Executive On State Panel: Ending ‘Death Tax’ Could Boost Economy

Feb. 01--A state panel advising the General Assembly on how to reverse Connecticut's economic decline is considering a revamp of state taxes, including ending the estate tax, a business executive said Wednesday.

James Loree, the chief executive officer of Stanley Black & Decker Inc., is leading efforts by the Commission on Fiscal Stability and Economic Growth to advance pro-growth policies.

"We've just been stuck in a rut since the '08-09 recession," he said at a meeting of the commission

Loree called for policies that attract and retain high-income individuals.

"I know that won't sit well with some people," he said. "Some people don't think that's a good idea, but fortunately or unfortunately that's what we need to do in this state."

For example, Loree said Connecticut's estate tax is "really kind of a poke in the eye for the wealthy here."

"Most people I talk to who are leaving the state mention this as one of the key factors," he said. "If you're trying to attract wealthy people, it's not a very good policy."

"I personally would opt to eliminate (it) in total," he said. "If you could keep those folks around, that would be a positive."

"But at minimum, we would hope to align that with the new federal structure," Loree said.

States and the federal government tax transfers of property and assets of an estate that are bequeathed in a will or provided as a gift. The amount of taxation varies and typically is tied to the dollar value of the estate. For years critics have said that the state's "death tax" is driving wealthy residents to states such as Florida, which doesn't have an estate tax. In the process, Connecticut has lost billions of dollars in potential taxable income.

Congress and President Donald Trump enacted a federal tax overhaul in December that doubled the estate and gift tax exemption to $10 million, effective through 2025.

In Connecticut, the tax will be in line with the federal exclusion for estates of those who die in 2020 and later, said a spokesman for the state Department of Revenue Services.

In the budget law that Gov. Dannel P. Malloy signed last October, he said changes related to the state estate tax will make Connecticut more competitive with neighboring states "and make us a more desirable place to work and live."

Connecticut relies on high net worth taxpayers for a portion of revenue, which takes a hit when the super-rich move to states with no income tax such as Florida and Texas.

The estate and gift tax generated $218.7 million in revenue in the state's 2016-17 budget year, or about 1 percent of the annual state budget.

Other proposals being considered by the commission include phasing in reductions in the individual income tax and broadening the state sales tax to include items now exempt and possibly raising the tax by about 1 percent from the current 6.35 percent, Loree said.

In addition, to offset the lower income tax, a "modest payroll tax" of 1 percent or 2 percent could be considered, he said. Acknowledging the political headwinds for such a proposal, Loree said, "There are challenges with that."

In addition, members of the commission "very well may recommend some form of a gas tax increase" to generate revenue to upgrade transportation systems, he said.

The overall impact on revenue has to be neutral or slightly positive "or it makes no sense here in this environment with all the other problems that we have," Loree said.

Loree said commission members look to Florida, North Carolina and Texas as states to emulate in changing the mix of state revenue.

The commission, which includes several company chief executives and others, has been meeting for several months to consider recommendations to the legislature to boost economic growth and end Connecticut's chronic budget deficits.

Its report is due to the legislature March 1.

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