Commentary—

Fun And Frolic Over Taxes

By William A. Collins

Taxes, although

You may doubt;

Can well be used,

To help folks out.

Tax policy, like economics, is a dismal science. Lawmakers do not rush to serve on the tax committee unless either they have an axe to grind or their girlfriend’s father runs a No-Doze factory.

This year, in order to lighten things up, that dreary body decided to give money away to movie moguls. They may have been seeking to draw a celebrity or two to Connecticut’s prosaic rocks and rills. Maybe some new jobs too. After all, tourists still come to visit Mystic Pizza. Thus starving producers will henceforth get generous tax credits if they choose to set up their cameras in our state. And just to show we’re not simply star-smitten, the credits will not apply to any salary over $1 million. Both parties loved the bill.

The Republicans loved some other bills too. Like repealing the estate tax. Since you have to own over $2 million in qualifying assets to be covered, you can guess where the pressure for that one came from. Who knows what the governor really thought about it, but in any case, she had to put on a good show of support for her rich contributors (and then back off).

The GOP was also required to turn up the heat for repeal of the surcharge on the state corporate profits tax. Their business supporters demanded it. But by now, the basic corporation tax has been so whittled away that there is very little left to which the surcharge can be applied. The Dems fathom all that but repealed it anyway, in hope of getting something in return.

Luckily the Dems also fathom, at last, the kind of socially conscious tax policy that has become necessary now that our rich are rapidly becoming richer, and our poor, equally rapidly, poorer. The centerpiece of this policy has lately become the earned income tax credit (EITC). EITC is not exactly a new concept. The feds started theirs in 1975, under Gerald Ford no less. Since then 18 states have added their own, so Connecticut was hardly leading the pack by considering it.

The idea is that workers who slog away for low wages often don’t owe any income tax. They’re too poor. Therefore they don’t enjoy any of the tax breaks that more prosperous folks covet and that so deplete our treasury. To level the playing field a bit, when these poor folks submit a tax return that needs no payment, the state would actually send them back some cash in lieu of tax breaks. That’s what the feds have been doing now for 30 years.

This approach offers a salient advantage over Connecticut’s other main reverse tax program, the property tax credit. With that one, you obviously need to own a house or a fancy car just to qualify, and many people who do qualify are far from poor. Meanwhile nearly a third of all Nutmeggers can only afford to rent their homes and can only afford to drive clunky cars. Thus, they’re locked out.

That’s why EITC is such a commendable concept — it goes to the right folks. That’s the reverse of repealing either the estate tax or the corporate profits surcharge, both of which aid the rich. Such help is extra important in a time of spiraling rents, gas prices, and health premiums. Nonetheless, it failed.

To put this scene in better perspective, a New York Times study has just found a whole Greenwich zip code where the average family income is $378,000 per year, while in Hartford one zip reported an unbelievably low average of only $3,000. Even the next poorest, in Groton, was only $15,000. And that’s the average family income for hundreds, maybe thousands, of people.

In some social circles, this growing disparity causes little anxiety. Devil take the hindmost and all. Unfortunately, those circles still have great clout in the legislature.

(Columnist William A. Collins is a former state representative and a former mayor of Norwalk.)