The State of Connecticut has a justifiably notorious financial reputation: with bloated defined-benefit and health-care expenses for intractable unions, corrupt government, and socially and politically divided constituency, fiscal reform proves extremely difficult.
You have roughly three political groups in Connecticut: moderates-conservatives who range from working poor to upper-middle class and live in suburbs or rural areas, section 8-working poor of all races in conurbations and poor urban areas, and the wealthy in their enclaves.
Solution #1: State-wide Windfall Property Tax
The Connecticut State Government, desperate for funds, sought to impose an additional property tax on personal property, specifically vehicles.
Moderate-conservatives(pickups, RV’s, and small boats) voting blocs aligned with Wealthy(Ferrari’s, planes) voting blocs against the motion, and it was defeated.
Solution #2: Kill the Rich: Higher Income Taxes on Elite & Gift Taxes
Connecticut raised income taxes on the elite’s incomes, approaching 7% (6.99%).
Connecticut also added a gift tax of 12%, with only a $2m exemption (Federal exemption is almost three times as high).
Outcome: Epic Failure
Dozens of super-wealthy residents of Connecticut fled to other states. Many other older residents also fled, because they did not want to give over 1/10th of their Estate to a most undeserving Hartford mafia.
This policy received the public derision it merited, and it was eventually admitted it cost the State lost future tax revenue!
Solution #3: Carbon Tax: Hurts so Good
Many wealthy want, but dare not say it in public, an economically regressive(SHORT TERM), socially progressive tax.
The “Carbon Tax” fits this bill.
It’s been estimated that a $20/ton Carbon Tax in Connecticut would raise about $660m per year.
To give you an idea of how much revenue this is, Greenwich, CT, the wealthiest town in Connecticut, had a revenue of $433m in 2016.
A “Carbon Tax” would add 1.5 Greenwich’s to the revenue of Connecticut, and not a single billionaire would leave because of it.
Outcome: In Progress
When Hartford tried to impose an additional state-wide personal property tax to plug some more fiscal holes, note that the rednecks allied themselves with the elite to stop it. That put two voting blocs, Redneck and Elite, against the Residue, and so the Residue lost.
The Carbon Tax has the political support of the Wealthy and the Working Poor, and so the Moderates-Conservatives alone will not be able to stop it.
New York and all of New England are all drafting Carbon Tax policy, right now, in unison, and will implement it with inter-state coordination.
Conclusion: Carbon Tax Buys Time
The Carbon Tax not only provides an incentive for ecologically-conscious development and behavior, but it also buys time for municipalities facing impossible fiscal challenges.
Those who would invest in municipal bonds of these Blue States should account for a carbon tax into their model.