[RonaldusMagnus]

Relevant to "Economic Climate in CT" from tomorrow's WSJ. (Note: I am pasting entire story bc the WSJ is a paid service and if i simply post the link, those that don't pay won't be able to see entire article).

Connecticut’s Hedge-Fund Bribe
First soak the rich. Then subsidize the richest. Meet the progressive state business model.


Connecticut lost General Electric’s headquarters to Massachusetts earlier this year, so Governor Dannel Malloy is now trying Illinois’s business model: Raise taxes, and then when businesses threaten to leave, write a check to other businesses so they’ll stay. Behold his $22 million taxpayer gift to Ray Dalio’s Bridgewater hedge fund.

Last week the Governor presented Bridgewater with $5 million in grants and $17 million in low-interest, forgivable loans to renovate its headquarters in Westport along the state’s Gold Coast. Mr. Malloy said that other states including New York were trying to lure Bridgewater, and Connecticut couldn’t afford to lose the $150 billion fund or its 1,400 high-income employees. We’ve got nothing against Mr. Dalio, but he could probably dig up $22 million from petty cash.

The Governor’s office says Nutmeg State tax revenues could shrink by $4.9 billion over the next decade if all of Bridgewater’s employees departed. After Appaloosa Management’s David Tepper escaped to Florida from New Jersey last year, Trenton’s budget gnomes sounded the public alarm.

“We see what happens in places like New Jersey when some of the wealthiest people move out of the state,” Mr. Malloy warned. This is the same Governor who has long echoed the progressive left’s claim that tax rates don’t matter. Maybe he was knocked off his horse by a vision on the road to Hartford.

Like other states with progressive tax codes, Connecticut is dependent on high earners. As recently as 1990, the state had no income tax and had long been a refuge for companies and employees fleeing high-tax New York. But as usual after an income tax is introduced, the political class keeps raising the rate.


Mr. Malloy’s Republican predecessor Jodi Rell raised the top marginal tax rate to 6.5% from 5% on individuals earning more than $500,000, and Mr. Malloy raised it again to 6.99%. Hilariously, Ms. Rell said last month that she’s also moving her residence to Florida because of the “downward spiral” in Connecticut that she helped to propel.

Raising taxes has backfired on the state economy and budget. Senate President Martin Looney moaned that last year’s income tax hike has amplified revenue volatility and produced “diminishing returns” as tax receipts have trailed budget forecasts. Higher taxes have also depressed business and income growth.

Fitch Ratings and Standard & Poor’s downgraded Connecticut debt last month because of structural deficits and slow income growth, which Mr. Malloy calls “our new economic reality.” Fitch noted that employment growth between 2012 and 2015 was half that of the U.S. average. Median home prices have declined during the past two years.

Connecticut has lost 105,000 residents to other states over the last five years while experiencing zero real economic growth. Last year it was one of seven states including Maine, Mississippi, Illinois, Vermont, New Mexico and West Virginia with population declines.

Democrats in Hartford this spring attempted to close a $960 million deficit—equal to about 10% of the state general fund—by cutting 2,500 state government positions and creating supposed efficiencies. One result: Six legislative commissions studying the struggles of blacks, Latinos, Puerto Ricans, Asian-Pacific Americans, women, children and seniors were consolidated into two 63-member study groups.

Yet a $1.3 billion gap will blow open in 2018 because the legislature’s budget patches don’t resolve imbalances driven mainly by worker pay and pensions, which this year cost about $1.5 billion. Pensions are less than 50% funded, third worst after Illinois and Kentucky.

So here is the new-old progressive governing model: Raise taxes relentlessly in the name of soaking the 1% to pay off government unions. When that drives people out of the state, subsidize the 0.1% to salvage at least some jobs and revenue. Ray Dalio gets at least some of his money back. The middle class gets you know what.

[Vandy-bound]

I think the Mercatus data analysis is pretty compelling. And the results across the country seem to jive fairly well with what others have already said. Long-term solvency is a critical issue in CT (and IL--which surprisingly to me came in ahead of IL). The only category in which CT was ranked average is in service level solvency.

Quote from Mercatus: "Service-level solvency measures how high taxes, revenues, and spending are when compared to state personal income. Do states have enough “fiscal slack”? If spending commitments demand more revenues, are states in a good position to increase taxes without harming the economy? Is spending high or low relative to the tax base? (Connecticut ranks 27th.)"

