CT Dems: Tax the rich more, give $150 child tax credit. GOP lawmaker says package makes him ‘sick’

Hartford Courant – Wednesday, April 23, 2025
By Christopher Keating

Democratic lawmakers set up a clash Wednesday night with Gov. Ned Lamont by voting for a capital gains surcharge on the state’s wealthiest residents.

Lamont, a wealthy Greenwich entrepreneur who started his own business, has repeatedly rejected increased taxes on the state’s richest residents, saying that he opposes increases on anyone at a time of state budget surpluses.

The Democratic tax package includes a capital gains surcharge of 1.75 percentage points for single individuals earning $1 million per year and couples earning more than $2 million per year. The tax increase would end after four years under a sunset provision. The wealthiest residents currently pay 6.99% on their capital gains through the state income tax, which has helped lead to budget surpluses in recent years as Wall Street boomed in 2023 and 2024 before recent volatility under President Donald J. Trump.

After some spirited debate, the legislature’s tax-writing finance committee approved the capital gains amendment by 27 to 21 with three members absent. Democrats later approved the broader tax package, which included the amendment.

After the vote, Lamont’s chief spokesman, Rob Blanchard, said that the state “has managed to turn its fiscal house around” under Lamont’s stewardship that has led to a record-breaking rainy day fund for fiscal emergencies.

“However, increasing taxes won’t help our state grow, which is also a priority for the governor,” Blanchard said. “While it’s early in the process, we look forward to working together to pass an honest budget that reflects the needs of our state today and builds a better tomorrow.”

Democrats who control the committee supported the surcharge as a method for achieving tax fairness, but Republicans blasted the surcharge as a bad idea with bad timing.

“In ranking after ranking, Connecticut is one of the highest-taxed states in the country,” said Sen. Ryan Fazio, a Greenwich Republican whose district includes millionaires and billionaires in lower Fairfield County. “The people of this state have had enough tax increases. … We don’t need more revenue. We don’t need more taxes. We need more taxpayers. … Let’s not make the same mistakes of other states.”

The measure would provide exemptions for one-time sales of residential properties and businesses in order to help longtime homeowners and business owners, lawmakers said. The tax would generate an additional $284 million per year in taxes, officials said.

Rep. Joe Polletta, the committee’s ranking House Republican, said the Democratic tax package would harm the progress that the state has made over the past seven years.

“After I read this, I’m sick,” he said.

The recommendations by the finance committee are subject to final approval by the full House of Representatives and Senate, along with Lamont. Top legislative leaders are expected to negotiate a final compromise on the two-year, $55.5 billion budget before the regular legislative session ends on June 4.

State Rep. Kerry Wood, a Rocky Hill Democrat who serves as the co-leader of the House Democratic moderate caucus, voted against the surcharge, saying the timing is wrong as the state has been generating surpluses in recent years.

Rep. Jill Barry, a fellow moderate Democrat from Glastonbury, voted against both the capital gains surcharge and the overall tax package.

“In short, now is not the time to raise taxes,” Barry said.

But Rep. Aimee Berger-Girvalo, a Ridgefield Democrat, said she was “much more comfortable” voting for the package because of the one-time exemptions that would waive the surcharge.

State Rep. Maria Horn, a Litchfield County Democrat, said she had hesitations about the idea but ultimately decided to move ahead as federal budget cuts are looming ahead from President Donald Trump’s administration.

“We shouldn’t sit here and pretend that we’re living in ordinary times,” Horn said. “We are looking ahead at more significant cuts ahead.”

She said she fears using the state’s rainy day fund to cover federal cuts and then have nothing left in the fund.

“We very well may need it to protect against recession,” Horn said of the reserve fund.

Child tax credit

Democrats have been pushing for years for a child tax credit, and the latest proposal calls for a permanent, refundable credit of $150 per child for a maximum of three children, or $450 per year. That represents a sharp drop from an original proposal of $600 per child for an overall total of $1,800 per year. With various pressing needs on the tax and spending sides of the complicated state budget, lawmakers say they are often unable to award as much tax relief as they would like.

