Tax commisioner denies 'deal' with hedge fund executive
The New York Times, in a story last weekend about the consequences of the rich moving to tax-free states, reported that Kevin Sullivan, commissioner of the Connecticut Department of Revenue Services, made a deal with one state-fleeing hedge fund executive.
The story suggested Sullivan agreed to let the executive, who moved to a lower-tax state, visit Connecticut more than the six months allowed by law for those who don't pay taxes here.
In exchange, according to The Times story, the executive would leave more of his company's high-paying jobs in Connecticut.
"(Sullivan) said the state worked out a deal to keep the jobs in exchange for an agreement about the owner's regular visits to family and friends in Connecticut," The Times story said.
It went on to explain that homeowners who spend more than 183 days in the state are considered residents for tax purposes.
This is the same six-month tax rule that wealthy residents of Fairfield County know as well as they know their way to the Whole Foods in Darien.
I was so shocked to read that the revenue commissioner was making tax "deals" that I called him to ask what was going on.
He told me he did not make a deal, that, indeed, the law would not give him that flexibility.
Sullivan, a lawyer, led the state Senate as president pro tempore before serving as lieutenant governor from 2004 to 2007.
Gov. Malloy named him commissioner in 2011, waving him through the magic pension-enhancing revolving door for former legislators.
So, I asked the commissioner this week, were you misquoted in the Times?
No, he said, the writer mischaracterized what he said.
Odd, I thought.
The New York Times quotes you as saying you essentially made an illegal tax deal with a rich hedge fund executive, and you don't want to say you were misquoted?
And if it wasn't a deal, I asked him, what was it?
The conversations — the commissioner said they were not negotiations — were held with the executive to clarify the law about how much visiting would be allowed if he were not paying taxes to the state.
Couldn't any accountant explain that to him?
No, the commissioner said. You'd be surprised, but many can't, he said.
"There's a great deal of anxiety about it," he said.
The story in The Times was written by Robert Frank, the CNBC wealth editor. He did not return a specific phone message I left for him about the Sullivan quotes.
The commissioner said he couldn't identify the former taxpayer The Times said he had made a deal with. He scoffed when I asked.
Sullivan also was quoted in The Times as saying Connecticut now tracks the quarterly estimated tax payments of 100 of its top earners.
He said the state is holding "discussions" with some of them in the hopes of keeping them in the state.
"I'm not saying we're sending fruit baskets and get-well cards," the commissioner was quoted as saying. "But we are trying to send a more welcoming message to the high earners as a group."
I don't have a problem with lawmakers making and adjusting tax policy and tax rates in a way to keep high-earning taxpayers from moving out of the state.
Indeed, I think Gov. Dannel Malloy, a former Fairfield County mayor, has tread this fine line very carefully, making sure that Connecticut income taxes do not become more onerous than those in New Jersey or New York.
Indeed, the state's fiscal crisis might be traced in part to the flight of the rich.
The Times story by Frank said the move to Florida by one New Jersey billionaire could cost the state hundreds of millions of dollars.
Still, I find it creepy that Connecticut is hand-holding its richest residents, having talks, discussions, negotiations or whatever you want to call them, that might lead to understandings about their tax bills or, well, deals — whether you call them that or not.
It is also worrisome that it is happening in secret and the public will never know the outcome.
This is the opinion of David Collins.
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