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lection seasons often focus on
the major national races, and
2012 is no exception. Presiden-
tial and congressional races receive
the vast majority of media coverage,
diminishing the perceived importance
of state elections. Ironically, state leg-
islature elections can be just as (if not
more) important in their impact on
constituents' daily lives and the busi-
ness environment. Laws passed by the
Connecticut General Assembly gov-
erning tax and regulatory policy signifi-
cantly impact CPAs' practices and the
clients they serve.
State Elections Matter
State elections are extremely impor-
tant in Connecticut for two reasons.
First, there is great potential for change
in the political climate, as the entire
General Assembly is up for re-election
every cycle. Combine the lack of at-
tention that state races garner with the
lower levels of voter turnout the re-
sult is that elections are often decided
by slim margins. Consequently, small
groups can have a meaningful impact
on the political process through their
involvement. The Connecticut General
Assembly is particularly ripe for turn-
over this year; in addition to the entire
assembly being up for election, be-
tween the House and Senate, there are
28 seats without incumbents running.
Second, Connecticut has a biannual
budget process and the new legisla-
ture will be adopting the budget for
fiscal years 2014-2015. Despite recent
substantial increases in taxes and fees,
the state is projected to end the 2012
fiscal year with a sizeable deficit. As a
result, the process of developing the
2014-2015 budget will undoubtedly in-
clude debate over the size and scope
of government, especially as it relates
to taxation and regulation.
These are critical issues to CPAs and
their clients, as they directly relate to
the affordability and ease of operating
a business in Connecticut. The state
needs to seriously address its debt
and deficit without damaging the al-
ready compromised competitive busi-
ness climate of the state.
Debt and Deficit Solutions
Long-term debt and deficit solutions
require sound tax and regulatory pol-
icy. Taxation and regulation that pro-
mote economic growth and a competi-
tive business environment should be
based on three principles: neutrality,
stability, and simplicity.
Neutrality fosters growth by allowing
capital to flow efficiently. The current
tax code is filled with measures that
attempt to influence the taxpayer's
activities. Various deductions and
credits influence a broad array of
personal and business issues ranging
from debt versus equity financing
to what type of employee benefits a
business might offer.
troublesome for small businesses. Many
regulations are riddled with exceptions
and finely detailed clauses, forcing
business owners to spend unproductive
paid advertisement
Political Focus:
Why We Need to
Zoom In on the State
By Michael S. Hill, CPA