The rich of Fairfield County are safe with Gov. Lamont
New York Gov. Andrew Cuomo might have been speaking for Connecticut Gov. Ned Lamont when last week he explained why he won't succumb to calls to close budget gaps with new taxes on the rich.
"Tax the rich, tax the rich, tax the rich ... (then) the rich leave," Gov. Cuomo said this past week in a news conference that addressed his state's new $2.3 billion budget shortfall.
Cuomo was addressing the new federal tax law that is frustrating blue state governors because of its cap on the deductibility of state and local taxes, which are often higher in blue than in red states. Cuomo said he has anecdotal evidence that the cap is already driving the rich out of New York to states like Florida, with low or no income tax.
The worry is the same in Connecticut, where the recent departure of a few very rich individuals has moved the revenue meter, even before the federal tax code changed.
The new tax law has only aggravated a situation that for years has driven tax policy in the states with suburbs around New York City, including New York, Connecticut and New Jersey. All three have traditionally been careful to not let their tax rates become uncompetitive, since it would be easy to drive rich taxpayers over state lines to suburbs with lower tax rates.
The rich don't have much recourse when their federal taxes go up. But more than anyone else, they can often change states when the tax bill jumps.
Enter Connecticut's freshman governor, Ned Lamont, who has yet to show his budget balancing cards but surely must be hearing the calls from many in his party, which now decisively controls the General Assembly, to make the rich pay a bigger share of the shortfalls.
Lamont's predecessor, Dannel Malloy, was a Fairfield County mayor who carefully walked the line of not overtaxing the rich to the point of expulsion. Lamont is genuine Fairfield gentry, with a household income that apparently puts him at the top of the rich heap, so presumably he has heard plenty from his highly taxed neighbors.
Lamont's gubernatorial campaign featured a regular guy visiting diners and driving his own car. But some of his first appointments have been rich executives who have hardly come from the world of regular folk.
His new economic development team includes the retired chief executives of PepsiCo and Webster Bank and a titan of Wall Street, a partner of Goldman Sachs, a Greenwich resident who had a front-row seat for the mortgage securities disaster that drew the country into the Great Recession.
He later backed away from it, but one of the budget balancing ideas Lamont floated was a tax on groceries and medicine, regressive enough to horrify progressive Democrats.
We are close to the moment of truth, Feb. 20, when Lamont must finally lay out his first hand at budget poker.
He managed to get elected without making many specific budget and tax promises. He is boxed in a bit by his commitments to a lot of public policy and programs that are not cheap. Even if his promises to revive the Connecticut economy come to pass, that is not going to produce a balanced budget anytime soon.
Stay tuned to hear the Lamont budget plan.
One thing I expect to hear from him is an echo from the governor of New York: Tax the rich and they'll leave.
This is the opinion of David Collins.
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