Did the Hartford Courant’s recent report on the effects of the Connecticut income tax miss the point?

Mara Lee, Business Reporter, Hartford Courant

Mara Lee

On July 27, 2011, the Hartford Courant published an article, “Next Week’s State Income Tax Bite? Not So Big For Most Workers”, written by Mara Lee, a business reporter on its staff. In that article, Mara Lee remarks that the state income tax is higher on people with higher incomes, reporting that it will not hurt the bottom half of workers and most retirees. However, what is disturbing to me is the impression that her article leaves with the reader:  that is, any criticism of the new tax bill on the grounds that it fails to spread fairly the tax burden on all groups is unfounded and mere class warfare.

Unfortunately, Mara Lee and Peter Brown, assistant director for Quinnipiac University’s Polling Institute, whom Mara Lee quotes in her article, miss what the public has not: that the super rich, as always, got off very lightly with this new tax law.

Of all the individuals, those with Connecticut taxable incomes of $500,000 are hurt the most by the new tax law. However, all those S&P CEOs in Fairfield County, who earn on average $9 million annually, were given a pass. Let’s run some numbers to illustrate.

Assume a physician or an attorney practicing in Connecticut has taxable income of $500,000. Under the previous tax bill, this individual’s tax liability would have been $24,800; however, under the new tax bill, this individual’s tax liablity would now be $31,050, representing a 25.2% increase in taxes.

Connecticut Income Tax on Middle Class

Now let us examine the effect of the new tax bill, Senate Bill No. 1239, on the Connecticut income tax liability of the average $9,000,000 salary of an S&P CEO, a number of whom live in Fairfield County, Governor Dannel Malloy’s home territory. Although this individual’s state income taxes would increase $23,250 over that under the previous tax rates, percentage-wise it is a modest 4.03% increase in taxes: a percentage increase 20.9% less than that born by the middle-class professional citizen.

Connecticut Income Tax Laibility on S&P CEO

The article’s suggestion that Senate Bill No. 1239, Governor Dannel Malloy’s recent tax bill, is fairly progressive, equitably increasing taxes on the wealthy, misrepresents the actual nature of the bill: it unjustly favors the wealthiest citizens in Connecticut, targeting the middle and upper middle classes in Connecticut, as clearly evident in these two examples.

One can only wonder if Mara Lee bothered to read Senate Bill No. 1239 and investigate the tax effects of the tax bill on the various economic classes since she failed to mention the material discrepancy in tax rate increments between those individuals with taxable incomes of $500,000 per year and those with taxable incomes of $9,000,000.

If you, too, wish to see the wealthy, the super rich, the Wall Street barons who caused the collapse of our economy in 2008 and stole trillions without one being convicted and sentenced for the crime of the millenium, then sign the petition below to raise their taxes.

Change.org|Start an Online Petition »

The Barefoot Accountant

About William Brighenti

William Brighenti is a Certified Public Accountant, Certified QuickBooks ProAdvisor, and Certified Business Valuation Analyst. Bill began his career in public accounting in 1979. Since then he has worked at various public accounting firms throughout Connecticut. Bill received a Master of Science in Professional Accounting degree from the University of Hartford, after attending the University of Connecticut and Central Connecticut State University for his Bachelor of Arts and Master of Arts degrees. He subsequently attended Purdue University for doctoral studies in Accounting and Quantitative Methods in Business. Bill has instructed graduate and undergraduate courses in Accounting, Auditing, and other subjects at the University of Hartford, Central Connecticut State University, Hartford State Technical College, and Purdue University. He also taught GMAT and CPA Exam Review Classes at the Stanley H. Kaplan Educational Center and at Person-Wolinsky, and is certified to teach trade-related subjects at Connecticut Vocational Technical Schools. His articles on tax and accounting have been published in several professional journals throughout the country as well as on several accounting websites. William was born and raised in New Britain, Connecticut, and served on the City's Board of Finance and Taxation as well as its City Plan Commission. In addition to the blog, Accounting and Taxes Simplified, Bill writes a blog, "The Barefoot Accountant", for the Accounting Web, a Sift Media publication.
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One Response to Did the Hartford Courant’s recent report on the effects of the Connecticut income tax miss the point?

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