March 2016

Revenue Options are Crucial to Maintaining Public Investments that Promote Prosperity

Derek Thomas, M.P.A.

In confronting the financial crisis looming over state budget decisions, the common-sense choice for Connecticut should be a balanced approach that includes revenue, rather than a cuts-only approach that threatens an already fragile economic recovery.

Alternatives available to lawmakers include:

  • Collect a Larger Share of Taxes Due on Internet Sales: Implementing a version of Colorado’s reporting law would chip away at the estimated $65 to $70 million lost annually in uncollected sales taxes on Internet sales
  • Increase Rates on Capital Gains or Personal Income: An increase in the tax on personal income and capital gains – 84 percent of which would fall on the top 1 percent of taxpayers – would result in an estimated $283.1 million in new state revenue
  • Institute a Low-Wage Workers Fee: According to the state OFA, last year’s proposal to recoup state costs attributable to low-wage employers was estimated to generate $305 million in revenue in the coming fiscal year
  • Create a Soda Tax: According to the OFA, an increase of one cent on each fluid ounce of soda would raise more than $85 million in the coming fiscal year
  • Apply the Sales Tax to Digital Downloads: Applying the sales tax to digital downloads would have generated $7 million to $11 million in revenue in 2011
  • Close the Expedia Loophole: The existence of the Expedia loophole is estimated to have resulted in a loss of $3 million to $4 million in 2010
Issue Area:
Budget and Tax