And that's the highest ranking CT has in the categories ranked by Mercatus. When you look across the state at overall population trends (not just move in/move out, but age demographics too), it seems to me that CT will continue to have solvency issues for the foreseeable future. While I appreciate several of the good things about CT, the financial climate is not one of them.

[Henry10]

The problem with CT is not simply economic. It is also political -- CT is at a check-mate, nailed on a cross.

Non-union middle class has shrunk that is is no longer the strongest constituency. So now the winning constituencies are the subsized (poor or rich) and public unions.

Middle-class is in the minority and politicians are treating it as such.

[Robert137]

Originally Posted by Henry10

The problem with CT is not simply economic. It is also political -- CT is at a check-mate, nailed on a cross.

Non-union middle class has shrunk that is is no longer the strongest constituency. So now the winning constituencies are the subsized (poor or rich) and public unions.

Middle-class is in the minority and politicians are treating it as such.

Yes, this seems to be true. Although Panderer-in-Chief Malloy and the legislative stooges seemed to have developed some spine in the latest crisis, and ticked off their masters. We'll see whether this lasts beyond the November election when the next regularly-scheduled fiscal crisis hits. I'm hoping, but not optimistic. How many wake-up calls to they need, anyway.

[BPt111]

Opinion Journal: Connecticut's Bridgewater Bribe

http://www.wsj.com/articles/connecti...ibe-1464822065

Connecticut lost General Electric’s headquarters to Massachusetts earlier this year, so Governor Dannel Malloy is now trying Illinois’s business model: Raise taxes, and then when businesses threaten to leave, write a check to other businesses so they’ll stay. Behold his $22 million taxpayer gift to Ray Dalio’s Bridgewater hedge fund.

Last week the Governor presented Bridgewater with $5 million in grants and $17 million in low-interest, forgivable loans to renovate its headquarters in Westport along the state’s Gold Coast. Mr. Malloy said that other states including New York were trying to lure Bridgewater, and Connecticut couldn’t afford to lose the $150 billion fund or its 1,400 high-income employees. We’ve got nothing against Mr. Dalio, but he could probably dig up $22 million from petty cash.

Debt Continues To Weigh Heavily On State Finances

http://www.courant.com/politics/hc-s...601-story.html

[MrGompers]

Originally Posted by RonaldusMagnus

Connecticut’s Hedge-Fund Bribe
First soak the rich. Then subsidize the richest. Meet the progressive state business model.

When is the WSJ going to do their analysis of the state of Kansas tax experiment ? LOL if progressive/ liberal and regressive/conservative tax polices don't work, what polices do work?

I'm sure the WSJ will get right on that.

They also had the nerve to say that Malloy raised the top tier tax rate from 6.5% to 6.99%. LOL what are the high income earners going to do now ? Holy cow how will they survive a .49% increase. Maybe they will have to go pick up cans on the side of the road to make ends meet. I feel sorry for them.

P.S. when is everyone going to leave CT ? Should be any day now. Can't wait to have the place to myself with traffic free roads. Maybe I can finally drive from Hartford to NYC in 2 hours.

[GoHuskies]

According to the Pew study posted a few weeks ago Connecticut is actually gaining more upper income earners. It's the middle class that is slowly leaving.

[BPt111]

Originally Posted by GoHuskies

According to the Pew study posted a few weeks ago Connecticut is actually gaining more upper income earners. It's the middle class that is slowly leaving.

CT dont like the middle class

[Beeker2211]

Originally Posted by GoHuskies

According to the Pew study posted a few weeks ago Connecticut is actually gaining more upper income earners. It's the middle class that is slowly leaving.

Leaving or rising up? CT has one of the best economic upward mobility stats in the country.

[Henry10]

Originally Posted by MrGompers

When is the WSJ going to do their analysis of the state of Kansas tax experiment ? LOL if progressive/ liberal and regressive/conservative tax polices don't work, what polices do work?

Sound fiscal, and pro-growth policies work.

Secondly, don't join the echo-chamber of left-wing useful idiots, who keep repeating the same thing on Kansas like drones.

Here is another point of view -- Cutting Taxes has helped, not hurt, Kansas | The Maine Heritage Policy Center

And I'll stop because this is off-topic, but not too off-topic since CT is on the other spectrum from Kansas. Comparing Kansas to CT is as relevant as comparing a ballerina to a sumo wrestler.