Connecticut passes $40 billion biannual budget, hikes taxes

Reuters News
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Posted: Jun 04, 2015 11:15 AM

NEW YORK (Reuters) - Connecticut lawmakers passed a $40 billion biannual budget late on Wednesday, hiking taxes by $1.2 billion over two years, despite protests from some of the state's biggest corporations.

General Electric Co, Aetna Inc and Travelers Cos Inc as well as the state's Republicans slammed the tax hikes.

GE and Aetna, which both have corporate headquarters in the state, said they would consider leaving Connecticut.

The plan keeps spending growth under 4 percent annually in both years, with Democratic governor, Dannel Malloy, touting a "historic investment" in roads, bridges, rail and other infrastructure slated to reach $10 billion over five years.

The budget raises the top rate of income tax to 6.99 percent from 6.7 percent, cuts property tax credits and boosts the sales tax on luxury items to 7.75 percent from 7.0 percent. That includes automobiles over $50,000, jewelry over $5,000, and clothing and accessories over $1,000.

The spending plan also extends a temporary 20 percent surcharge on corporate tax for an additional two years and introduces new rules that mean companies headquartered in Connecticut must calculate their tax base on group-wide income, not just on affiliates connected with the state.

The bill also increased and expanded a tax on data processing services from Oct. 1.

(Reporting by Edward Krudy; Editing by Lisa Von Ahn)