https://www.wsj.com/articles/a-connecticut-rescue-plan-1540509346
A Connecticut Rescue Plan The state’s economy has shrunk 9.3% since 2007. Time for a change?
For Connecticut taxpayers, the eight years of Democratic Gov. Dannel Malloy may feel like Groundhog Day. High taxes have repressed economic growth, swelling budget deficits that Democrats have “solved” by raising taxes again and again. This year voters face a choice of whether they want to relive this misery for four more years or take a risk on a growth remedy.
Once upon a time Connecticut had no income tax and attracted high earners from all over the Northeast. From 1976 to 1991, Connecticut led the country in GDP growth. But its fairy tale economy began to end in 1991 with its enactment of a flat 4.5% income tax. That soon became a “progressive” tax, and rates have since climbed while taxpayers have fled.
After the financial crisis, former GOP Gov. Jodi Rell raised the top rate on individuals earning more than $500,000 to 6.5% from 5%. Mr. Malloy pushed the top rate to 6.7% in 2011 and 6.99% in 2015, notwithstanding his re-election promise not to raise taxes. He also imposed a 10% surtax on corporate income over $100 million. Connecticut’s 8.25% top corporate rate exceeds that of all of its neighbors.
The result has been a lost decade of growth. Connecticut’s GDP has shrunk an incredible 9.3% since 2007 and declined by 0.5% on average annually during Mr. Malloy’s governorship. Revenue growth for the government has been sluggish as businesses and high-earners have decamped to lower-tax states. Over the last five years $8.8 billion in income has left the state, mostly to Florida.