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To Cap or Not to Cap? Stodder Study Thinks Not

by Christine Stuart | February 14, 2008 4:14 PM
Posted to State Capitol

Christine Stuart photo

AFSCME Council 4, a union with 35,000 members, hired Rensselaer Polytechnic Institute Economics Professor James Stodder to study Gov. M. Jodi Rell’s proposed local property tax cap, which has already received wide criticism from municipal leaders.

At a press conference Thursday Stodder said a property tax cap would increase the gap between rich and poor communities and increase sprawl.

He said wealthier communities where property assessments are higher will collect more in taxes to finance local services, while poorer communities with lower property tax assessments will be forced to start cutting services, such as education aid. He said richer towns are also more likely to override the cap, while poorer towns will be forced to cut services and make bad land use decisions in order to increase their property tax base.

An alternative to the property tax cap would be full funding of PILOT, payment-in-lieu-of-taxes, and other local state grants to town, in addition to a statewide initiative that guarantees no person pays more than a certain percentage of their income in property taxes, Stodder said.

When asked where he would get the revenue to fully fund PILOT payments and grants to towns, Stodder said a higher percentage of taxes should come from income.

But the Democrats, who claim to have a veto-proof majority, were unable to get a progressive income tax passed last year and no tax increases are scheduled this year, so it’s unlikely a proposal to change the income tax structure in the state will move forward over the next 12-weeks of the legislative session.

Stodder suggested another alternative to the property tax cap could be a guarantee no one would pay more than a percentage of their income in property taxes. Calling this idea, “circuit breakers” Stodder said Rhode Island and Vermont rebate property taxes in excess of 3 and 3.5 percent of a taxpayers income.

According to Stodder’s report the maximum property tax rebate Connecticut residents can receive is $1,250, a dollar figure that has not increased since 1998.
“Given how unequal Connecticut’s property is distributed, taxing even some small part of it at a flat rate would be remarkably ‘progressive’,” Stodder wrote in his report. However, “Capping property taxes merely puts a band-aid over a wound that is already badly-infected-and wholly self-inflicted,” Stodder concluded.

Click here to read the full report.