December 21, 2012

New Haven Advocate: Despite New Law, Poor Still F-ed, Rich Still Whining

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NB: CTJ Modified the original story’s title, which can be found in the original article at the URL below.

Original Post

by Win Vitkowsky

August 2, 2011

Connecticut’s wealthiest 1 percent still get a sweet deal on taxes, while the poorest 20 percent get screwed, according to a report released last month by CT Voices for Children. But the Washington, D.C.-based think tank that collected the data says things are better in Connecticut than practically anywhere else in country.

That’s thanks to a new “earned income tax credit” the state just passed that was intended to close the disparity between how much the rich and the poor pay in taxes. There is already a federal tax credit for low-wage earners, but the policy enacted in the spring allows state residents to get refunds from state and local taxes, too.

Connecticut’s poorest (based on an annual income of less than $26,000), pay 11 percent of their income in taxes. The state’s wealthiest (based on an annual income of more than $1,355,000), pay 5.5 percent of their income, according to Joachim Hero, an analyst for CT Voices for Children.

“The lowest income residents still pay the most taxes,” Hero says.

But Meg Wiehe, of the national Institute on Taxation and Economic Policy, says Connecticut has gone from a state with one of the heaviest tax burdens on the poor to a state with one of the most progressive tax policies in the country.

“We look at all 50 states every year,” Wiehe says. “The last time we did that report was in 2009. The interesting thing was Connecticut fell into the top 10 states with the highest taxes on the poor. With the changes enacted in the spring, Connecticut would likely not make that list.”

Wiehe concedes the gap between what the poor pay and what the rich pay was closed by only about 1 percent.

“One percent is not insignificant. [But] I haven’t seen a package like Connecticut’s in years,” Wiehe says. “Most of the time it’s politically convenient to raise sales taxes — which in effect is a tax on the poor — and reduce income taxes for the rich.”

Still, some say the state is moving in the wrong direction by closing the disparity.

Toni Boucher is a Republican state Senator who represents the very affluent 26th district in Fairfield County. She says although the earned income tax credit is very “compassionate and well-intentioned,” she fears it might kill jobs.

“It is taking money from one group and redistributing it to another,” Boucher says. “The more you tax [the top 1 percent], the less likely there will be enormous disposable income, which some will start businesses and employ people with.”

But Boucher and CT Voices for Children agree that sales taxes impact the income of the poor. Taxes on things like food, gas and clothing eat up a greater amount of low wage earners comes than they do the wealthy.

Copyright © 2011, New Haven Advocate





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