Plans for Connecticut's biggest tax cut since the inception of the income tax highlighted Gov. Ned Lamont's 2024-25 budget presentation to lawmakers Wednesday.
Members of the General Assembly will crunch the numbers on the two-year, $50.5 billion proposal and negotiate their own adjustments as the months-long legislative budget process begins.
The governor's plan would reduce the 5% tax rate (on income between $10,000 and $50,000) to 4.5% and the 3% rate (on the first $10,000) to 2%, saving Connecticut families hundreds of dollars a year. With a proposed increase in the Earned Income Tax Credit, most families making less than $50,000 a year would pay no income tax.
The state's investment in tax cuts became possible, according to the governor, thanks to four straight balanced budgets and the state's healthy surplus and rainy day fund.
"For the first time in over a generation, Connecticut has enjoyed strong economic and population growth – more taxpayers, a growing economy, coupled with our shared fiscal discipline, has resulted in four consecutive balanced budgets – soon to be five," Lamont told lawmakers.
While Republicans have generally complemented the cuts-- saying the Democratic governor is adopting cuts Republicans have been asking for for years-- they suggest the state's financial position allows for more relief, delivered faster. The Lamont cuts would take effect in 2024.
"There's no reason that the income tax has to wait until '24," says Senate Minority Leader Kevin Kelly (R-Stratford). "Why isn't it retroactive to '23? Why are we only (cutting a key tax rate) 5 to 4.5 percent, a ten percent reduction, when we could do twenty?"
House Speaker Matt Ritter says the Lamont cuts are right-sized. He adds that cuts will help residents while protecting the state's rare surplus: "Do both. Make investments now and limit them. Not because maybe (lawmakers) want to, because they know that the pre-paying of pensions and the full rainy day fund is going to have a huge impact, maybe not on their careers, but the next generation and that's important to them."
