Hartford Business Journal

6 HARTFORDBUSINESS.COM | APRIL 20, 2026 POLITICS & POLICY significant increases in sales tax rates, raising concerns about both economic and political feasibility, as well as the regressive nature of those levies. "What other states have done is, they've cut their income tax, but then they've raised all kinds of fees and other revenue sources," said Fred Carstensen, director of the Connecticut Center for Economic Anal- ysis at the University of Connecticut. "That means shifting the tax burden," Carstensen said, noting that such changes can push more costs onto municipalities — leading to higher prop- erty taxes — while placing a greater burden on lower-income households. "Basically, she wants to make the aggregate tax burden, state and local, more regressive than it already is," Carstensen said. Other economists have raised similar concerns, noting that consump- tion-based taxes tend to fall more heavily on lower- and middle-income house- holds than progressive income taxes. Carstensen also questioned McCaughey's use of a 2013 study by economists Karel Mertens and Morten Ravn, published in the American Economic Review and cited in this year's Council of Economic Advisers report, which found tax cuts can spur economic growth. He said the study is being misap- plied because it focuses on federal tax policy, not state systems. Because of that, he said, "you can make no analogy from their analysis of federal policy with state policy. They're entirely different animals." McCaughey said she cited the study with that distinction in mind, but views it as supporting her broader argument that income tax cuts are more effec- tive than reductions in other taxes. She also pointed to research cited by conservative activist Grover Norquist, Americans for Tax Reform and the Council of Economic Advisers that she said shows income taxes play an outsized role in corporate location decisions. "The income tax is the one that it seems most corporate executives look at when they're deciding where to locate or where to relocate," she said. A different era While proposals to eliminate the state's income tax are nothing new, efforts have historically run up against fiscal realities. Gov. Ned Lamont, who faces at least one challenger within his own party as he seeks a third term, and other Demo- cratic leaders have expressed skepti- cism about eliminating the tax, citing potential impacts on funding for schools, transportation and other services. The state is also grappling with rising Medicaid costs, which state Fred Carstensen Comptroller Sean Scanlon recently cited as a factor in Connecticut facing its first budget deficit during Lamont's tenure. McCaughey, though, says her proposal would not create a "budget hole" or require any program cuts. "If you impose the fiscal discipline that any increase in revenue must be dedicated to reducing and phasing out the income tax, you have a shot at becoming a high-growth state," she said. "You're not going to have a revenue hole, because spending is not going to dip below current levels," McCaughey said. As for Boughton's comment that it's "not possible" to eliminate the state income tax, McCaughey chuckled. "Maybe he can't do it, but I can," she said. www.borghesibuilding.com | 860.482.7613 2155 East Main Street, Torrington, CT 06790 With vision and planning we will guide you in defining your project using a balance of goals, budget and timeline, presenting " Building Ideas that Work" for you. © 2011 BlueScope Buildings North America, Inc. All rights reserved. Butler Manufacturing ™ is a division of BlueScope Buildings North America, Inc. Feasibility Test Continued from page 5 Source: CT Dept. of Revenue Services TOTAL REVENUE $1.4B $2.1B $3.5B $6.5B $13B TAX TYPE Corporation business Pass-through entity All other taxes Sales and use taxes Personal income CT STATE BUDGET REVENUE SOURCES (FY 2025) $1B $2B $3B $4B $5B $6B $7B $8B $9B $10B $11B $12B $13B 0

• Cover