Hartford Business Journal

www.HartfordBusiness.com February 29, 2016 • Hartford Business Journal 5 Connecticut vs. Massachusetts Tax Rate Comparisons Tax CT MA Income Progressive rate ranging from 3% to 6.99% Flat 5.15% Sales and Use 6.35% 6.25% Corporate Income Greater of: 7.5% of net income, 3.1 mills per dollar of capital base, or $250 minimum tax. 20% surcharge applies for 2016 and 2017; 10% surcharge for 2018 8% of net income plus $2.60 per $1,000 of taxable property or net worth; $456 million minimum tax. Real Estate Conveyance 1% to 1.75% of sales price, depending on property type and location $4.56 per $1,000 of sales price (0.456%); $6.12 per $1,000 in Barnstable County (0.612%) Estate For estates over $2 million, marginal rates range from 7.2% to 12% For estates over $1 million, marginal rates range from 0.8% to 16% Gift For gifts over $2 million, mar- ginal rates range from 7.2% to 12% None S O U R C E : C T O F F I C E O F L E G I S L A T I V E R E S E A R C H REPORTER'S NOTEBOOK Mass., CT tax structures come under spotlight In the wake of General Electric's deci- sion to move to Boston, the tax structures of Connecticut and Massachusetts have come under closer scrutiny, as the neighboring states compete for businesses and jobs. And while some have nicknamed the Bay State "Taxachussets" for its perceived high tax rates, it holds certain advantages over Connect- icut, including a lower income tax for high earn- ers, according to a new report from the state's Office of Legislative Research (OLR), which recently compared various taxes in both states. Connecticut has a progressive income tax structure, with rates ranging from 3 percent to as high as 6.99 percent, while Massachu- setts has a flat 5.15 percent income tax rate. Massachusetts also lacks gift or busi- ness entity taxes, while Connecticut has both. The Nutmeg State also has a slightly higher sales and use tax rate (6.35 percent vs. Massachusetts' 6.25 percent rate). Connecticut's 7.5 percent corporate income tax rate is lower than Massachusetts' 8 percent rate, but the Nutmeg State has instituted a 20 percent corporate surcharge in recent years, boosting its effective rate to about 9 percent. The surcharge shrinks to 10 percent in 2018. There was no comparison of property taxes, which is often considered one of the most bur- densome levies by Connecticut businesses. OLR didn't draw or make any conclu- sions from its research, which aims to pro- vide state lawmakers with data to inform their policy decisions. The comparisons, however, are particularly important this leg- islative session, as lawmakers grapple with a growing budget deficit that will require tax increases or budget cuts as a remedy. Key legislative leaders on both sides of the aisle have already said tax increases are not on the table this year, but they face mounting pressure from labor unions, non- profits and other groups to raise revenues and prevent significant budget cuts. Connecticut has raised taxes twice since 2011, but lawmakers, including Gov. Dannel P. Malloy, are skittish about boosting rates again as the state tries to remain competi- tive in maintaining and attracting employers. Of course, GE's decision to flee its Fairfield headquarters wasn't solely based on tax policy. The industrial conglomerate is trying to rein- vent itself as a technology company and is look- ing to tap into Boston's high-tech talent and ecosystem to raise its profile and prospects. — Greg Bordonaro Italian firm aired plans with CT's brass in '15 Announcement recently that Ital- ian aeroparts manufacturer Pietro Rosa TBM was coming to Connecticut with the purchase of a long-standing Farmington airfoil-products maker caught many by surprise, but not the governor nor his top economic-development lieutenant. Catherine Smith, commissioner of the state Department of Economic and Com- munity Development (DECD) said she and Gov. Dannel P. Malloy met with Pietro Rosa officials at last June's Paris Air Show about its desire for a Connecticut presence. "We certainly were aware that Con- necticut was on their radar,'' Smith told the Hartford Business Journal last week. " … It just takes a long time for companies to make up their minds.'' Pietro Rosa announced Feb. 19 that it was paying an undisclosed sum for New England Airfoil Products, and will remain in the firm's facilities at 36 Spring Lane. Pietro Rosa declared it will invest more than $10 million in the Farmington facility in exchange for a $3 million low-interest DECD loan and a commitment to help the employer cement ties with local universities and techni- cal colleges to develop its skilled workforce. Mauro Fioretti, CEO of the Pietro Rosa group, said the acquisition offers the company greater reach and access to its existing and new North American customer base. — Gregory Seay PDS has been meeting the needs of the construction industry since 1965. Our dedicated team of design and construction professionals welcomes the challenge of serving its past and future customers on their most demanding projects. 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