This testimony was delivered to the Connecticut General Assembly Finance Committee on February 26, 2026.
My name is Marco Guzman, and I am a Senior Analyst at the Institute on Taxation and Economic Policy (ITEP). ITEP is a non-profit, non-partisan tax policy organization, conducting rigorous analyses of tax and economic proposals and providing data-driven recommendations to shape equitable tax systems at the state, local, and federal levels. On behalf of ITEP, I submit this testimony in support of Connecticut For All’s Stand Up CT Fair Share policies.
The Federal Context
With the passage of federal HR 1 (commonly known as the One Big Beautiful Bill Act, or OBBBA), a tiny sliver of affluent families – the top 1 percent by income – will receive tax cuts of more than $1 trillion over the next decade. According to our analysis of the federal tax changes, the richest 1 percent in Connecticut will see an average tax cut this year of over $63,500, an amount almost 30 times larger than middle-income Connecticut households. These giveaways, combined with historically deep cuts to programs like the Supplemental Nutrition Assistance Program (SNAP), healthcare benefits, and housing support programs, along with additional federal funding cuts to research done at Connecticut universities, make clear the responsibility to provide bold solutions to meet this moment.
Who Pays? In Connecticut
Connecticut’s state and local tax system is regressive, meaning that it requires a greater share of income from low- and middle-income families than from wealthy families. The lowest income families in Connecticut pay roughly 12.4 percent, on average, of their income in taxes, whereas those in the top 1 percent pay an average rate of just 7.9 percent. This upside-down trend holds for middle-class families as well. The policies outlined in the Stand Up for CT Fair Share Policies would be important steps toward a more equitable tax system.
New Revenue and a Fairer Tax Code
For instance, raising the top marginal rate from 6.99 percent to 7.99 percent and creating a capital gains surcharge are both smart ways to raise needed revenue from households who are the main beneficiaries of the new federal tax law. Increasing the top marginal tax rate would put Connecticut in line with nearby states like Massachusetts (9%), New York (10.9%), Vermont (8.8%), and New Jersey (10.8%), and taxing unearned income via a capital gains surcharge would bring much-needed fairness to the tax treatment of capital gains, as they already receive preferential tax treatment over wage earnings at the federal level.
A tiered property tax structure with increased rates on high-valued properties would raise revenue for important programs and public goods while also increasing equity in the tax code. A historically large share of the nation’s wealth is concentrated in the hands of a few, and this inequity is exacerbated in the housing market. High-value homes in many parts of the country have grown even more valuable over the past several years while people with low incomes, especially renters, face ever-growing challenges in securing affordable housing.
Finally, a refundable Child Tax Credit (CTC) would boost the after-tax incomes of qualifying families, offset some of the cost of raising children, and improve the overall fairness of Connecticut’s tax system. The far-reaching policy would help families make ends meet, improve outcomes for children, and reduce child poverty. A growing number of states are adopting CTCs and Connecticut should join fellow New England states like Maine, Massachusetts, and Vermont, as well as northeast neighbors like New York and New Jersey in bolstering the economic security of low- and middle-income families and positioning the next generation for success.
In the face of recent reckless federal tax and spending law changes, state actions to ask more of the highest earners in Connecticut – who currently pay the lowest effective tax rates in the state – are not only reasonable, but responsible. These policies would be important steps in the right direction to help your state meet the needs of Connecticut families in an equitable and sustainable manner. And if you seek to replace some of the federal investments with these new revenue sources, you should also be able to spend it. Now is also the time to reform the fiscal guardrails in order to respond to cuts to the safety net by this federal administration.
ITEP supports Connecticut For All’s Stand Up CT Fair Share policies and hopes that you will vote favorably in creating a more equitable and sustainable tax system for Connecticut.
Thank you for your time,
Marco Guzman
[i] Carl Davis, “Top 1% to Receive $1 Trillion Tax Cut from Trump Megabill Over the Next Decade,” ITEP (July 3, 2025).
[ii] Steve Wamhoff, Carl Davis, Joe Hughes, Jessica Vela, “Analysis of Tax Provisions in the Trump Megabill as Signed into Law: National and State Level Estimates,” ITEP (July 7, 2025).
[iii] Institute on Taxation and Economic Policy, “Connecticut: Who Pays? 7th Edition,” (Jan. 2024).
[iv] Neva Butkus, “State Child Tax Credits Boosted Financial Security for Families and Children in 2025,” ITEP (Sept. 11, 2025).
