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OP-ED | Cutting Taxes With Dannel Malloy

by Heath W. Fahle | Feb 17, 2013 2:42pm
(5) Comments | Commenting has expired
Posted to: Opinion

Dannel Malloy’s first major initiative as governor was to call for the second largest tax increase in Connecticut’s history in 2011. In conjunction with legislative allies, Gov. Malloy expanded or increased at least 77 taxes at that time in hopes of raising nearly $2 billion in additional revenue. He did this while at the same time touting Connecticut as “open for business.”

You could say that the messages were mixed.

To his credit though, Gov. Malloy’s actions since then demonstrate that he does recognize the power of tax cuts to improve the economy. The only problem is that after raising taxes on everyone, the Governor likes to pick tax cut winners and losers. For example, the company of the state’s richest man, Ray Dalio, was a winner. Bridgewater Associates, the company Dalio founded, will receive $115 million in tax breaks to move from Westport to Stamford. To date, tax breaks through the First Five Program and its successors reduced the burden for some taxpayers by more than $300 million. Lump in the estimated $100 million Earned Income Tax Credit for taxpayers who didn’t earn enough to pay income taxes and you have the makings of a killer 2014 gubernatorial re-election television ad: Dan Malloy cut taxes by nearly $500 million.

The Governor now proposes to eliminate the property tax assessed on motor vehicles valued less than $28,500. The highly regressive car tax, as it is colloquially known, is an administrative nightmare for tax collectors and a burden for taxpayers. These factors make the car tax a good candidate for cutting.

A closer look at the numbers suggests that people should not get excited about the idea because it is unlikely to survive the Connecticut General Assembly’s scrutiny. Indeed, the proposal may be more valuable politically than it will ever be as a policy matter.

Motor vehicles comprise 5.5 percent of local grand lists statewide but the percentage varies widely. In Windsor Locks, for example, such assessments comprise 14 percent of property tax revenue while Greenwich’s higher real estate property values mean that the car tax represents just 2 percent of their revenue. With relatively low property values and motor vehicle assessments making up a larger share of the grand list, four of the six most impacted towns would be Thompson, Windham, Canterbury, and Brooklyn. These towns have one other factor in common: they are all represented by the powerful Sen. Donald Williams, the state Senate’s President Pro Tempore.

The odds of Sen. Williams allowing the Malloy car tax cut to stand as proposed — and blowing a 10 percent hole in four of his local budgets — seem quite small.

As a result, the primary value of the car tax cut would seem to be political. Gov. Malloy gets to be for reducing taxes and anyone that opposes his plan runs the risk of appearing to stand against tax cuts. It is an advantageous position.

But it isn’t all puppies and flowers on the tax cutting front for Gov. Malloy. The administration line says that the budget doesn’t include any tax increases, but they have to stretch common sense a bit to make the claim. Taxpayers know the truth: continuing a tax scheduled to expire is a tax increase even if you don’t call it a tax increase. Word games aside, cutting the tax on cars is a good idea — even if it will probably never happen.

Heath W. Fahle is the Policy Director of the Yankee Institute for Public Policy and a former Executive Director of the Connecticut Republican Party. Contact Heath about this article by visiting

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(5) Comments

posted by: Linda12 | February 18, 2013  8:39am

Dannel, a political schemer, will never be a leader. He is concerned with himself first….one and done….never again!

posted by: Angus | February 18, 2013  9:38am

Doubt this tax tempest will never leave the teapot, but anyway, color me ignorant. Why is the property tax an “administrative nightmare for tax collectors”? Isnt payment/nonpayment tied to auto registration? If you dont pay on time are there not penalties when re-registering? And then, I’m not clear why renters should be getting a credit for this tax. You have a car property, ok you pay the tax. If you rent you are paying real estate tax through your rent, so, why the credit?

posted by: Lawrence | February 18, 2013  11:13am

Full marks for accuracy; but why couldn’t your GOP brethren in the General Assembly get this fact right last year when they were campaigning? It’s almost as if they purposefully wanted to lie to the public…

“Dannel Malloy’s first major initiative as governor was to call for the second largest tax increase in Connecticut’s history in 2011.”

posted by: johnnyb | February 18, 2013  12:08pm

When the Gen. Assembly votes to borrow lots of money to solve this deficit problem Sen. Williams will be on the podium smiling just like he was last time. The problem is the Democrats plan that the economy is going to turn around and cover for their lack of ability to cut spending is not going to happen. Sen Williams is Linus waiting up for “the Great Pumpkin”.

posted by: Joe Eversole | February 18, 2013  2:27pm

It’s because ownership of the vehicles move around. As an example, if don’t pay the property tax on the vehicle in question, then I simply have my wife register the car in her name.  There is a bit more time in tax free land with a registered vehicle.  Now imagine trying to keep up with that.