The full tax credit would be available to single parents earning up to $100,000 per year, heads of households earning up to $160,000 per year, and couples filing jointly earning up to $200,000 per year, according to an analysis by the legislature’s nonpartisan fiscal office. The credit would start on Jan. 1, 2026 and would save families a combined $82.7 million per year.

While pushing for the child tax credit, the committee documents remained silent on Lamont’s proposal for an increase in the popular property tax credit to $350, up from $300, per tax filer. Lamont’s proposal was expected to help 800,000 tax filers, officials said, as the income eligibility would increase, an issue that had restricted the credit in the past.

The credit, Democrats said, provides tax relief for middle-class families.

Democrats also called for approving Lamont’s plan to eliminate the licensing fees for a wide range of occupations, including nurses, dental hygienists, paramedics, occupational therapists, electricians, plumbers, and public school teachers, among others. The combined savings for the workers would be $25 million in the second year of the two-year budget.

Business taxes

The committee documents also showed that Democrats agreed with Lamont on business tax increases.

Republicans and businesses have not been happy with Lamont’s proposed change to the “unitary” tax reporting system that they said would lead to tax increases for large, multi-state corporations like Electric Boat, Raytheon, Amazon, Home Depot, Lowe’s, AT&T, Verizon, and the parent company of Sikorsky helicopters, among others. Amazon is now the fifth-largest employer in the state, and the unitary tax would hit about 20 major corporations, officials said. The tax has not been mentioned much at the state Capitol in recent years, but Fairfield-based General Electric Co. cited the tax among the reasons that the company decided to move its headquarters to Boston during the tenure of then-Gov. Dannel P. Malloy.

Lamont and his team are in frequent contact with top business leaders, and he said after the initial proposal was released that they had not raised major objections.

In addition, the Connecticut Business and Industry Association was among those unhappy with Lamont’s proposed three-year extension of the 10% corporation tax surcharge, which was originally designed to be temporary and is now more than 20 years old. The overall increase in the corporation tax, which includes the unitary tax, is $168 million in the second year of the two-year budget, according to Lamont’s plan. The documents state that the committee’s view is the same as the governor.

For individuals, the budget-writing appropriations committee Tuesday blocked a plan by Lamont to increase bus fares by 25 cents per ride to $2, which would have marked the first fare increase in 10 years.

After caucuses and delays, the finance committee started its public debate at about 5 p.m. Wednesday. The first bill was the annual bond package, which had widespread bipartisan support. While various projects are included in the legislative package each year, the items cannot move forward until they gain final approval from the 10-member State Bond Commission that is chaired by Lamont.

“This remains under the borrowing cap,” said Sen. Tony Hwang, a Fairfield Republican who supported the plan. “This package is not final. It is rather a starting point for negotiations between the executive and the legislative branch.”

Fazio, who voted against the bond package, said Connecticut has among the highest bonded indebtedness rates among all states.

Studying soda tax

The battle over a soda tax has a long history at the state Capitol, but one of the most recent iterations was a proposal by Lamont in 2019 that generated strong opposition from Republicans.

On the day that Lamont unveiled his 2019 budget proposal, some Republican legislators responded in the historic Hall of the House by drinking from large 7/11 Double Gulp cups of soda to show their opposition to the tax.

The latest iteration Wednesday called for creating a working group to study the issue under a separate bill that is titled: “An act imposing a tax on certain sweetened beverages, syrups and powders and dedicating the revenue generated to a universal free school meals program.”

Republicans have been concerned about the issue, but the substitute language on Wednesday called for creating a work group “to study ways to fund a program to provide public school students with free breakfasts and lunches” before issuing a report by January 1, 2026.

The Republican ranking members and numerous colleagues voted against the bill Wednesday.

Dating back to Lamont’s proposal in 2019, some Republicans have opposed any tax increases and said there should not be an extra charge on sugar-sweetened beverages. Democrats, meanwhile, have said it is necessary for health reasons.

State Rep. Jonathan Steinberg, a Westport Democrat, was not amused.

“If they want to be the party of Big Gulps, that’s up to them,” Steinberg said at the time. “I think this is not a Libertarian issue. This is a public health issue. It’s a shame that sometimes you see people taking advantage and pandering to the public for political gain. I was hoping that something like health care would not be subject to that kind of partisan pandering.”

Access this article at its original source.