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BACKGROUND
Last year, I called for a review of the tax credits, exemptions and incentives that Connecticut provides to companies and individuals every year. Greater transparency is needed to ensure that these expenditures are fulfilling their purpose, including creating new jobs and enticing new businesses to establish and grow in Connecticut. Since then, a legislative committee met and the Governor created a task force on the issue. I serve on both.
One question deals with the Corporation Business Tax currently at 7.5%*. Many companies receive credits and/or exemptions to minimize this tax burden, while others pay the full rate and receive no credits or exemptions. Like many states, Connecticut has tried to entice companies and industries with financial incentives – however, many smaller employers receive few or no incentives, despite providing the greatest promise for future employment and economic development.
Does government have the capacity to pick winners (and, losers)? Should we discontinue spending resources on these tax credits every year – and instead use that money to drive down the Corporation Business Tax to the lowest possible rate? If big biz ends up paying a little more and smaller businesses less, what is the net change in jobs and tax revenue?
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