Connecticut’s Turnaround (In a Bad Way)


Folks are starting to track the effects of taxpayer flight in Connecticut, now, too.  Here’s Red Jahncke in Investors Business Daily:

The higher earners are departing. Connecticut is the only state where the adjusted gross income of emigrants exceeds the AGI of remaining residents.

Between 2011 and 2013, about 95,000 taxpayers left the state. Their average AGI was $112,000, versus $101,000 for the remaining 1.4 million taxpayers. Only 78,000 taxpayers moved into the state, bringing an average AGI of only $86,000. Data are not yet available for 2014.

The outlook is dire. Connecticut’s budget is about $18 billion. Just four months into this fiscal year, it fell into a deficit, requiring a special legislative session to adopt $350 million in short-term fixes.

For various projects that I’ve undertaken for the RI Center for Freedom & Prosperity over the past few years, I’ve watched Connecticut’s trends out of the corner of my eye, and there was a conspicuous reversal of the state’s fortunes around 2009 or so.  I’m sure people more familiar with policy debates in that state could come up with an explanation readily, but my sense is that the state government tried to borrow and spend its way out of the recession and fell off a cliff.

From the fourth quarter of 2009 to the second quarter of 2015, Connecticut’s state and local tax collections increased 76%, according to the U.S. Census, which was the 14th biggest increase in the country.  Rhode Island is next on the list, still rounding to 76%, but we were already trailing the country in just about everything, anyway.  So, whereas Rhode Island has only sunk a bit deeper into its problems, Connecticut has taken a tumble.

Public policy really does matter.  Unfortunately, it’s extremely difficult to get people to think about it clearly and objectively.

  • Rhett Hardwick

    Where are the high earners going? Are they dispersing, or clustering elsewhere?

    • OceanStateCurrent

      A mix of things. Wealthy people are better able to shuffle wealth around, so they wind up moving to more helpful places on paper. Some of them hide their money better to get below thresholds. Others just become less wealthy.

      • Rhett Hardwick

        Makes me think of some people I know who probably qualify as “wealthy”. They spend most of the year in RI, but moved their residence to Florida years ago. Gauging by the number of their friends who have done the same, I suspect the total is substantial.

        • ShannonEntropy

          I know a few well-off peeps who live here but use a business or relative’s addy in Mass for tax and health insurance purposes

          Health insurance is *way* cheaper there … plus you can use their health care providers

          Heck ,, when Lincoln Almond needed surgery a few yrs back he went to Boston (( nice ‘vote’ for the quality of health care here ,, Linc !! ))

          Why shouldn’t us hoi polloi Rhodents be able to do the same thing ?? In the UK this is known as playing the Postcode Lottery … similar to moving to Barrington if you have kids in school and want to properly educate them

  • Max

    Allegedly, Rhode Island was on GE’s short list. One reason cited was ‘reforms’ in public sector pensions. Anyone here buying it.?

    • Rhett Hardwick

      If you can remember the “de-regulation” started in the 80’s, it is obvious that RI is geographically well suited for servicing New England. Add to that Rte. 95 and the railroad, we have a lot to offer a manufacturer. I suppose the same can be said of lower CT and S/E Mass. Having drawn Fidelity here, have we tried to leverage that? I understand that things are becoming uneasy in Charlotte, perhaps we should send a delegation to prospect there.

    • Tommy Cranston

      Scott McKay, Maureen Moakley and Ian Donnis. End of list.