Submitted by Michael T. Goldstein, M.D., J.D., Greenwich
In January 25, 2023’s Wall Street Journal there was an opinion article entitled “The State Wealth-Tax Alliance. You can check out but you can never leave”.
According to this article eight states including Connecticut, California, New York, Illinois, Maryland, Hawaii, Minnesota and Washington have formed a tax alliance to implement wealth taxes. These taxes would still apply even after the taxpayer has left the state.
Among the various proposed taxes are wealth taxes on all assets, adding surcharges to the capital gains tax of ie. 7.5% for households earning over $550,000 and 15% for those earning over $1.1 million. One of the supporters of this legislation, according to the article, is the American Federation of Teachers.
The concept of wealth taxes will drive the remaining wealth out of towns like Greenwich. We have already seen a flight of wealth from here. This has caused a rapid decline in price for the high end homes in Greenwich and has depressed the overall housing market.
Greenwich which has less than 2% of Connecticut’s population pays about 9% of all the state income tax revenue. The other lower Fairfield County towns also disproportionately pay income tax to Connecticut. Wealth tax legislation, that will continue to tax wealthy taxpayers even after they leave the state will force them out before these laws take effect. In the end the tax revenues will probably decrease.
According to the article wealth taxes in Sweden, the Netherlands and several other European countries were imposed and later repealed. We should learn from Europe’s mistake not repeat it.
The solution for Connecticut is not new taxes that will drive wealth and business out of the state. Instead it is attracting businesses and generating job growth.
Since Connecticut has gone from a no income tax state to one of the highest taxed states our economy has declined as the taxes have increased.
It is time for our government to follow the lead of states with population and economic growth rather than the other seven states in the wealth tax alliance.