A Deeper Dive Into Tax Studies
/By Susan Merrow
Along with rooting for the New England Patriots and the UConn women’s basketball team, grousing about our tax burden – how onerous and unfair it is and how our tax dollars are wasted – has become a favorite sport of Connecticut residents.
It’s not hard to get a round of applause for this narrative, and articles and letters to the editor questioning why anyone would want to live here are not hard to find. It’s important once in a while, especially in mid-April when tax anxiety is upon us, to examine the facts about taxes in the Nutmeg State.
It turns out that when all the ways we pay for state and local government in Connecticut are taken into account, the total cost puts us in the lowest third of all states and in a group that includes Florida, Georgia, Texas, and other low-tax states.
The studies that typically rank Connecticut as one of the states with a high tax burden conveniently count only taxes, leaving out such assessments as surcharges, fees for the use of things like airports, state facilities, school lunches, highways, state hospitals, sewer usage, and the like. Most other states rely more on these for revenue than Connecticut does.
As a matter of fact, states on average get 31% of their revenue from fees and charges, rather than taxes. Connecticut collects just 16 per cent of its revenue this way. Alaska, for example, collects a whopping 61 per cent of its revenues from non-tax sources. The following is a link to an excellent article by Bill Cibes that shows in detail how some tax studies give an incomplete picture:
To further distort the negative narrative, studies that rank Connecticut highest in tax burden often count the taxes that are actually paid to other states, such as property taxes on out-of-state homes or income taxes that people who live in Connecticut but work in New York are paying to that state. There’s not much your elected officials can do about that even if they wanted to.
We should speak up when our taxes are excessive or spent in a wasteful manner. We should scream loudly when taxes unfairly burden older citizens, small business, and those with low-income. But when doing so, we should be sure we understand how Connecticut’s revenue is derived and how it’s counted. A deeper look at the way that tax studies are conducted and interpreted can help ensure that the energy we expend on fixing the state’s tax system is aimed in the right direction.
Michele Jacklin contributed to this post..
