Some will argue that comparing Connecticut to Tennessee is like comparing champagne to beer. Connecticut is a northern state, which continues to be No. 1 in per capita personal income at $38,287 while Tennessee is a southern state ranking 34th in per capita personal income at $24,427. The comparison is useful, however, when we look at how Connecticut business has fared with an income tax.
Opponents of an income tax in Tennessee predict the Tennessee economy will go to hell in a hand basket if an income tax is passed.
They argue there will be a mass exodus of business out of the state (to where is a good question since there are only a handful of states which do not have an income tax.) They claim Tennessee will lose its ability to recruit new businesses since not having an income tax (and having cheap labor) is one of our state's main lures. They claim an income tax is just the tip of the iceberg, that state spending will reel out of control and that taxes will go up and up. The Connecticut experience has proven otherwise.
Connecticut instituted an income tax in 1991 after a protracted struggle not unlike the one we are facing here in Tennessee. Right-wing talk show hosts ranted and raved and upwards of 40,000 protesters assembled on the lawn of the Capitol in Hartford after the income tax was passed. But despite the uproar, Connecticut has prospered since 1991.
It is noteworthy that Connecticut Business and Industry Association's (CBIA) support of the personal income tax was instrumental in its passage by the Connecticut legislature.
Before the adoption of an income tax, Connecticut was losing jobs, businesses and population.
Today, Connecticut is the headquarters for fifteen Fortune 500 companies, including General Electric, Aetna, and United Technologies.
Several of the world's major pharmaceutical companies have large facilities located there including Bayer, Bristol-Myers Squibb and Pfizer.
The corporate income tax rate has dropped from 13.5 percent in 1991 to 7.5 percent, saving corporations $498.6 million.
Exports have risen from $1.49 billion in 1991 to $2 billion in 1999.
Connecticut has regained all of the jobs it lost in the late 1980s to early 1990s recession, the unemployment rate stands at a record low 1.9 percent and the state boasts a net gain in new business formations each year.
This year's budget surplus is estimated at roughly $500 million, of which $22 million is going into economic and workforce development initiatives.
The governor has also proposed spending $50 million for various transportation improvement projects, which is a very high priority of the Connecticut Business & Industry Association.
Another $33 million will be used to implement an educational technology initiative, which will rewire schools and provide computer equipment