations out of Connecticut.
“We offer our support in the wake of Connecticut’s looming tax increase, because friends don’t let friends pay higher taxes,” the ad read.
GE did not attempt to hide its displeasure with the Connecticut tax package.
“Reports that Connecticut officials intend to raise taxes by another $750 million dollars are truly discouraging. Retroactively raising taxes again on Connecticut’s residents, businesses and services makes businesses, including our own, and citizens seriously consider whether it makes any sense to continue to be located in this state,” said GE spokesman Seth Martin.
“The Connecticut economy continues to struggle as other states offer more opportunities and a better environment for business growth. It is essential that Governor Malloy and legislative leaders find a more prudent and responsible path forward for Connecticut and its citizens in their current budget negotiations,” he added.
General Electric isn’t alone in its dissatisfaction with the taxing mentality in Hartford.
Joseph Brennan, the president and chief executive officer of the Connecticut Business & Industry Association, wrote a letter to Connecticut Gov. Dannel Malloy (D) warning him “some of the best-known companies in the state are rethinking their commitment to our state. We have consistently warned throughout the legislative session that adoption of the tax increases …would cause serious and long-term harm to our economy.”
Brennan described the situation as being so dire it should be considered “a crisis in Connecticut.”
He is hoping to change some legislative minds before it is too late, but there does not seem to be much hope of that judging by what Malloy and legislative leaders said when they proudly announced the two-year budget deal.
“This budget meets the state’s obligations and provides historic property tax relief for the people of Connecticut,” said Senate President Martin M. Looney (D).
Senate Majority Leader Bob Duff (D) said the budget contained major property tax relief. “Additionally, this budget supports our people, our business sector and makes significant long term investments in our transportation system,” he said.
Speaker of the House Brendan Sharkey admitted “the wealthy and corporations” would be faced with a higher tax burden. But he described it as “a little bit more,” certainly not as cataclysmic as Brennan’s assessment.
“A brighter tomorrow will start with this budget today,” said Gov. Malloy.
Scarborough doesn’t see it that way.
“Fifty percent of Connecticut residents in a poll over the past year said they would leave the state if they could,” said Scarborough. “But they can’t sell their houses because nobody is coming in because they keep raising taxes.”