PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

STATE OF THE WEEK: Connecticut

By at 28 August, 2018, 8:03 pm

Could Connecticut actually become a Top 10 small business-friendly state? It currently ranks 8th WORST, but Election Day 2018 could bring some badly needed policy surprises.

by Raymond J. Keating-

Small Business Policy Index 2018: Connecticut ranked 43rd – or eighth worst – among the 50 states.

SBE Council’s “Small Business Policy Index 2018” ranks the 50 states according to 55 different policy measures, including a wide array of tax, regulatory and government spending and performance measurements. 

Small Business Tax Index 2017: Connecticut ranked 41st – or tenth worst – among the 50 states. 

SBE Council’s “Small Business Tax Index 2017” ranks the states according to 26 different tax measures. Among the taxes included are income, capital gains, property, death, unemployment, and various consumption-based taxes, including state gas and diesel levies.

Is it really possible to reverse course in a state like Connecticut, transforming the Nutmeg State from one of the most costly and hostile for entrepreneurs, workers, businesses and investors to one of the most attractive states in the nation to live, work, and start up, own and/or invest in a business?

Well, if Bob Stefanowski, the Republican candidate for governor in the state, is elected and carries through with what’s proposed in his economic plan, then the answer would, amazingly, be “yes.”

According to the Small Business Policy Index 2018: Ranking the States on Policy Measures and Costs Impacting Small Business and Entrepreneurship, which I write for the Small Business & Entrepreneurship Council, Connecticut ranks 43rd among the 50 states.

At the top of the list of policy negatives for Connecticut are high personal income, individual capital gains, corporate income, corporate capital gains, death and property taxes.

It pays to recall that Lowell Weicker – a liberal Republican who became an independent – ran for governor in 1990, and was victorious. At the time, the state had no personal income tax. Not long after taking office, Weicker quickly changed his tune on opposing a personal income tax, and wound up signing one into law in 1991. It took effect in 1992.

Predictably, the state’s personal income tax merely fed more government spending in the state, which in turn, over the years, generated more budget crises.

Now, Stefanowski, with the help of economist Art Laffer, has correctly identified weighty taxes, regulations and spending as the state’s biggest obstacle to prosperity. Among his key proposals are the following:

● Phase out corporate income tax and business entity tax over 2 years

● Phase out state income tax over 8 years

● Eliminate the gift and estate taxes immediately

● Embrace zero-based budgeting to reduce spending

● Enact a taxpayer bill of rights

Regarding that taxpayer bill of rights, Stefanowski is calling for:

● Impose term limits for state legislators (5 terms/10 years) and the governor (2 terms/8 years).

● Allow for a recall of state officials who are not living up to campaign promises, getting the job done or representing their constituents properly.

● Impose a constitutional amendment to require a supermajority to enact any tax or fee increase.

● Allow citizens the rights of referendum and recall.

● Require more transparency around private interests receiving tax payer dollars.

This is a bold, pro-growth agenda for Connecticut.

From 8th Worst to 9th BEST in the Nation

To give you an idea of the potential impact, if the elimination of income and death taxes, and implementation a super-majority for any tax or fee increase were to occur, and other states were left unchanged, Connecticut would move from 43rd, or eighth worst, on the “Small Business Policy Index” to become one of top 10 best states (ranking ninth) in the nation.

Over the past near-three decades, Connecticut has served as an example for other states on what not to do. If the Stefanowski plan were implemented, Connecticut would become a beacon for entrepreneurship, investment, strong growth and opportunity.

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Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

Keating’s latest book published by SBE Council is titled Unleashing Small Business Through IP:  The Role of Intellectual Property in Driving Entrepreneurship, Innovation and Investment and it is available free on SBE Council’s website here.

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