Republican states may be red and Democratic states blue but money is green. That’s what the state of Connecticut is learning to its dismay:
The blue-state paragon’s two-year budget of $40.3 billion includes a $1.5 billion net increase in taxes and fees. The top marginal individual tax rate rises to 6.99% from 6.7%. But the biggest blow is making permanent a 20% surtax on a company’s annual tax liability—a tax on a tax—and for the first time taxing Connecticut companies on their world-wide income, rather than what they earn in the state.
General Electric, long a Connecticut fixture, protested that the state is “retroactively raising taxes again,” which “makes businesses, including our own, and citizens seriously consider whether it makes any sense to continue to be located in this state.” Aetna, the giant health insurer and pillar of Hartford, said the bill would “undermine the competitiveness” of companies and “lead to an exodus of jobs and business from the state.’’
The biggest shock came Thursday when GE CEO Jeffrey Immelt told the company’s Connecticut employees that he has “assembled an exploratory team to look into the company’s options to relocate corporate HQ to another state with a more pro-business environment.”
Mr. Immelt, usually the consummate corporate diplomat, said Connecticut had raised taxes on GE five times since 2011. “I believe we should pay our fair share and that all of us should give back to our communities,” he wrote. But he added that “we can compare Connecticut with other states where small and large businesses have a better environment to thrive and compete.”
President Obama name Mr. Immelt to head his Economic Advisors Board. I guess we know what his advice for improving the global economy is now.
GE isn’t the only company strategizing its exit from the Nutmeg State. Aetna is, too. You can raise the rates but that doesn’t guarantee you’ll receive more revenue.
GE and Aetna are two of Connecticut’s largest employers. Here’s a a list of some of the others. I’m guessing that those that are portable are considering boogying out about now, especially those that have substantial overseas earnings.