Connecticut’s state budget avoided one major tax increase - raising the income tax.
Joel Johnson, managing partner with financial advisory firm Johnson Brunetti, says that was huge for investor and resident confidence.
“There’s definitely a sigh of relief. There was a lot of anxiety,” Johnson said.
Connecticut raised close to $2 billion in taxes in order to reach a balanced $43 billion two-year budget last week. Those taxes included an expansion of the sales tax to include dry cleaning and parking. It also included applying the full 6.35 percent sales to digital downloads and streaming services like Hulu and Netflix. In addition, Uber, Lyft, and AirBnB services all received surcharge or tax increases consumers will pay.
Johnson says those consumption based fees and taxes were better than other tax hikes.
“That doesn’t change a behavior but I think for the state and for citizens it’s much better for a consumer tax than it is an income tax.”
Johnson says one of the things he looks at is whether a tax increase will lead more residents to leave Connecticut for lower cost states. He says this budget, from his standpoint, does more to keep people in Connecticut for the first time in a long time.
“Some of it is a little bit hyped about how bad the state is. It’s not quite as bad, quite as sometimes we hear. But we do have a revenue problem and a tax problem here and we’ve got to be competitive if we want to keep our citizens here.”
