Governor Ned Lamont at a press conference on December 7, 2022 Credit: Hugh McQuaid / CTNewsJunkie

An income tax cut for residents making between $150,000 and $200,000 a year is among the proposals Gov. Ned Lamont said Tuesday he is weighing ahead of the meeting. legislature that will begin next month.

In an interview with the Hartford Business Journal on Monday, Lamont said he is considering cutting and allowing the sinking of corporate tax rates as part of his upcoming budget proposal. which aims to stimulate economic growth.

During a press conference on Tuesday morning, the governor told reporters that he had discussed the income tax cut with lawmakers from both sides of the aisle. ‘the corridor of the governor and believes that there may be permanent reductions after the package of corrections of the budget last year which included more than 600 million dollars. mainly temporary tax relief.

“We’ve had a lot of rebates, a lot of credit, a unique way that we’ve given people immediate support, especially last year with the rate of inflation. ,” Lamont said. “I like to think that now it is simpler if we give a moderate tax reduction, that is a reduction in income tax for people up to an amount, say 150 or 200. [thousand].”

The state’s budget agency, the Office of Policy and Management, has priced the potential tax cuts in an effort to ensure they don’t stretch the state’s budget, Lamont said. Although the state has a projected $1 billion surplus and is on track to pay off its pension debt by an additional $2.8 billion, Lamont expressed concern about the economic impact of the recession. potential savings to the public purse.

“I don’t want to do something that we can’t handle and I don’t want to do something that leaves us in a gap, you know, two years ago,” Lamont said. “That’s usually the way it works here and I’m not going to let that happen but I think it can provide some middle class relief that I think is long overdue.”

The governor’s comments were welcomed by state Republicans on Tuesday, who failed to pass a tax relief proposal earlier this year that would have included a tax cut for households. not less than $175,000.

House Minority Leader Vincent Candelora said he had discussed the matter with the governor before a special legislative session in late November.

“It’s a good start in the long run, it’s a legitimate tax cut for low and middle class people,” Candelora said Tuesday. “It’s something the Republicans have tried. It doubled over the summer and I think it resonated with a lot of people across Connecticut. It obviously resonated with this governor and I think it’s a good policy to look at. ”

Senate President Martin Looney said he was happy to hear the governor talk about tax cuts for the middle class and said there are many ways policymakers can provide that relief. The details will be worked out through the legislature’s finance committee process, he said.

“One way is to make sure we make the child credit permanent, the other is to keep the current income tax credit around 40% of federal tax credit. The other is to further increase the federal tax credit,” Looney said. “There are various ways of providing income tax relief.”

Looney reiterated Lamont’s requirement that the potential tax relief be structured in a way that does not create a fiscal deficit later.

“We may be looking at a deficit next year when the federal money is gone so we have to be careful and target the relief where it’s needed, which is at the middle income level,” Looney said.

The news comes at a time when inflation appears to be cooling. According to the US Bureau of Labor Statistics, inflation rose 7.1% in November. This was down from 7.7% in October.

The Federal Reserve’s Open Market Committee will announce Wednesday how it plans to handle the news. It has already marked a 50 basis point increase and is usually consistent with what it has posted.

The Fed has raised rates six times this year. Raising it to 50 basis points on Wednesday would raise the rate to 4.5%, a 15-year high.

Inflation is very good for the government budget because it has added taxes. Last year, sales tax rose 10%, followed by an 11% increase. It is expected to be around 7.6% next fiscal year. This is due to historically high inflation.

When it comes to Connecticut’s budget, for the first time in at least five years, taxes have increased faster than fixed costs.

Revenues, according to state budget officials, are expected to rise by about $400 million over the next two years.

Source link