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    Thursday, April 18, 2024

    Would expanding tax breaks stop exodus from Connecticut?

    The Malloy administration challenged some of the contentions in my Dec. 20 column, “Connecticut must reverse exodus.” In particular, a spokesman said I had it wrong on young people and seniors leaving the state. I expressed concern in the column about young post-college graduates leaving in search of opportunity and retirees taking the wealth they accumulated here in Connecticut to places with warmer climates and lower taxes.

    Devon Puglia, director of communications for Gov. Dannel P. Malloy, said the statistic I used, showing a net migration of those aged 20-to-34, “omits in-migration from outside the country. Including in-migration adds another 31,714 immigrants in 2014 for a net gain of 23,500 for 20 to 34 year olds.”

    Puglia also pointed to “in-migration of immigrants” as giving lie to the perception that Connecticut is losing senior residents. When “in-migration of immigrants,” is included, the Malloy administration contended, “there were 56,902 more people in the ages 65 to 69 in 2014 than in 2007.”

    I’m not sure if this is cause for celebration. Though I could not track down hard numbers, logic suggests that even if the immigration numbers provided by the administration hold true, the nature of the people exiting still represents a net loss in terms of wealth and buying power for Connecticut.

    In any event, since that column ran came another story, this one confirming that in the most recent federal fiscal year, Connecticut was one of seven states to see a net loss of population, losing 3,876 people, or minus 0.11 percent, for a total population of 3,590,886.

    Readers had plenty to say about the column — it had 56 comments when I last checked — and in addition to the governor’s office, it also caught the attention of a group trying to use tax policy to keep more retirees in the state.

    Chapter 158 the National Active and Retired Federal Employee Association of New London County is asking that the first $50,000 ($60,000 if married filing jointly) of all retiree pension incomes be exempt from state income tax.

    Michael W. Gouzie, of Gales Ferry, a member of the association and Arthur F. Miller, the vice president of the local chapter, wrote a letter to the editor on the topic. They have sent their proposal to state Sen. Mae Flexer, chair of the Standing Committee on Aging, and Sen. Catherine A. Osten of the 19th District, which includes Montville, Ledyard and Norwich. Osten is also on the Aging Committee. Both are Democrats.

    Gouzie, noting he is “75 next month,” worked about 40 years at the Naval Underwater Sound Laboratory in New London, and relocated when it moved under a new name to Newport, R.I. Gouzie retired in 2000. He called current tax policy unfair.

    Currently, Social Security income is fully tax exempt under state law for single filers whose adjusted gross income is less than $50,000, as well as joint filers whose AGI is less than $60,000. And as of tax year 2015, 10 percent of state teacher retirement fund benefits become fully exempt, increasing to 25 percent for 2016 and 50 percent for 2017.

    Military pensions are 100 percent exempt.

    Non-military federal employees do not participate in Social Security and so get no benefit from these tax breaks. In contrast, Massachusetts and New York provide 100 percent exemption on federal pensions, as do 12 other states.

    The organization has 31,083 active and retired federal and postal employees in Connecticut. The 14,916 retirees in that group receive net monthly payments of $35 million. The current tax system gives them incentive to take the money and haul out of here.

    The proposed cap would mean hundreds of millions of dollars in lost tax revenues, but the money that would stay in the local economy if pensioners don’t flee could potentially more than make up for it. It’s an idea worth exploring.

    Paul Choiniere is the editorial page editor.

    Twitter: @Paul_Choiniere

    p.choiniere@theday.com

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