Connecticut divided over GOP tax plan

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President Donald Trump holds an example of what a new tax form may look like during a meeting on tax policy with Republican lawmakers including House Speaker Paul Ryan of Wis., and Chairman of the House Ways and Means Committee Rep. Kevin Brady, R-Texas, right, in the Cabinet Room of the White House, Thursday, Nov. 2, 2017, in Washington. less
President Donald Trump holds an example of what a new tax form may look like during a meeting on tax policy with Republican lawmakers including House Speaker Paul Ryan of Wis., and Chairman of the House Ways … more

Photo: Evan Vucci / Associated Press

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From left, Rep. Richard Neal, D-Mass., the ranking member of the Ways and Means Committee, Sen. Ron Wyden, D-Ore., the ranking member of the Senate Finance Committee, House Minority Leader Nancy Pelosi, D-Calif., and Senate Minority Leader Chuck Schumer, D-N.Y., respond to the Republican tax reform plan during a news conference on Capitol Hill in Washington, Thursday, Nov. 2, 2017. less
From left, Rep. Richard Neal, D-Mass., the ranking member of the Ways and Means Committee, Sen. Ron Wyden, D-Ore., the ranking member of the Senate Finance Committee, House Minority Leader Nancy Pelosi, … more

Photo: J. Scott Applewhite / Associated Press

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House Ways and Means Committee Chairman Kevin Brady, R-Texas, joined by Speaker of the House Paul Ryan, R-Wis., right, discusses the GOP’s far-reaching tax overhaul, the first major revamp of the tax system in three decades, on Capitol Hill in Washington, Thursday, Nov. 2, 2017. less
House Ways and Means Committee Chairman Kevin Brady, R-Texas, joined by Speaker of the House Paul Ryan, R-Wis., right, discusses the GOP’s far-reaching tax overhaul, the first major revamp of the tax system in … more

Photo: J. Scott Applewhite / Associated Press

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WASHINGTON — While large corporations and national business organizations gave the newly released Republican tax plan boffo reviews, a prominent Connecticut business trade association was not so sure.

“On the corporate side, yes, it’s positive,’’ said Joseph McGee, vice president for policy at the Business Council of Fairfield County. “But overall when you look at it from a business-and-labor perspective, it is very, very troubling.’’

The bill eliminates the deduction for state income taxes and caps the property-tax deduction at $10,000, a potential hardship for residents of a high-cost state like Connecticut.

It maintains the mortgage-interest deduction on existing home loans, but places a $500,000 cap on new ones.

Connecticut has a history of being a donor state, one that sends more in tax money to Washington than it gets back in federal spending. Studies peg the return rate at 83 cents of every tax dollar sent to the federal treasury.

For McGee, the key question is what the Republican tax plan — if enacted — would do to that balance.

“With all these changes, are we still a donor state?’’ he said. “How has this changed the relationship? That’s what I can’t figure out.’’

And although he said he shies away from “back-of-the’’ envelope calculations, he added: “My gut sense is when you put in loss of the (state and local tax) deductions, you’re looking at massive increase of what Connecticut sends to the federal government.’’

But large corporations praised the Republican plan overall.

“This is a watershed moment,’’ said a statement from United Technologies, based in Farmington. “We applaud the release of this bill and look forward to reviewing the details.’’

According to 2015 Internal Revenue Service extrapolated by the non-partisan Tax Policy Center, 661,940 Connecticut taxpayers — 37.6 percent of the total number — deducted state income taxes. The average was $13,222 per return.

For property taxes, 658,520 Connecticut residents sought deductions that year, 37.4 percent of the total. The average per return was $7,635.

The proportions of Connecticut filers claiming state-and-local tax deductions is 9 percentage points higher than the overall U.S. average of 28 percent.

As the name implies, the GOP “Tax Cuts & Jobs Act’’ adheres to the deeply held Republican-conservative position that tax cuts for corporations and the wealthy create jobs.

But Connecticut lawmakers on Capitol Hill said they doubted the premise.

Noting the proposed reduction of the corporate tax rate from 35 percent to 20 percent, Rep. Rosa DeLauro, D-Conn., said large businesses would use the extra cash for shipping jobs overseas and stock buybacks.

“It’s not about creating jobs,’’ she said.

dan@hearstdc.com

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