Connecticut’s Experience: Taxing the Rich Doesn’t Work
In recent decades, Connecticut has been much like Minnesota: an unabashed blue state that enacted liberal fiscal policies, secure in the conviction that it could collect endless amounts of money from its highest-earning taxpayers. But it hasn’t turned out that way: “Income tax revenue collapses; Malloy says taxing the rich doesn’t work.”
Connecticut’s state budget woes are compounding with collections from the state income tax collapsing, despite two high-end tax hikes in the past six years.
It means the current budget year, which ends in just two months, is now seriously in the red and next year’s deficit has ballooned to $2.2 billion.
It’s happening because the state of Connecticut depends too much on its wealthy residents, and wealthy residents are leaving, and the ones that are staying are making less, or are not taking their profits from the stock market until they see what happens in Washington.
One can only wonder why this wasn’t foreseen. Of course, it doesn’t appear to have been foreseen in Minnesota, either.
Governor Malloy added, “The reality is that in Connecticut we get most of our money from very few people and that can produce some very wild swings.”
Connecticut offers a clear warning of what lies ahead if Minnesota continues on its current fiscal path. The early signs are already present, as more and more Minnesotans leave the state for lower-tax jurisdictions, or never come here in the first place. Will Minnesota’s liberals catch on before it is too late?