CT News Junkie |

Social Networks We Use

Connecticut Network

Categories

Our Partners

Connecticut Improves, But Remains In Top 10 Least Tax-Friendly States

by | Oct 19, 2017 5:30am
() Comments | Log in to Facebook to Post a Comment
Posted to: The Economy

Courtesy of Kiplinger HARTFORD, CT — Every fall Kiplinger’s, a publisher of business forecasts and personal financial advice, releases it’s top 10 list of most tax-friendly states and least tax-friendly states.

Connecticut has made the top 10 least tax-friendly states the last three years in a row, however, its ranking has dropped considerably between 2015 and 2017.

In 2015, it was the second least tax-friendly state. It dropped to third in 2016, and it dropped six more spots to ninth place this year — a marked improvement.

However, David Muhlbaum, online editor at Kiplinger’s, said that’s related more to a change in methodology than to Connecticut’s tax policy.

He said this year they used two sample taxpayers to calculate and compare the taxes in a given state and the impact it would have on those fictional taxpayers. He said that caused places with certain tax policies to drop and others to rise in the rankings.

For example, California, which taxes its top income tax bracket at 13.3 percent, also dropped a few spots due to the new methodology. California came in at number eight, just ahead of Connecticut, where the top income tax bracket is 6.99 percent for couples making more than $1 million in earned income and single individuals making more than $500,000 in earned income.

Muhlbaum said they also applied the state’s fiscal health to the calculation using data from the Mercatus Center at George Mason University, which scored Connecticut 37th — a jump up from last place in 2016.

That study, which came out in July, said “Connecticut’s fiscal health is greatly improved on a budgetary basis, but its metrics are still poor on a cash and long-run basis.”

According to Kiplinger’s latest analysis, Maryland is now the number one least tax-friendly state followed by Minnesota and New York. Coming in 10th place behind Connecticut is New Jersey.

The most tax-friendly state in 2017 was Wyoming followed by Alaska and South Dakota. Mississippi was the 10th most tax-friendly state.

In its narrative about Connecticut, Kiplinger’s says the only “bright spot” is that municipalities can’t pile on the 6.35 percent sales tax. That’s only a tax that can be levied by the state.

“Real estate taxes are the fourth-highest in the county and the state has not only a gift tax, but a luxury tax,” Kiplinger’s wrote.

The median annual property tax on a home value of $270,500 is $5,327, according to the Tax Foundation.

Connecticut also imposes a tax on the transfer of estates valued at $2 million or more at a progressive rate starting at 7.2 percent. The rate rises to a maximum of 12 percent for an estate valued above $10.1 million. There is no inheritance tax.

Connecticut is the only state with a gift tax, which applies to real and tangible personal property in Connecticut and intangible personal property anywhere for permanent residents. Only the amount given after Jan. 1, 2005, and over $2 million, is taxed, starting at 7.2 percent of the excess and rising to $748,200 plus 12 percent of the excess over $10.1 million.

The Tax Foundation also released it’s index this week of state’s business tax climate and Connecticut came in 44th place, slipping one spot from 43rd place over the last three years.

There was an effort under way in Connecticut, spearheaded largely by business groups and chambers of commerce, to make Connecticut a top-20 economy by the year 2017. The campaign was called CT20x17.

Since that time Connecticut has climbed in the CNBC business rankings. In July it jumped 10 spots

However, Joe Brennan, president and CEO of the Connecticut Business and Industry Association, has said the trick will be to sustain that.

Tags: , , , , , , ,

Share this story with others.

Share | |

Post a comment

You must have a facebook account and be logged in to facebook (log in above) to comment.
Before commenting, please read our Comment Policy.

Comments