Connecticut’s economic outlook is the seventh-worst in the country, according to a new report by the American Legislative Exchange Council, exactly matching the state’s ranking for past economic performance.
The Nutmeg State earned its lowest ranking yet in the fifth edition of Rich States, Poor States, falling to 44 despite ranking as high as 32 in 2009 and 35 last year. In 2008, the first year of the report, Connecticut ranked 40th.
ALEC also ranked Connecticut 44th in economic performance based on a historical review of economic growth, job growth and migration to Connecticut. Last year, Connecticut ranked 43rd for economic performance.
ALEC is a national nonprofit that helps state legislators enact free-market policies.
Arthur Laffer, an economist who advised Pres. Ronald Reagan, wrote the report along with co-authors Stephen Moore of the Wall Street Journal editorial board and ALEC’s Jonathan Williams.
The forward-looking rank is based on 15 factors.
Connecticut ranked fourth-worst in recently legislated tax changes for increasing taxes $10.37 per $1,000 in income.
The state ranked 45 for its average workers’ compensation costs (2.55 percent of payroll) and its $8.25 minimum wage.
Despite already having one of the highest minimum wages in the country, the General Assembly is considering a $0.50 increase.
Property taxes of $44.82 per $1,000 of personal income earned Connecticut a 44th-place ranking. The state’s top corporate tax rate ranks 40th.
Connecticut’s ranking also suffers because it has not passed right to work laws.
The state has a relatively low sales-tax burden (10th) and other tax burden (9th).
Between 2000 and 2010, Connecticut per capita income grew 30.3 percent, the 15th lowest rate of growth in the country.
The state lost 97,731 people to domestic migration and payroll employment fell by 4 percent over the past decade. Both performances put Connecticut among the 10 worst-performing states.
The report also singles out Connecticut for its expansion of the estate tax.
“In the misguided hope of soaking the rich and closing a $3.3 billion budget shortfall, Gov. Dannel Malloy signed a budget that lowered the estate and gift tax thresholds from $3.5 million to $2 million (retroactive to January 2011) and kept the rate at 12 percent,” the report says.
The report cites 2008 research by the Connecticut Department of Revenue Services to support eliminating the estate tax, including a survey of people leaving Connecticut.
“Interestingly enough, the average gross estate of those who left was $7.5 million, and their average taxable income was $446,000,” the report says. “Approximately 50 percent of the people surveyed said that they changed their residence primarily because of the state’s hefty death tax, and 76 percent said that it was one of the top reasons why they left.”
I’ll be leaving in two years for that reason alone. Of course, I’ll still get to “enjoy” CT on the six month less 1 day that I’m in state, but Virginia will get the benefit of my income tax and my sales tax. Their gas tax is lower, income tax is lower, and property tax, even in northern VA is lower. But the BIG draw is that they eliminated their death tax.