One of the first lines in the sand has been drawn between Gov. Ned Lamont and members of his own party in the House and Senate.
Top Democrats in the House and Senate want to close the state’s budget hole by increasing the rate on capital gains taxes, taxes levied on stocks, bonds, and real estate.
Speaker of the House Joe Aresimowicz (D – Berlin) said House Democrats are not enamored with the governor’s budget that would enforce the sales tax on hundreds of millions of dollars’ worth of goods and services.
“A lot of our caucus members have told us that they’re frustrated at the lack of rhyme and reason at the sales tax exemptions and I think the governor was trying to get at that but a lot of the issues in the areas are tough,” Aresimowicz told reporters Tuesday morning.
He said they favor raising taxes on some of the wealthiest Connecticut residents, specifically increasing the tax on capital gains for individuals or couples making more than $500,000 per year.
“We believe those that are doing very well are obligated to pay their fair share,” he said.
Lamont’s budget did not include any specific tax rate increases. The administration has argued that expanding the sales tax would simply mean enforcing the sales tax on goods and services that have previously not been taxed. Specifically, the administration proposed applying the sales tax to digital streaming services like Netflix and Hulu, legal and accounting services, and on products like child car seats which have been exempt from the sales tax.
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Lamont favors his approach to increasing rates.
“I’ve been pretty tough. I want to draw the line,” Lamont said Tuesday. “I don’t want to increase tax rates on income tax, capital gains tax rates and corporate. I’m trying to get this state to live within its means.”
Connecticut’s top rate on capital gains taxes is 8.99 percent, slightly higher than the highest rate on standard income, 6.99 percent.
Republican Rep. Vincent Candelora (R – North Branford) said the GOP would likely be against any tax proposal to begin with, but so far is siding with the governor, because he has discussed the state tightening its belt and reducing spending more than members of the General Assembly have.
Candelora also said the budget crafted by Democrats and Republicans under Gov. Dannel Malloy is a better blueprint than starting from scratch.
“Our bipartisan budget created a surplus for the state of Connecticut,” he said. “We started to see economic recovery and now the Democrats are trying to go it alone and they can’t help themselves and items like expansion of the sales tax, a capital gains tax, it’s just going to constrict our economy.”
Lamont says he fears for the kind of message another tax increase like a capital gains adjustment would send to residents and the rest of the country.
“It would be what, our fifth tax increase in fifteen years? It’s a trend. It puts us a little out of step with our neighbors so I don’t think it’s the right way to go.”
