Two Governors See Need for Major Tax Increases

By: - February 16, 2011 12:00 am

As Connecticut Governor Dannel Malloy prepares to introduce his first state budget today (February 16), The Hartford Courant , the state’s largest newspaper, bluntly describes the plan’s effects.

“If you earn a middle-class salary, drive a car, get a haircut, buy clothing, sleep in a hotel, smoke cigarettes or drink beer, your taxes would go up,” The Courant reports .

While some Republican governors are seeking major tax cuts despite facing huge budget shortfalls, Malloy, a Democrat, is going in the opposite direction. In the spending plan he will present to lawmakers, he will propose one of the biggest and widest-ranging tax increases in Connecticut history. The proposal not only would raise taxes on alcohol and cigarettes, but would raise the general sales tax for the first time since 1991.

Overall, the plan would hike taxes by $1.5 billion in the first year and $1.34 billion in the second, according to The Courant . Connecticut’s budget gap for the next fiscal year is estimated at $3.7 billion.

Malloy is not the only Democratic governor bucking the conventional wisdom by proposing a major tax hike shortly after taking office.

In Minnesota, Governor Mark Dayton  will introduce a biennial budget today that temporarily raises the state’s top income tax rate to 13.95 percent — the highest in the nation. (Hawaii and Oregon currently have the highest marginal income tax rates, at 11 percent.) Minnesota faces a budget deficit estimated at $6.2 billion over two years.

The two governors’ proposals are among very few nationally that would hike broad-based taxes. Many governors who won election last year have vowed not to raise taxes, and as Stateline reported earlier this week , several of them are pushing broad tax cuts for businesses, hoping to spur hiring. In some cases, the tax-cut plans come despite state budget shortfalls of several billion dollars. 

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