Republican gubernatorial hopeful John McKinney of Fairfield has proposed ending income taxes for those making less than $75,000 a year.
McKinney, the state Senate minority leader, on Thursday said the $746 million cost of the tax break for a million Connecticut residents would be covered by laying off middle-management positions in state government, forcing concessions from state unions and ending the Earned Income Tax Credit for Connecticut's poorest residents, among other things. He said he plans to cut more than $1.4 billion from the $19 billion state budget.
"If we want to grow our economy, if we want to grow jobs, if we want to reverse the trend where people and jobs and businesses are leaving Connecticut every single day, we need to give people their money back," McKinney said. "We need small business owners to get their money back so instead of paying government, they can pay new employees; they can plow money back into their business and expand what they do. That's how you grow your economy."
The proposal, which would take effect in 2017, was immediately criticized by McKinney's political opponents, labor leaders and a University of Connecticut economist, who warned that the spending cuts could hurt the economy.
McKinney and his running mate for lieutenant governor, David Walker of Bridgeport, the former United States comptroller general, picked Main Street in Stratford to announce that the state's middle-income earners were among the major casualties of the 2008 recession and Gov. Dannel P. Malloy's record tax hikes in 2011.
"We're the first candidates to be honest about the problem," McKinney said, citing a $3 billion increase in the state budget under Malloy. McKinney said he would support the scheduled phase-out of a 10 percent corporate tax surcharge and the return of the tax exemption on clothing and footwear.
McKinney slammed Tom Foley of Greenwich, his opponent in the Aug. 12 GOP gubernatorial primary, for not having a solid plan on taxes, the state budget and the economy beyond a promise to cut the 6.35 percent sales tax sales tax by 0.5 percent.
"For too long, leaders have said we can't do it," McKinney said of his and Walker's plan. "It's time we need a bold leader who says we can." He said taxpayers deserve it.
"If Tom Foley were standing here today, he would present you his plan and it would look like this," McKinney said, holding an empty page on the back of his news release. "A blank piece of paper, because he has no plan. We've seen the Malloy plan. It's increased spending, increased taxes, fiscal gimmicks and shell games. This is the only honest plan that deals with the budget without gimmicks, that deals with the problem as it honestly exists and provides real tax relief."
Chris Cooper, spokesman for Foley, who won the GOP's endorsement for governor during the statewide convention in May, said that Foley also has a plan to reduce taxes.
"Tom Foley will provide broader-based tax relief than John McKinney is proposing, including reducing the sales tax, which benefits all Connecticut residents," Cooper said in a statement. "John McKinney's proposal is narrowly focused and excludes a lot of people who are now paying taxes that are way too high. Senator McKinney's narrowly focused income-tax reduction won't provide relief to taxpayers and the boost to the economy that broader-based tax reduction will."
Foley has said that he will honor the current state union contracts that expire in 2022 and would hold the budget flat when it expires June 30.
Devon Puglia, spokesman for state Democrats, also blasted McKinney's plan. Read Full Article
"Providing tax relief to hard-working Connecticut families is important, but not at the expense of our schools, our roads and infrastructure, and elimination of other vital services," Puglia said. "While Connecticut is making progress through steady leadership under Gov. Malloy, and while there is more work to do to keep us on the same path, John McKinney's plan would take us backward."
Larry Dorman, spokesman for Council 4 of the American Federation of State, County and Municipal Employees, which represents 16,000 state employees, called McKinney's proposed changes to state pensions "a non-starter" that would require the approval of employees.
"The senator's plan to rebuild Connecticut's middle class involves making working families less strong and poorer," Dorman said. "Real pension plans are a tremendous boost to the economy. It's just a bad idea from every conceivable angle."
Fred V. Carstensen, director of the Connecticut Center for Economic Analysis at UConn, said the $120 million low-income earners receive under the Earned Income Tax Credit gets immediately put back into the state economy.
In a phone interview, Carstensen warned that McKinney's plan -- if he wins the primary, defeats Malloy and convinces the Democratic-controlled General Assembly -- would result in higher federal tax liability for those affected.
"I appreciate, for a politician, the appeal of saying `I'm going to cut your taxes,' " Carstensen said. "This looks, to me, ill-considered. It doesn't make sense in terms of the state economy or a stable revenue base."
Carstensen warned the plan could result in substantially less than 60 percent of the $746 million cost of the tax exemption going back into the Connecticut economy.
He said McKinney's plan needed fleshing out.
"I would like to see more hard numbers," he said. "You have to say what the implications are for these kinds of choices."
How McKinney would cover the $746 million cost of eliminating the income tax for middle-class:
Cut the current $19 billion state budget by $1.4 billion.
End the Earned Income Tax Credit worth $120 million.
Change the state pension system for new hires to a 401(k)-like program.
Reduce non-union managers in state agencies.
Terminate the $12 million state-marketing budget.
Eliminate expensive state programs that have not produced positive results.
Create more partnerships with local social-service providers to cut costs.