Connecticut Governor Dannel Malloy proposed lowering a business-tax increase by $224 million after companies including General Electric Co. said they would consider moving.
The second-term Democrat said in a statement Friday that he will ask the legislature to let him make spending cuts of as much as 1.5 percent across the board, which would offset the reduced revenue from companies. Lawmakers’ latest budget plan had called for higher computer and data processing taxes and Internet levies.
“Even as we have one of the lowest effective corporate tax rates in the nation, these steps are being made to protect Connecticut’s long-term interests, because I believe in doing everything possible to expand our economy,” Malloy said.
GE, along with Aetna Inc. and Travelers Cos., had decried the higher taxes. The news that GE was looking for a new home has already spurred Republican Texas Governor Greg Abbott to write to executives suggesting the Lone Star State as an alternative.
Fairfield, Connecticut-based GE urged Malloy and lawmakers to take action on the governor’s proposal.
“The governor and the legislature should do the right thing for small and large businesses and the citizens of Connecticut to improve the economic vitality of the state,” said Seth Martin, a spokesman for GE, in an e-mail Friday.
Texas isn’t alone in wooing the companies.
The Indiana Economic Development Corp. ran a full-page advertisement in the Wall Street Journal June 10, telling the companies “friends don’t let friends pay higher taxes.”
States and localities have long battled to attract companies, approving about $50 billion in tax breaks annually, according to estimates by Kenneth Thomas, a political scientist at the University of Missouri-St. Louis. The deals are billed as a way to spur expansion, add jobs and retain companies.
Connecticut lawmakers approved a tax increase for the state’s wealthiest residents and a $500 million increase in corporate tax liabilities, in an effort to patch a deficit.
The legislature is scheduled to meet this month to pass a package of bills needed to enact the budget. At that time, lawmakers can take up Malloy’s request to lower the tax increases. Meanwhile, the governor is leaving for a European tour beginning Saturday to drum up new corporate business.
Cynthia Michener, an Aetna spokeswoman, said the Hartford, Connecticut-based insurance company is reviewing the changes proposed by Malloy.
“While the Connecticut business climate continues to be very challenging, this announcement is a step in the right direction,” Michener said in an e-mailed statement.
Judy Senechal, a spokeswoman for Travelers, said the Hartford-based company will be monitoring the legislature’s action on Malloy’s proposal.
“We are pleased the governor has listened to the concerns expressed by the business community,” Senechal said in an e-mailed statement. “We care deeply about the state of Connecticut and are committed to ensuring that it continues to be a top-quality place to live and work.”