The Legislative Finance Committee on Wednesday released a two-year tax plan that would disqualify some wealthy households from the income tax cuts proposed by Gov. Ned Lamont and expand the earned income tax credit for the working poor. proceeded.
The legislative tax code followed the spending plan announced by the Appropriations Committee on Tuesday. The Finance, Revenue and Bonds Committee’s proposal was debated late Wednesday afternoon.
These proposals represent the legislative response to the governor’s proposed $50.5 billion budget plan in February. Lamont’s headline provision was a sweeping reduction of the state’s two minimum tax brackets, narrowed slightly by the Legislative Tax Making Commission.
The panel chose to scale back some of the tax cuts for wealthy residents by including a cap on tax cuts. Meanwhile, the Commission retained his Lamont proposal to reduce the 3% tax rate to 2%, but chose to reduce the 5% tax rate to 4.75%.
Lawmakers have recommended increasing tax cuts for low-income earners. The Commission has strengthened the EITC’s planned expansion. When the governor proposed raising the federal poverty rate from 30.5% to 40%, the legislative committee pushed the rate to 45%.
Commission co-chair, Salisbury Democrat Maria Horne, said the commission was fortunate to recommend a revenue plan focused primarily on providing tax relief.
“Almost everything in this whole package is about tax cuts,” Horn said. “What we’re trying to do here is strike a balance that will help a variety of businesses, consumers, retirees, and workers across the board…we’ll be tax-free the moment Connecticut’s finances are sound. We are working to return the
Despite calls from some legislative Democrats and progressive supporters, the revenue package did not include the ongoing child tax credit that the state offered one time last year.
The proposal included provisions not in the governor’s budget to ease the “cliff” of tax credits for retirees who are currently ineligible for pensions or pensions. Under the Commission’s bill, once your income exceeds these thresholds, your eligibility for the deduction will gradually decline.
“This is certainly a tax cut for the middle class,” said Rep. Jason Doucett of Manchester, a Democrat. “A couple earning $101,000 with some pensions and some Social Security income is certainly a middle-class family and would feel somewhat secure under this income package.”
While the Appropriations Committee’s spending plans had bipartisan support, fiscal policy caused considerable division. Rep. Holly Cheesman of R-East Lyme views the overall package with disappointment, as despite supporting elements of the bill, it doesn’t provide enough tax relief.
“This isn’t even in line with what the governor was doing with our residents’ income tax deductions, and I thought it was pretty stingy,” she said.
Republicans also called it “revenue interception” to allocate funds before they counted against the statutory spending cap, one of several fiscal guardrails backed by the governor and renewed by lawmakers earlier this year. It denounced the fiscal package for adopting the so-called accounting method.
“Maybe no one argues about the intended destination of this money. “It’s been avoided for another five years,” Cheeseman said. It’s not a way to direct money to a place where the is very high.”
Democratic legislative leaders issued a joint statement on Wednesday, praising the work of the two committees but calling for additional investment in various areas.
“As we move forward, we will find ways to strengthen funding in many key areas, including nonprofits, public schools, higher education, health and child care workers, paraprofessionals, and group homes, while still remaining financially viable. We will continue to explore ways to protect our sanity by offering historic tax cuts to our state and residents.
A spokesman for the governor said the government was still reviewing the financial package on Wednesday night.