Finance, Revenue and Bonding Committee
JOINT FAVORABLE REPORT
Bill No.: Senate Bill 443
AN ACT CONCERNING THE TAX INCIDENCE REPORT, TAX INCIDENCE
ANALYSES AND THE DISCLOSURE OF RETURNS AND RETURN
Title: INFORMATION.
Vote Date: 4/5/2022
Vote Action: Joint Favorable Substitute
PH Date: 3/21/2022
File No.: 565
Disclaimer: The following JOINT FAVORABLE Report is prepared for the benefit of the
members of the General Assembly, solely for purposes of information, summarization and
explanation and does not represent the intent of the General Assembly or either chamber
thereof for any purpose.
SPONSORS OF BILL:
Finance, Revenue and Bonding Committee
Co-Sponsors:
Rep. Josh Elliott, 88th District
Rep. Michael A. Winkler, 56th District
Rep. Kate Farrar, 20th District
Rep. John "Jack" F. Hennessy, 127th District
Sen. Marilyn V. Moore, 22nd District
REASONS FOR BILL:
This bill (1) requires additional data to be included in the tax incidence report, (2) requires the
Commissioner of Revenue Services to provide incidence impact analyses of certain legislative
bills or proposals, and (3) authorizes the disclosure of returns or return information to certain
members of the General Assembly.
Real-time analysis of tax incidence during the legislative process would lead to improved
understanding of policy impacts prior to policy changes.
RESPONSE FROM ADMINISTRATION/AGENCY:
None expressed.
NATURE AND SOURCES OF SUPPORT:
The following people testified in support of the bill, stating that Connecticut is the wealthiest
state in the country, but is unfortunately among the most unequal. They reference the 2014
state tax incidence analysis performed by the Department of Revenue Services (DRS) showing
that the bottom 50% of earners in the state contribute 23.6% of their income in taxes, however,
the top 1% contribute only 7.5%. A follow up report released earlier this year showed that low-
income households now pay up to 26% of their income in taxes, middle-income households
are also paying more as much as 15.5%, yet the ultra-wealthys effective tax rate has
remained flat. They testified that Connecticuts tax system is even more regressive now than
it was in 2014, thus proving that tax fairness in Connecticut is getting worse and that it is
important that the state act soon.
Jody Barr, Executive Director, AFSCME Council 4
Thomas Connolly, Member, Connecticut Communist Party
Ed Hawthorne, President, Connecticut AFL-CIO, Member, Recovery For All Coalition
Margaret Henderson, Co-President of the Board of Trustees, Unitarian Universalist
Congregation of Danbury, Member, Recovery For All Coalition
Josh Pawelek, Reverend, Unitarian Universalist Society, Member, Recovery For All Coalition
Travis Woodward, President, CSEA SEIU Local 2001, Member, Recovery For All Coalition
John Filchak, Executive Director, Northeastern Connecticut Council of Governments testified
in support of the bill, stating, "tax incidence studies provide policymakers with the information
to understand comprehensively how proposed changes in their tax laws would affect the
amount of taxes owed by different income groups in their populations or how total tax
obligations are distributed across income groups at a particular point in time. Without this type
of analysis states are limited to an understanding of determining how much proposed tax cuts
will cost or tax increases will raise and estimating the total amount of revenue that will be
generated by their current tax structure. Recently, the Department of Revenue Services
released Connecticuts second ever tax incidence study, which you were briefed on by DRS.
The recently released report confirms the disparities shown in the 2014 report - providing a
very valuable resource. Notably and although in accordance with current law, the new tax
incidence study does not address, as the 2014 study did, the gross earnings tax, insurance
tax, estate and gift tax and the insurance tax. The Commissioner noted in his briefing on the
new tax incidence study that Minnesota is the gold standard for tax incidence studies. Their
approach is one that Connecticut should emulate and learn from as a means to garner the most
information possible on our tax system and its impacts. Senate Bill 443 would move our state
strongly in that direction."
Seth Freeman, Professor, Capital Community College, President, Congress of Connecticut
Community Colleges testified in support of the bill, stating, "the purpose of a tax incidence
report is to provide lawmakers with historical data to enable reasonably accurate forecasting
and inform tax policy decisions. The General Assembly can make real transformational
progress in addressing Connecticuts inequities by using coherent, historical data and
forecasting to inform their tax policy decision making. Senate Bill 443 will ensure that future
tax incidence reports are detailed and uniform, giving policymakers the tools they need to right
size Connecticuts unequal tax burdens."
Page 2 of 4 SB-443
Patrick Gibson, Deputy Executive Director for Data, Policy, and Special Projects, School and
State Finance testified in support of the bill, stating, "The School and State Finance Project
supports the proposed new tax incidence analysis for legislative proposals contained in Senate
Bill 443, which will provide real-time analysis of tax incidence during the legislative process and
lead to improved understanding of policy impacts prior to policy changes. We support
additional statutory requirements to 1) specify the timeline to which the Department of Revenue
Services should adhere when fulfilling this type of request, and 2) in the interest of transparency
and effective policymaking, to publicly share such analyses, when complete, on the website of
the Connecticut General Assembly in a manner similar to the publication of fiscal notes
prepared by the Office of Fiscal Analysis."
