Raised Bill No. 1241, introduced in the General Assembly and referred to the Committee on Finance, Revenue and Bonding, proposes the establishment of a payroll expense tax and a tax credit for certain employees, as well as the development of a state Social Security program. The bill defines "covered employees" as those who are required to have amounts withheld from wages under section 12-705 of the general statutes, excluding minimum wage earners, state and municipal employees, Indian tribe employees, and federal government employees. "Employer" is defined as one required to deduct and withhold tax from wages under the same statute. The Commissioner of Revenue Services is tasked with calculating an estimated tax filers' effective federal income tax rate by December 1, 2023, and developing a state Social Security program in collaboration with the Comptroller and the Treasurer.

The bill stipulates that starting January 1, 2025, each covered employee will receive a tax credit against the tax imposed under chapter 229 of the general statutes, with the credit being reduced by the rate calculated by the Commissioner. If the credit exceeds the taxpayer's liability, the excess will be refunded. The difference between the full and reduced credit will be deposited into the state Social Security program account, which is a separate, nonlapsing account within the General Fund. Employers will be required to pay a tax of five percent of their payroll expense for each quarter starting January 1, 2025, and they are prohibited from deducting any portion of this tax from employee wages. The bill also includes provisions for the submission of returns by employers and the application of existing tax provisions to the new tax. Regulations may be adopted to implement the provisions of this section. The act will take effect on July 1, 2023, for Section 1 and on January 1, 2025, for Section 2. The purpose of the bill is to establish a payroll expense tax and a state Social Security program, with a corresponding tax credit for covered employees.