Study: Business Tax Climate Is Good

Keith M. Phaneuf

 ©The Connecticut Mirror

A new study shows Connecticut businesses faced one of the lowest tax burdens in the nation in mid-2011, eclipsed by just two other states, when those taxes are compared with their productivity.

But the study, commissioned by a coalition of nearly 600 multistate corporations, also reviewed finances just before Connecticut and many other states raised taxes on businesses to overcome huge operating deficits.

The $7.4 billion burden imposed by state and local governments on Connecticut businesses in the 2010-11 fiscal year represented just 3.6 percent of companies’ gross state product, or the annual value of the businesses’ economic output, according to the study prepared for the Council on State Taxation by the global accounting firm Ernst & Young. The national average, according to the study, was five percent.

State Senator Gary D. LeBeau, D-East Hartford, co-chairman of the legislature’s Commerce Committee, said the study casts some needed perspective on a tax system subjected to “overblown” criticism.

Connecticut Business & Industry Association Senior Vice President Joseph F. Brennan, however, challenged the study’s approach of weighing taxes against productivity, arguing it offers an incomplete picture.

“We’re never going to be a low-cost state,” he said, adding that if taxes are being compared with business productivity, the study also should account for high energy and labor costs and overall higher cost of living Connecticut businesses face.

(This edited story originally appeared in its entirety at CTMirror.org, the website of The Connecticut Mirror, an independent, nonprofit news organization covering government, politics, and public policy in the state.)