The editorial board of The Wall Street Journal recently penned an op-ed lamenting the downward economic spiral that Connecticut is experiencing, after decades of high taxes and deficit spending. Perhaps in a fleeting moment of clarity, WSJ seems to have correctly identified the source of the lost economic progress, namely liberal policies.
High taxes have repressed economic growth, swelling budget deficits that Democrats have ‘solved’ by raising taxes again and again.
WSJ notes that Connecticut used to attract high earners from across the region, until the imposition of a 4.5 percent flat income tax in 1991 that eventually morphed into a progressive income tax. Since then the top rate has been hiked, first from 5 to 6.5 percent, then to 6.7, and finally to 6.99 percent.
In addition to tax hikes, Democratic Gov. Dannel Malloy also imposed a 10 percent surtax on corporate income exceeding $100 million, in a state with the highest corporate tax rate amongst its neighbors.
The result has been what some, including WSJ, liken to the “lost decade” of economic stagnation in Japan. Connecticut’s GDP shrunk 9.3 percent since 2007, and $8.8 billion in income has fled the state. Had growth simply kept with the national average, Connecticut’s economy would be $50 billion larger and state revenue $3.9 billion higher.
According to WSJ, Connecticut, like many states, is facing an uphill battle with its public employee pensions, thanks largely to profligate spending on public worker benefits.
As the unpopular Malloy leaves office, Democratic governor-elect Ned Lamont enters having doubled down on liberal policies while on the campaign trail. Lamont blamed transportation and corporate welfare for the exodus of capital and talent while pushing infrastructure and tourism spending.
The likely result of Lamont’s election is a continuance of the state’s downward trend. Should reasonable minds ever regain control of Connecticut’s levers of power, they should look to the Texas model of low taxes & regulations coupled with spending restraints; or, simply put, they should reference their own history.