Boucher: A robust real estate market is the bellwether of a healthy economy. Realtors are among the first to detect developing economic trends. Recently, several have reached out to me to warn that the market has taken a negative turn.
Report by Paula Antolini
August 28, 2015 8:09AM EDT
Senator Boucher: Listening to Connecticut’s Businesses
A robust real estate market is the bellwether of a healthy economy. Realtors are among the first to detect developing economic trends. Recently, several have reached out to me to warn that the market has taken a negative turn. In New Canaan alone inventory increased by 22.3% compared to last year, and fewer buyers have caused a 5.5% decrease in home sale prices. Many of their customers have come to the sad conclusion that they would be better off living in other states.
Businesses and families long established in our state find burdensome taxes and regulations just as hostile to their wellbeing. The state income tax, in addition to placing an inordinate burden on Fairfield County residents, has not prevented Connecticut from lurching from one budget crisis to another. This was evident just recently when majority lawmakers enacted the second largest tax increase in state history on the heels of the largest tax increase in state history which passed only a few years ago.
Furthermore, anti-business taxes in the most recent budget, notably the “unitary tax,” have induced several large internationally respected companies to openly contemplate leaving Connecticut. The loss of GE and similar businesses would severely diminish our highly skilled workforce, our community volunteers, donors to nonprofits and our income, property and sales tax revenue.
I recently met with several small to mid-sized manufacturers outside of Danbury, to hear their concerns first hand. They were joined by Boehringer Ingelheim, a world recognized pharmaceutical company. The latest budget, they agreed, was disastrous for business. The owner of a mid-size device company said that the unitary tax, which taxes Connecticut based businesses on out of state income, is a threat to their remaining here. He added that delaying the unitary tax for a year would not matter since it would still be a future burden.
Additional taxes such as the sales and use tax, unemployment, workers compensation, property tax on equipment make Connecticut companies uncompetitive. States such as Ohio, Florida and Texas smell blood in the water, and circle our floundering business community like sharks.
During our meeting, one manufacturer reported that less than a week after the budget passed, the state of Ohio called and said, “Your Governor isn’t a friend to business, is he?”
Even New York has reduced its corporation tax in comparison to ours. The much touted START-UP NY offers new and expanding businesses the opportunity to operate tax-free for 10 years. Small wonder that the Governor finds himself in a bidding war with New York for GE:
“We’re open for business and we would love to have GE here, and we wanted to make sure that they know what we have to offer,” said a spokesman for Westchester County Executive.
“If Connecticut is making it harder to do business in their state, we’re more than happy to offer GE some incentives as a town, as a county, as a state,” Somers (NY) supervisor.
During the meeting, I asked representatives from each company what single change they would most like to make. Here are some of their responses.
- Restore the research and development tax credit
- Reduce state income tax brackets
- Eliminate the unitary tax
- Eliminate prevailing wage because it affects town budgets
- Prioritize transportation funds to relieve congested roads, especially I-84 and I-95
- Eliminate the Estate and Inheritance Taxes.
- Reduce the burden of DEEP land use regulations
- The chemicals the state uses to melt ice ruins costly road equipment
- Reform the state procurement process. If state equipment needs to be fixed let a regions competitively bid
- Bolster our skilled labor force in technology and manufacturing.
We must act immediately if we are to revive Connecticut’s economy. A special session to eliminate the unitary tax would benefit not just General Electric but others as well. The Hartford Courant recently agreed, “Perhaps the unitary tax — the lack of which had been one of the few competitive advantages enjoyed by Connecticut — should be scrapped altogether.”
If we are truly going to make Connecticut “open for business again” it is crucial that we listen to our remaining business who want to stay and thrive here. It is through them that we discover what steps competing states have taken to lure businesses away and what we must do to prevent this from occurring. If we follow up our listening with action, we will be able to turn things around, and move our state in a better direction.
*****
Boucher represents the 26th District in the State Senate and is a Ranking member of the Education and Transportation Committee. She also serves on the Finance Revenue and Bonding and Judiciary Committees.
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