Ruminations on Reforming Aspects of Connecticut's Tax Structure

Abstract

Connecticut’s tax structure, primarily regarding corporate taxes, is outdated and easily manipulated by sophisticated tax attorneys and accountants. The state legislature has failed to act in any meaningful way to protect the state’s revenue stream. This article addresses the flaws of Connecticut’s tax system. Part I pinpoints four income tax shortcomings, which create great inequity as large corporations often pay less in income tax than low-wage employees. Part II discusses the forgone sales tax revenue as a result of online sales, and how the state legislature has failed to enact constitutionally permitted legislation that could prevent the erosion of the sales tax and protect local businesses. Part III discusses the massive growth of tax expenditures, which are uncapped and not considered part of the state budget, and the legislature’s further accountability failures. Part IV analyzes the relationship between economic development and taxes, and dispels the widely held belief that cutting taxes spurs job and economic growth. Finally, the article concludes by discussing corporate transparency, specifically whether the public deserves to know how much businesses pay in corporate income tax. The article advocates for the passage of a bill that would compel corporations to disclose their corporate income tax liability.

Keywords: tax, law, tax law, taxation, Connecticut, structure, corporate taxes, outdated, revenue, inequity, sales tax, SALT, state tax, legislation, constitutional, economic development, economic growth, corporate transparency, corporate income tax liability

JEL Classification: k34, h20, h21, h25, h70, h71