Testimony Regarding S.B. 872, An Act Implementing the Governor's Budget Recommendations for General Government
Katie Roy, Executive Director & Founder
Appropriations Committee
Friday, April 5, 2019
Chairwomen Osten and Walker, Ranking Members Formica and Lavielle, and distinguished members of the Appropriations Committee:
Thank you for the opportunity to submit testimony on S.B. 872, specifically Section 1(a), which further delays the statutory requirement that the Connecticut Department of Revenue Services (DRS) biennially produce a tax incidence report.
My name is Katie Roy and I am the executive director and founder of the Connecticut School Finance Project, a nonpartisan, nonprofit policy organization based in New Haven that works to identify solutions to Connecticut’s school and state funding challenges that are fair to students, taxpayers, and communities.
Section 1(a) of S.B. 872 continues the unfortunate practice of delaying the production and release of a tax incidence report that is intended to answer the important questions of “Who pays Connecticut’s taxes?” and “How much are they paying?”
Tax incidence reports examine the impact of taxes on Connecticut households and businesses, analyze the "results of the interplay of tax impacts," and provide an overview of Connecticut's tax environment. Among other items, tax incidence reports provide valuable insight into where Connecticut’s tax dollars are coming from, the progressivity of Connecticut’s tax system, and the population and tax burdens for specific income groups. This information is vital for policymakers to accurately understand how taxes impact, or will impact, individuals and businesses, and make informed decisions when it comes to tax policies.
Despite being a necessary tool for understanding the tax burdens of Connecticut households, the General Assembly has repeatedly delayed the statutory requirement for the DRS to biennially produce a tax incidence report.
Since the General Assembly passed the requirement in 2013 for the DRS to produce a tax incidence report biennially, only one tax incidence report – released in December 2014 – has been produced. Since the release of the 2014 tax incidence report, the General Assembly has delayed the tax incidence report requirement three times with the most recent delay occurring as part of the bipartisan budget for fiscal years 2018 and 2019. Passing S.B. 872 as Section 1(a) is currently written would mark the fourth delay, and push the production and release of the next tax incidence report back from February 15, 2020 to February 15, 2022.
Further adding to the need for an updated tax incidence report is the fact that the 2014 report used tax data from the 2011 tax year. This means the most recent publicly available information about the tax burdens of Connecticut households is currently eight years old and will be 11 years old by the release of the next tax incidence report if the report is delayed until 2022. Since the 2011 tax year, numerous significant tax changes have made and Connecticut needs to fully and accurately understand how those changes have impacted its citizens and businesses.
I urge Committee members to reject the delay of the tax incidence report contained in S.B. 872. An updated tax incidence report is far too important to continue kicking the can down the road and delaying the much-needed analysis and examination of the impact of taxes on Connecticut households and businesses.
Thank you again for allowing me the opportunity to provide testimony on S.B. 872 and the importance of ending the recent legislative tradition of delaying the production and release of a biennial tax incidence report. Please feel free to reach out to me via the contact information below should you have any questions.
Sincerely,
Katie Roy
Executive Director & Founder
Connecticut School Finance Project