Middle-Class Tax Cut Advances From Finance Committee
At a glance:
Senate Bill 513 would give middle-income workers access to federal tax relief currently available only to business owners, with program targeting families earning over $50,000
Workers voluntarily reduce salary in exchange for larger tax cut, increasing take-home pay without cost to employers or state
Bill passed Finance Committee with bipartisan support, Sen. Honig says middle-class families “still struggle to make ends meet every month”
Middle-income earners in Connecticut could save more than $1,100 annually under a bill proposed by Sen. Paul Honig, D-Harwinton, and advanced Monday by the Finance, Revenue and Bonding Committee with bipartisan support.
Senate Bill 513 would create a new program giving workers access to the same federal tax relief Connecticut business owners already receive through the pass-through entity tax. Honig said the proposal addresses a gap where middle-class families miss out on tax breaks designed to help people get ahead.
“A really important part of this bill is that it targets people who normally don’t qualify for some of our benefits programs, whether those be services or tax breaks that are income-constrained,” Honig said during Monday’s meeting.
“So, here, middle class people-- someone who makes $100,000 a year can get meaningful tax relief, whereas with our other programs they probably would not qualify, but we know that these middle class folks still struggle to make ends meet every month, so it’s, it’s important that they get some benefits of this as well,” Honig said.
The legislation allows participating employees to take a voluntary salary reduction in exchange for a larger tax cut, resulting in increased take-home pay. The program is designed for working and middle-class Connecticut families earning more than $50,000 annually.
Sen. John Fonfara, a Hartford Democrat who co-chairs the finance committee, said New York state has adopted a similar policy. Fonfara said he expected the new initiative to be popular with Connecticut taxpayers.
“It doesn’t take much to see how employees would opt for that option which will generate more take-home for them,” Fonfara said.
In a press release, Honig said the proposal delivers on his commitment to make Connecticut more affordable without adding costs to employers or the state budget.
The bill now heads to the full Senate for consideration before the legislative session concludes May 6.
By Hugh McQuaid