Talking taxes with ideological and political adversaries
I was talking state revenue, meaning taxes, last week with the ranking member of the Appropriations Committee, Republican state Sen. Paul Formica, and the woman who wants to replace him in the 20th District, Democrat Martha Marx.
One expects to be talking more taxes with a Democrat named Marx, but a Republican? Formica, a businessman, is pragmatic. Since Connecticut cannot print money like the feds, it will need to find more revenue.
I dialed up the three-term senator after catching a story in the Hartford Business Journal that quoted Formica.
“There’s going to be a big need for revenue. I’m sure there is going to be a big discussion on sin taxes in the long session starting in January,” Formica told reporter Joe Cooper.
Sin taxes are so named because they are assessed on things we arguably shouldn’t be doing, such as smoking cigarettes, gambling our money away, using intoxicants.
“The term’s outdated,” Formica said when I called to ask which sins he had in mind. “It was the reporter’s term, not mine. I was just responding with the word he used.”
Sinful or not, the Republican is open to finding some new tax revenue. The question is, whose revenue?
Connecticut, which operates on a $21 billion budget, will face a projected deficit of $3 billion, give or take a few hundred million, when the newly elected legislature convenes Jan. 19. The 20th District senator, whoever that ends up being, will head to Hartford to represent the towns of Bozrah, East Lyme, Montville, New London, Old Lyme, Old Saybrook, Salem, and Waterford. This is a rematch for Formica and Marx, who faced off in 2018.
Marx agrees that more revenue must be part of the math in balancing the state budget. And both candidates agreed that gaining new revenues by allowing online sports betting, casino games and legalized recreational marijuana should be on the table. But Marx said if sin taxes mean ever higher taxes on cigarettes and six-packs, taxes that disproportionately hit the working-class, she wants no part of them.
They disagreed strongly about raising taxes on the richest state residents. Marx said the state’s wealthiest can well afford to pay more in taxes, through higher income and capital gains fees, calling it only fair. Formica dismissed that as a bad idea.
“Let’s start taking care of the poor and the working-class people who pay a far higher percentage of their income on taxes than do the wealthy, when you factor in all the purchases they make,” said Marx, a visiting nurse and chair of the Democratic Town Committee in New London. “There is no reason the wealthiest should not contribute more.”
“I know my opponent is a big proponent of tax increases,” said Formica, who owns and operates Flanders Fish Market in East Lyme, and is a former first selectman there. “The thing is, those 1 percenters can pack up and move a lot easier and especially now, when you can pick up a computer and take your whole business with you to a friendlier tax haven.”
Marx dismissed this as an excuse for not making the wealthy pay up. She said the wealthy are not going to abandon their homes, the state’s better schools and colleges, or its great health system to save a few tax bucks.
I’m not so sure about that. On other hand, some wealthy are escaping to Connecticut from New York and other large urban centers after their pandemic experiences. So maybe higher taxes won’t move them.
Unlike many in his party, Formica is open to considering the legalization and taxing of marijuana, but is not yet sold on the idea. A couple of years back his tie-breaking vote allowed a marijuana bill to move forward out of the Appropriations Committee. He did so not because he had made up his mind, but because he wanted to give a chance for the debate to continue, he said. But unlike other New England states where pot is now legal — Massachusetts, Vermont and Maine — Connecticut’s elected officials have resisted.
“How do we manage the supply? The supply for medical marijuana barely keeps up with demand now. How do you provide law enforcement, as to driving, when there is no active test. Does use and abuse increase? In what form can it be sold and how much will it be taxed? There are a lot of questions and it won’t be a huge moneymaker for the state,” Formica said. “Don’t count on that.”
But, he said, the reality is that it is now legal to buy in nearby states and Connecticut citizens are buying, their taxes going elsewhere.
Marx counted herself as “100 percent in favor,” but added any marijuana legalization bill has to address and expunge the records people accumulated in the past for what would become a legal activity.
“And we have to make sure that the communities that suffered the most because of unfair marijuana laws get the opportunity to gain from the business opportunities, not the rich, not the big corporations,” she said.
Both candidates agreed that online sports betting and casino gaming, another potential source of new tax revenue, should be made available and that discussions to make that a reality should begin with the tribes that own and operate the state’s two casinos, Foxwoods Resort and Mohegan Sun. The tribes contend their casino compact with the state, giving them exclusive gaming rights, would include sports betting.
Gov. Ned Lamont wants to cut the state lottery and off-track betting parlors in on the sports betting market, a position that has led to tribal resistance and a stalemate.
“The governor seems to be against the casinos somehow,” Formica said.
Marx, asked if the Democratic governor is to blame for no sports betting agreement, took a pass.
“I don’t know enough about that, but I do know we need to go back to and work with the tribes,” she said. “They’ve been big job creators and send a lot of money to the state.”
From slot revenues, not sin taxes — if there’s a difference.
Paul Choiniere is the editorial page editor.
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