Gov. Lamont pitches tax cuts, but could some only be temporary?

The cut is targeted at low- and middle-income workers, with rates dropping for the bottom two tax brackets.

John Craven

Mar 27, 2023, 10:11 PM

Updated 389 days ago

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Gov. Ned Lamont hit the road Monday to sell his tax cut plan, but legislative leaders are warning that some of his proposals may only be temporary.
Lamont stopped by Static Era Records in Milford, which could benefit from a boost in the “pass through entity” tax credit.
“We're allowing you to pay out of the [Limited Liability Corporation] and we'll credit you,” Lamont told reporters. “That means it's still deductible for small businesses.”
That sounds good to Jay Reason, who opened the shop during the pandemic to put his own “spin” on the record business.
“It's definitely – it's more work than I thought it would be,” said Reason.
In addition to the business tax relief, Lamont is pitching the first income tax cut in a generation. The cut is targeted at low- and middle-income workers, with rates dropping for the bottom two tax brackets. The Lamont administration estimates the average worker would keep $300 in their paycheck – and combined with a bigger Earned Income Tax Credit (EITC), those making less than $50,000 would pay no state income tax at all.
But there’s a catch. Top lawmakers said some of that tax relief may not be permanent.
“My guess is, you'll see a combination,” said Connecticut House Speaker Matt Ritter (D-Hartford). “You'll see some tax cuts that are permanent. You'll see others that may ‘sunset,’ or expire, which is what Congress typically does.”
Ritter said the income tax cuts and EITC boost will probably stay for good. But others, like the “pass through entity” relief for small businesses, may be temporary depending on how much they cost and how effective they are.
“I'm not burdening future generations to win the next election,” said Ritter.
On the other side of the aisle, GOP leaders pushed back on any plan to "sunset" tax relief.
“Republicans view the governor’s tax relief proposal as a good start toward helping families who are feeling the pain at the pumps, at the supermarket and when they open their energy bills. But we can do better," said Connecticut Senate GOP leader Kevin Kelly (R-Stratford). "Senate Republicans proposed $1.2 billion in tax relief last year, but our plan was rejected by majority Democrats.”  
Reason said every dollar he saves helps.
“Anything that opens up extra money for us to be able to buy more used records, bring in more new items,” he said.
The General Assembly’s tax-writing committee will submit a budget by April 20. After that, the final tax receipts come in – helping lawmakers see how much money they have to work with. Then legislative leaders and Lamont will negotiate a final tax and spending plan by the end of the session on June 7.


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