Alex Knopp, Retired State Representative, Connecticut General Assembly testified in support
of the bill, and requested that the committee consider adding a new recommendation to the
incidence factors to include, "the incidence impact of any relevant federal tax offset in any
future tax incidence analysis. Analyzing the impact of the federal tax system on the incidence
of the Connecticut revenue system is necessary and important because the Connecticut tax
system does not exist in isolation. According to the Minnesota Tax Incidence Study, the
incidence of a tax is determined not by who pays it in the first instance, but by who bears the
burden of the taxs final resting place after any tax shifting has occurred. The Connecticut
report similarly calls this the Final Incidence of any tax.Tax-making policy in Connecticut
has always been significantly influenced by attempting to maximize federal transfersBy
itemizing their state and local tax deductions (called the SALT deduction), taxpayers will have
successfully shifted part of the final incidence of these taxes to the federal government,
thereby reducing their net or final state tax burden."
Bette Marafino, President, Connecticut Alliance for Retired Americans testified in support of
the bill, stating, "I draw your attention to lines 17 to 19 of this bill which, singles out the need to
report the tax burden on senior citizens. As you already know, seniors live on a fixed
incomeThe Connecticut Alliance hears from members that the most often reason for leaving
the state is not a warmer climate, but the promise of lower taxes. One of my retired friends told
me before she moved to North Carolina that shed rather stay here in Connecticut because her
children and grandchildren are here, but her fixed income will serve her better in a state where
taxes arent so high. We dont begrudge that Connecticut has billionaires and multi-millionaires,
but we do believe that attention should be paid to a deep analyses and disclosure of tax returns
and disclosure information."
Patrick R. OBrien, PhD, Research and Policy Fellow, Connecticut Voices for Children testified
in support of the bill, stating, "while we support Senate Bill 443 as written, we have three
recommendations to strengthen the bill and further increase tax transparency. We
recommend: (1) requiring the DRS to include in the tax incidence report all taxes that generate
more than $20 million in revenue; (2) requiring the DRS to include in future tax incidence reports
(A) an estimate of the impact of Connecticuts tax gap on the average effective tax rate by
income decile, and (B) an estimate of the overall size of Connecticuts tax gap; (3) requiring
the DRS to develop the tax incidence report entirely in-house or release a report detailing the
additional capacity that is necessary."
Stuart Savelkoul, Chief of Staff, American Federation of Teachers, Connecticut testified in
support of the bill, stating, "extreme income inequality and a lack of fairness in our states tax
system represent significant obstacles for Connecticut residents to achieve any measure of
Page 3 of 4 SB-443
shared prosperity. Senate Bill 443 seeks to ensure that going forward, legislators will have
easy access to the facts and figures that will allow them to make decisions on these economic
issues that have proven to be controversial. Perhaps that controversy will dissipate when
legislators are armed with the relevant evidence that paints a detailed and accurate picture of
Connecticuts economic landscape."
NATURE AND SOURCES OF OPPOSITION:
Donald Antilla, Resident, Southbury, Connecticut testified in opposition to the bill in the
strongest terms possible. Mr. Antilla thinks this bill is a slow and steady intrusion into the private
status and affairs of citizens.
Linda Dalessio, EdD ACNP, BC testified that, "this committee has no right to any of my or
others private Federal or State income data."
Eric Gjede, Vice President of Government Affairs, Connecticut Business Industry Association
opposed Section 3, stating, "Section 3 would allow certain lawmakers, upon written request, to
obtain individual tax return information for the purpose of evaluating and formulating tax policy.
While well-formulated tax policy is in the interest of the state, allowing access to individual
returns would undermine taxpayer privacy and the confidentiality of a voluntary tax reporting
system. Further, access to individual return information could be used out of context to target
specific taxpayers."
David Godbout, Connecticut Resident opposed the bill on the grounds that the current session
of the Connecticut General Assembly is illegal, in breach of Article 3, Section 16 of the State
Constitution.
Carol Platt Liebau, President, Yankee Institute testified, "the proposal contained in section 3
allowing state lawmakers to inspect individual personal income tax returnswould facilitate
unjustifiable invasions of privacy. There is no useful information that lawmakers can glean from
individual tax returns that cannot already be provided by the Department of Revenue Service
or the Office of Fiscal Analysis in the form of statistical reports. Consultation with other state
tax administrators will show that Connecticut would be an extreme outlier in granting access to
tax records of this nature, which is otherwise tightly controlled in every instance. Election to
public office does not bring with it an entitlement to the most personal details about ones fellow
citizens. And legislation that enables politicians to obtain such access is profoundly flawed,
opening the door to abuse and weaponization of sensitive information, with the concomitant
chilling of free speech rights."
Kathleen Randall, Resident, Avon, Connecticut was opposed to Senate Bill 443 because, "it
would allow legislators to access private citizens tax returns. Not only is this bill an
infringement on our individual liberties, but it could also contribute to fraud and identity theft, as
social security numbers, bank account numbers, financial information, and email addresses
are included on tax returns. Tax policy should not be targeted to specific taxpayers or devised
in response to individual returns."
Reported by: Jean Holloway Date: 4/19/22
Page 4 of 4 SB-443


Statutes affected:
Raised Bill: 12-7c
FIN Joint Favorable Substitute: 12-7c
File No. 565: 12-7c