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State Comptroller Nancy Wyman today proposed a plan to link tax relief to the fiscal performance of state government by using a portion of the state budget surplus to create a tax-rebate fund.
Wyman said issuing rebate checks to taxpayers would be a simpler and more direct form of tax relief than the governor's proposal to enact a $200 million cut in the income tax, and would represent a permanent statutory commitment to tax relief.
"Based on what happened in the 1980s, Connecticut taxpayers know all too well that tax cuts can disappear very quickly when the economy sputters," Wyman said. "A rebate check would require the state to turn back money to the people who paid it through their taxes, much like a successful corporation pays its shareholders a dividend."
Wyman said a rebate would tie tax relief directly to the performance of state government, and would hold government more accountable to the taxpayers. It also would enable taxpayers to use the rebate as they choose, including applying it to their property taxes or other tax bills.
As the state's chief fiscal guardian, Wyman said she is concerned that tax plans based on economic fluctuations have historically not been sustainable and have often led to budget imbalances and subsequent tax increases.
"We need to be sure that today's tax cut is not tomorrow's tax increase," Wyman said.
Constitutional and statutory requirements call for the state surplus to be used first to fill the Rainy Day Fund, which is currently $130 million short of its targeted level. Wyman said that, in the first year of her plan, the taxpayer rebates would be funded with any surplus remaining after the Rainy Day Fund is full.
In subsequent years, 90 percent of the surplus remaining after the Rainy Day Fund is full would be used for rebates, she said, with the final 10 percent being used for debt-reduction payments.
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For Immediate Release
January 13, 1998
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