House GOP launches $700 million tax relief package |
House Republican lawmakers introduced $700 million in tax relief proposals this week targeting individual taxpayers and small businesses.
The proposal includes using $300 million in federal coronavirus relief funds to help pay off more than $520 million in debt from the state unemployment fund.
Employers face higher taxes and special assessments to repay federal loans taken out when the Unemployment Trust Fund became insolvent after the pandemic shut down the state’s economy in 2020.
Connecticut cannot afford to repeat the aftermath of the 2008-2010 recession, when employers were hit with unemployment tax hikes four times higher than in neighboring states.
This financial pressure prolonged the economic downturn. Connecticut was one of the few states that did not recoup all of the jobs lost during the recession, as GDP growth also stagnated for much of the following decade.
The Republican proposal includes a number of additional measures aimed at alleviating the labor shortage, including extending the Manufacturing Apprenticeship Tax Credit to small businesses.
Additionally, GOP lawmakers want to further extend this credit to trades that hire apprentices who complete 2,000 hours of relevant on-the-job training.
This credit is currently available to large employers who hire registered apprentices who complete two- or four-year construction programs or skilled manufacturing programs with periods of 4,000 or 8,000 hours.
The CFIA’s 2021 Connecticut Business Survey found that 80% of employers are struggling to find and keep employers, and more than a third say the labor shortage is the most great threat to growth.
Connecticut’s unfilled job openings jumped 64% in 2021 to 110,000, while the labor force– the number of employed workers plus those actively seeking work – fell a further 17,000 and is down 92,000 (5%) since February 2020.
The House Republican proposal also restores the tax on forwarding entities to its original 93%, freeing up more than $50 million for small businesses to invest in workforce training and operational improvements. .
Sales, income tax relief
Additionally, it exempts personal protective equipment and rapid COVID-19 tests from state sales tax.
Republicans also want to repeal the truck mileage tax that increases based on gross vehicle weight that the Legislature enacted last year.
The tax relief plan calls for indexation and adjustment of state income tax brackets to “reflect actual earnings and not just wage adjustments, given that the cost of goods and services households has skyrocketed”.
It also expands Governor Ned Lamont’s property tax proposal released earlier this month, increasing the property tax credit from $200 to $500 and including childless households or eligible seniors.
And the proposal exempts 100% of individual retirement income from state income taxes for joint filers earning less than $150,000 a year.
Lamont proposed Accelerate the phased exemption of pensions and annuities from income tax from 2025 to 2022, with single filers with adjusted gross income less than $75,000 and co-filers with less than $100,000 eligible.
For more information, contact the CFIA Eric Gjede (860.480.1784) | @egjede