Print

Dueling Tax-Cut Proposals

Democrats Say Plan Would Extend Relief To Families; GOP Sharply Critical

May 18, 2007
By CHRISTOPHER KEATING, Capitol Bureau Chief

Nothing energizes politicians like promising to reduce taxes.

Thursday it was the Democrats' turn, in the battle of tax-cut one-upmanship evolving daily at the state Capitol: Legislative leaders offered a new proposal that would extend tax relief to families earning up to $272,000 annually, while raising the state income tax on those earning more.

The recent tax-cut proposals, coming with regularity from Republicans and Democrats, have been prompted by revised revenue estimates from the legislature's nonpartisan fiscal office. Those estimates show $1.2 billion in additional revenue than originally forecast for the current fiscal year and the following two years. The windfall is being attributed in part to large payments of capital gains taxes, as Wall Street continues its record-breaking run.

Tax-cut proposals - from the gas tax to the state income tax - are expected to be molded and reshaped in the final budget package being negotiated by Republican Gov. M. Jodi Rell and lawmakers as they head toward a scheduled adjournment June 6.

Democrats said they would increase the popular property tax credit to $1,000 for families earning up to $150,000 annually. Currently, the maximum credit stands at $500 for families earning up to $100,000. The credit currently phases out completely for families earning more than $190,000 annually; the phase-out level would be pushed to $240,000 annually under the Democratic plan.

"That's a lot of money [in tax cuts] going to a lot of people," said Rep. Cameron Staples, a New Haven Democrat who is co-chairman of the tax-writing finance committee.

The current maximum income tax rate of 5 percent would be increased to 5.875 percent for couples' filing jointly earning above $250,000 and 6.5 percent for couples filing jointly above $500,000, under the Democrats' plan. At the top end, couples filing jointly earning $2.5 million per year would see their state income taxes rise by nearly $32,000 annually, or 25.7 percent.

A middle-class couple with an adjusted gross income of $75,000 annually would have their state income taxes reduced by $624 annually, or nearly 25 percent; a couple earning $150,000 would receive a reduction of $950, or about 14 percent, officials said.

Democrats said their plan provides a tax reduction for 95 percent of all taxpayers, but Republicans immediately countered that those numbers are bogus because the Democratic plan also imposes the sales tax on clothing under $50 and on funeral expenses under $2,500, and hikes the cigarette tax by 49 cents to $2 a pack.

"They're not reducing taxes on the lower-income people," said Senate Republican leader Louis DeLuca of Woodbury. "They're not reducing taxes at all. They're not reducing spending at all. ... They're playing with figures. You can call it creative accounting. It's not the truth. It's a fabrication."

Republicans and Rell are still pushing to eliminate the state's 25-cents-a-gallon gasoline tax from Memorial Day through Labor Day, which would save motorists $120 million over three months. Republicans were hoping to vote on the gas tax during three days of House sessions this week, but the majority Democrats, who control the agenda, did not allow debates on any issues in which the gas tax amendment would have been applicable.

House Speaker James Amann dismissed the gas tax cut Thursday as a publicity stunt to gain favor with the public that would simply send more profits to the big oil companies. But Amann, D-Milford, said he believes that many lawmakers would support the gas tax cut.

"There's many people in this building that fold like cheap tents," Amann said.

House Republican leader Lawrence Cafero of Norwalk said he did not know how to react to Amann's comment.

"I love Jimmy," Cafero said. "He has those Ralph Kramdenesque statements that sometimes I just don't get."