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Analysis on Tax, Healthcare, Education Bills From First Week of CT Legislative Session

  • Feb 11, 2014

The 2014 CT legislative session opened last week with a flurry of proposed bills from legislators.  Most bills proposed in the first weeks of the session include very little detail about what they will actually do – rather, they serve as placeholders that are referred to committees where they may be fleshed out in greater detail.   But a few bills did include specific proposals – here are a few of the most consequential for economic and education policy, accompanied by brief policy analysis:

H.B. 5012 and 5021, proposing to repeal the state’s Business Entity Tax 

Connecticut’s business entity tax imposes a $250 biannual fee on any company doing business in Connecticut.  The tax is a major deterrent to small business creation in the state, forcing companies to pay a fee even if they are not yet turning a profit.  The tax is not a major revenue source for Connecticut, bringing in about $40M per year of revenue.  That’s or less than a quarter of one percent of overall state tax revenue.  Repealing it is good policy.

H.B. 5003, proposing to repeal the state’s Earned-Income Tax Credit (EITC)

The Earned-Income Tax Credit (EITC) is a federal program that provides a tax-credit to low-income workers.  For any Connecticut taxpayer eligible for the federal credit, Connecticut provides a state tax credit equal to 27.5% of the federal credit.  The EITC has generally drawn bipartisan support as a way to provide work incentives and keep low-income families out of poverty.  There have been a number of good proposals to simplify the administration of the tax credit, but repealing it is not good policy. 

SB 5, 8, and 10, proposing new coverage mandates for health insurance plans

As of 2012, Connecticut already imposed 65 mandates on health insurance plans, the fourth most in the country and well above the national average of 43. Connecticut’s large number of coverage mandates is one reason it trails only Massachusetts and Alaska in per capita healthcare costs.  At a time when health insurance premiums are already facing upward pressures and the state is struggling to grow jobs, adding yet more mandates may not be the best idea. At the very least, the legislature should carefully study the costs of these particular mandates before passing them.

H.B. 5005, proposing to increase state aid to towns that pay for inter-district magnet schools

When students choose to attend a magnet school in another district, the state provides a grant to that district to help defray the cost of the students’ education.  However, that grant does not fully compensate the receiving district for those costs.  The best way to address this challenge is to adopt a student-based funding model in which students “carry” an allotted per-pupil funding level with them to whichever school they attend. The allotted amount per student should be based on a weighted student formula that allocates more state money for students whose education is more costly, such as those in extreme poverty, English Language Learners, and special education students.  HB 5005 should be amended to enact student-based funding in Connecticut, which would improve equity and accountability in state-funded public schools.

Here is a full list of bills introduced so far in the CT Senate and House.

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