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Democrats: Taxing Us and Loving It
By State Rep. John E. Piscopo
It all started about two weeks ago with an increase of 61 cents per pack in the tax Connecticut imposes on its cigarette-smoking citizens, ostensibly to help reduce the state deficit. Although the majority Democrats at the General Assembly tried to sell it as a public health measure, it was a tax increase, nothing more; and it set the stage for other proposals for new taxes or tax increases.
It didn't take long. About a week and a half ago, new Democrat tax proposals poured out like wastewater from a broken sewer pipe—and they didn't just target goods and services; they also went after key legislative initiatives enacted several years ago to attract new employers to Connecticut and encourage existing companies to remain here and expand.
The anti-business proposals they rolled out include: reducing the credit for property taxes paid on data processing equipment from 100% to 90%; cutting the fixed capital investment credit from 5% to 3%; and increasing the minimum tax from $250 to $450. Among the goods and services that made their tax hit list are: candy, cakes, cookies, yarn, vegetable seeds, health club memberships, and bowling and camping services.
Two weeks ago the majority Democrats tried to convince us that the higher cigarette tax was voluntary, since only those who smoke would have to pay it. To avoid the cigarette tax increase, their argument ran, all a taxpayer had to do was quit. They contended that the increased costs of continuing to smoke would cause many to quit overnight, saving thousands of lives; that the tax hike would keep teenagers from taking up the habit in the first place; and that part of the revenue bonanza would even be tapped for smoking cessation programs. They claimed that the cigarette tax hike would not only help close a deficit expected to grow to as much as $400 million by the end of this fiscal year and to as high as $650 million for the 2002-03 fiscal year, it also would be a public health measure we all could be proud of.
While those arguments were convincing to many, they did not sway me. Experience and common sense tells us that tax increases that take place during economic downturns are just another drag on the economy and can even help bring on full-blown recessions.
Many of the tax incentives the Democrat proposals would gut were enacted during the mid-1990s to stem the tide of employers fleeing Connecticut for more business-friendly states in the south and southwest. The incentives worked. They not only encouraged businesses to remain here and expand, but also attracted new employers here from out of state, which in turn helped diversify Connecticut's economy and create new jobs.
If the Democrats succeed in turning back the clock to the failed anti-business policies of the past, the economic recovery that is just beginning to take hold could be stopped in its tracks and even reversed. The only achievement they will be able to point to if their policies are enacted is how quickly they brought on a recession.
Now, it may turn out that the Democrat leaders in the House and Senate slapped these proposals together intending to dump most of them once the public outcry becomes overwhelming. When that happens, most will be withdrawn with the exception of their proposal to double the sin tax on alcoholic beverages—a regressive tax that hits poor and the middle class the hardest. They will then unveil a "compelling" public health argument for the proposal that will sound remarkably like the one they used to justify the cigarette tax hike.
Okay. Just as some people will react to higher cigarette taxes by quitting smoking or switching to cigars or a pipe, some may quit drinking or significantly reduce their intake of alcoholic beverages. But many more will turn to the Internet for their cigarette purchases or will simply buy from people who smuggle them into Connecticut from low-tax states. The same is likely to occur if the tax on alcoholic beverages is doubled. At that point, angry taxpayers will drive to Massachusetts or New Hampshire and stock up on their booze there.
Hikes in sin taxes, no matter how they are justified, are still tax increases—and people, being people, will find ways to get around them—even if doing so turns normally law-abiding taxpayers into criminals.
John E. Piscopo represents the 76th District, which includes Burlington, Harwinton, Litchfield and Thomaston.
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