The golden Fairfield County goose may be dying

Long before income disparity became a watchword in presidential politics, Connecticut has sheltered an enormous gulf between rich and poor.

It is only because of the rich of Fairfield County that the state lands so high on rankings of states by household income.

When you count only the 1-percenters, Connecticut rings all the ranking bells.

And yet we all know that Connecticut — with its collection of hard-luck small cities, some of the detritus of the golden age of long-lost New England manufacturing — is challenged in all kinds of ways.

The difference between parking next to a Bentley in the Whole Foods parking lot in Darien and next to a 15-year-old dented minivan at the Willimantic Ocean State Job Lot could not be more stark.

And, like Robin Hood, Connecticut institutionally has helped bridge this great divide, distributing revenue from its richest residents to its poorest communities.

Through education grants, aid to municipalities and a whole range of state funding and bonding programs, the state smooths things out a bit.

Where would a poor city like New London be without state assistance, funneled from wealthier communities, especially for education?

We certainly know the city wouldn't be planning an innovative all-magnet school system if the state were not expected to pick up a lot of the tab.

And yet the equalization machine run by state government seems to be sputtering, running out of gas or, more specifically, money from rich people.

The system started when Connecticut didn't have an income tax and New York had a big one.

It was the original flame lighting the Fairfield County fire.

Rich New Yorkers, for a tolerable commute, could land in the beautiful environs of Connecticut, with its handsome shoreline, stone walls, charming New England colonials and good schools.

It became a cozy, commutable tax haven for the New York rich.

Now that income taxes are barely less here than in New York and New Jersey, that is much less true.

Gov. Dannel Malloy, a former Fairfield County mayor, knows this formula well and has worked to make sure his state has a slim tax advantage. But it has become so thin as to be almost irrelevant.

And when all those rich Fairfielders finally retire, they have begun to head in increasing numbers to states like Florida, where there is no income tax at all. You can even keep the Connecticut manse, as long as you stay out of the state six months a year.

This is pretty routine tax planning advice in Fairfield County.

Not only do you want to escape income tax but, more important, Connecticut's considerable estate tax.

Estates of more than $10 million, at a rate of 12 percent, hit the $20 million maximum pretty fast. You can buy a lot of nice Florida property for that kind of money and then leave it to your kids.

I wonder, for instance, whether Republican candidate and donor Linda McMahon, who already has a Florida address, will keep voting in Connecticut once she retires.

Complicating this deterioration of the Connecticut Robin Hood tax system is the general decline in the appeal of Fairfield County.

It's not just millennials who prefer city life to the suburbs.

Just ask the executives at General Electric, who are trading their boring suburban office complex in Connecticut for the bright lights and glamour of Boston's Seaport District.

Expensive New York City real estate has been roaring the last few years. It's a red hot market.

Lavish Fairfield County estates? Not so much.

You have more older Fairfielders heading out and fewer young rich New Yorkers interested in coming in.

The latest budget downgrade last week was blamed on declining income tax revenues.

It's part of the new budget reality that Malloy warned of in his remarks at the opening of the General Assembly last month.

And like the fierce storms accompanying global warming, it is apparently hitting faster and more powerfully than anyone expected.

This is the opinion of David Collins.

Twitter: @DavidCollinsct


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