FAIRFIELD — Sen. Chris Murphy was blunt when he addressed a forum on the new GOP tax law impacts on the state’s residents
“It was designed to hurt our state,” Murphy told a gathering of real estate professionals and residents at the Berkshire Hathaway offices on the Post Road on Jan. 5. “I hate to say that, but it’s the truth.”
As a Democrat, Murphy said he fought against the new tax bill, but admitted there were some things positive things to come out of it.
But, he said, it’s the changes to tax laws that place a $10,000 cap on state and local tax deductions on federal tax returns that are most damaging to state residents.
The bill imposes a new $10,000 cap on the federal deduction that millions use in connection with state and local income, property and sales taxes. The deduction is especially vital to residents of high-tax states like Connecticut, New York, New Jersey and California.
Companies, on the other hand, will continue to be able to deduct their state and local tax payments as normal business expenses.
“There is no doubt there are people in Connecticut who will benefit from this bill,” Murphy said, however, with almost half of the state’s residents itemizing their federal tax bill, this will mean a higher tax liability.
That, he said, could slow down the state’s real estate market, which he said helps drive Connecticut’s economy.
Ridgefield realtor Art Meyer said here in Connecticut there is a general perception in border towns that people move here from New York because of lower property taxes. “That incentive to come over is not going to be as strong anymore,” Meyer said.
He said California is thinking about creating a way for its residents to “donate” their state taxes in order to allow them to reap the full deduction. Meyer asked whether that was something Connecticut officials were considering, and also chastised politicians in Washington, D.C., for forgetting they work for their constituents, and not their political party.
Murphy agreed there is a more partisan atmosphere than there was 20 years ago, and said the tax bill was a perfect example of that. However, he said, there are major differences in economic philosophy between the two parties.
“They really do believe in trickle-down economics,” Murphy said, and that the projected deficits won’t materialize.
Despite Republican talk of fiscal discipline, the legislation is projected to add $1.46 trillion to the nation's $20 trillion debt over a decade. GOP lawmakers say they'd expect a future Congress to continue the tax cuts so they won't expire.
“The word on the street is nobody wants to retire in Connecticut because nobody wants to die in Connecticut,” Wilton real estate broker Donna Karnes said. Karnes said reductions in corporate taxes are what can entice businesses to the state after Murphy said he thinks the state needs to address its infrastructure.Read Full Article
Companies are relocating to New York City, Murphy said, because that’s where their young employees want to live. Connecticut, he said, has to stop looking at cities like Stamford, Norwalk, and Bridgeport as liabilities and instead treat them as assets.
The commute to New York, he said, has gotten longer from places like Fairfield and Westport, and Connecticut needs to work on a regional basis with other New England states to upgrade the infrastructure because the federal government will not.
“We’ve got to solve this problem ourselves,” Murphy said.
The Associated Press contributed to this report.