Back in 2015 I wrote about my hometown, Norwich, Connecticut, a luckless town at the intersection of three rivers: the Thames, the Shetucket, and the Quinebaug. Today I’m expanding the discussion to include the whole state, which is allegedly in crisis.
What compelled me to write about Connecticut today was the news that Governor Dannel Malloy’s approval rating had slipped to 24%, still above Dilma Rousseff, but tied with John Rowland, the previous governor of Connecticut, who actually went to jail.
Malloy was always an unpopular governor, though popular enough to win reelection against Tom Foley, an unsympathetic but hapless Wall Street Republican with a long career in private equity. Foley lost, but the fact that Richie Rich private equity guy almost beat Malloy in true-blue Connecticut sort of illustrates Malloy’s unpopularity.
If you ask the Wall Street Journal’s opinion page, it will tell you that the problem is taxes. Connecticut, according to the WSJ, didn’t even have an income tax until 1990, but they didn’t waste any time jacking it up. It currently stands at 6.99% for incomes above $500,000, which, I might add, is conspicuously lower by one basis point than the 7% tax rate in South Carolina (I’ll tell you about South Carolina politics another time).
Connecticut used to be a tax haven of sorts. Now it is the opposite.
The thing with state income taxes is that some are high and some are low, and people are free to move around the country, so if you raise taxes high enough over here, people will move over there. And that’s what is happening to Connecticut: the state is depopulating very quickly, with folks moving south and west.
I talk to ex-Connecticutians all the time. They are like survivors of some great, big natural disaster, like a hurricane, huddling together for warmth.
But it isn’t just income taxes. The overall tax burden in Connecticut, including property taxes and sales taxes, is extremely high. Property taxes have skyrocketed just in the last 10 years to among the highest in the nation. And Malloy expanded the range of goods and services covered by the sales tax to just about everything—most gallingly, Connecticut tried to tax veterinary services.
No matter how you slice it, when you look at the 50 states with respect to their overall tax burden, Connecticut is always near the top.
But California has high taxes, much higher than Connecticut, and people still like to live there. Apart from the obviously better weather in California, Connecticut has a hyperactive regulatory state, with licensing requirements covering hundreds of businesses.