Connecticut Democrats are hell-bent to implement one progressive tax plan or another.

Last week, a news story broke that the Democrats have a plan for a “radical change in state finances.” They want to replace the state income tax with a novel payroll tax, some even wanting to do so as soon as next January 1.

No other state has such a plan. Finance Committee Democrats introduced a four-page skeleton of a bill on April 24, immediately announced hearings with minimum prior notice, held them on the 29 with only seven people testifying. But the bill itself didn’t advance.

Then, 10 days later, Senator John Fonfara (D–Hartford), chairman of the Finance Committee, was quoted in the news story, saying “We need to do this. We can do this. We have a month.” In a month? Really?

Fonfara continued in his excitement, “We will not need a capital gains tax.”

What he really said, unless you believe Rome was built in a day, is that the Democrats will need a capital gains tax.

Ironically, the Democrats’ capital gains tax plan would be just as radical a change. It would be the first-ever, state-level surcharge on gains atop a state income tax.

The 2 percent surcharge for high-earners would be unlikely to raise the $262 million in revenue that Democrats project, but it would be virtually certain to drive more high income individuals out of a state already suffering an exodus.

Capital gains are unlike all other forms of income. They are taxable only when appreciated assets are sold. Investors can and do defer sales to avoid paying taxes — until a looming tax increase triggers a stampede of gains-taking at the expiring lower rate.

History provides proof. Twice in the last half century, federal tax rates on net long-term capital gains have increased dramatically. Here’s how investors behaved over the three years spanning the increases.

In 1985, with a 20 percent capital gains tax in place and little talk of tax changes, individuals reported $166 billion in net long-term capital gains. In 1986, after enactment of a sharp increase beginning the following year, gains doubled to about $319 billion as investors took advantage of the expiring 20 percent tax rate before the new 28 percent rate took effect. In 1987, only $140 billion in gains were reported. Naturally, capital gains tax revenue followed the same pattern, doubling to $50 billion in 1986 before plummeting in 1987.

The same dynamic was repeated over the 2011-2013 period. Reduced first under President Clinton and then further under George W. Bush, the capital gains rate was 15 percent in 2011, when investors reported $376 billion in net long-term gains. In late 2012, they took $610 billion in gains as they anticipated the year-end passage of the Obama tax hike, which took the rate for high earners to 23.8 percent in 2013. In 2013, investors reported only $462 billion, despite a whopping 30 percent gain in the stock market that year.

Naturally, stock market and economic performance influence gains-taking, not just tax rates. In 1987, there was the famous stock market crash, after which followed years of a relatively weak market and economy producing only modest gains. In contrast, since 2012, the market has been on a joy ride, with the S&P 500 Index doubling.

With both the market and the economy about to set records for their longest periods of uninterrupted advances, the market outlook is unclear. What is certain is the Democrats’ proposed gains tax would trigger a surge in gain tax revenue before the tax hike took effect and depress revenue thereafter. It would accelerate future revenue into the present, narrowing the budget deficit this biennium and widening it in the next. That’s called kicking the can down the road.

The real problem, however, is that a state-level capital gains tax surcharge is completely uncharted territory into which no other state has ventured. Actually, nine states tax capital gains at lower rates.

Individual high-earners could move anywhere else to avoid a surcharge. Moreover, the surcharge would sit atop Connecticut’s high income tax rate, the 11th-highest in the nation, and Connecticut is one of only six states with an inheritance tax. So, high-earners are taxed heavily on their regular salary earnings, prospectively even more heavily on investments made with their earnings, and, finally, on their estates if they die in Connecticut. Why stay?

Employees of the state’s huge investment industry pay an enormous share of state income taxes. Several hedge fund founder-managers, including Steven Cohen, Ole Halvorsen and Clifford Asness, own large personal stakes in their gigantic funds. Each pays huge taxes, mostly on investment-classified income. These individuals could move their personal tax residences to another state quite easily and still manage their investment firms — arguably, for 183 days by computer, telephone and teleconference from the other state and for 182 in person onsite. Why stay?

Indeed, why leave employees behind?

Recently, Asness retweeted a news story about Democrats’ proposed capital gains surcharge and asked the Twitterverse: “Do people generally prefer living in Texas or Florida?” Those fast-growing states don’t have income, capital gains, or inheritance taxes − or any newfangled payroll tax.

Red Jahncke (Twitter: @RedJahncke) is president of The Townsend Group Intl. LLC, a Connecticut business consulting firm.