Malloy Says Tax Cut Not Directed at Hartford-based Aetna

Hartford Courant (CT)

Feb. 01--On the same day that Gov. Dannel P. Malloy called for a tax cut this week for insurance companies, officials said that Hartford-based Aetna Inc. has been talking about moving its headquarters to Boston.

The insurance giant has been looking for as much as 400,000 square feet of space that could handle as many as 1,600 employees, officials said.

Malloy, though, said the proposed tax cut on insurance premiums was not targeted at the iconic company as a sweetener to keep its workers in the capital city.

"It is not specific to The Aetna, although I've had discussions with The Hartford and The Aetna and CIGNA, '' Malloy told reporters. "I don't go into what we're talking about, but I spoke with [Aetna president] Karen Lynch within the last 10 days and speak to representatives on a regular basis. I'm not going to go into it further, but my most recent discussion was with Karen.''

The insurance tax cut would save the industry an estimated $11 million next year and $22 million the following year in Connecticut. The cut involves lowering the current tax rate on insurance premiums from 1.75 percent to 1.5 percent. But it would also help Connecticut companies that operate in other states that must face a "retaliatory'' tax that involves paying the higher rate of the two states. For example, Iowa has a rate of 1 percent, but Connecticut companies are still currently paying 1.75 percent to Iowa because that is the rate in Connecticut.

The proposal also involves some changes in tax credits for insurance companies that would make up for the money lost to the state through the tax cut.

"On a largely cost-neutral basis to our state government, we're in a position to offer relief to tax burdens in other states, which is a substantial benefit to all of the insurance companies that are otherwise subject to that tax,'' Malloy said.

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