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5
Connecticut CPA
g
November/December 2013
It seems like every spring, after the end of
tax season, CPAs talk about the number
of their clients who have left Connecticut
to establish residency elsewhere. This is
not a recent phenomenon. It's a growing
trend over the years.
On several occasions, CTCPA has sur-
veyed its approximately 6,000 mem-
bers on this topic at the request of the
state Department of Revenue Services
(DRS) and shared the results with the
DRS. During the last couple of years,
we've also surveyed our own member-
ship on this very issue as it pertains to
their own future plans. [CTCPA Editor's
Note: The results of this survey appear
on page 6.] Although the results of our
membership surveys are not yet broad
enough to be deemed statistically val-
id, they do show a trend developing.
From 2012 to 2013, the number of
CPAs responding "yes" to the fol-
lowing question doubled: "Have you
considered relocating to a state other
than Connecticut?" Meanwhile, the
number of respondents who said they
have made an out-of-state real estate
investment increased by 250 percent
from 2012 to 2013.
That's significant.
What does all of this anecdotal infor-
mation mean?
It is an indication that Connecticut
taxpayers with financial wherewithal
are choosing to relocate rather than
suffer the economic consequences of
remaining in Connecticut. Without a
compelling reason to stay, like family
ties, retirees and others with means
are voting with their feet and ultimately
their wallets.
Some may argue that there are also peo-
ple choosing to relocate to Connecti-
cut, particularly New York residents. It is
true that Connecticut (and New Jersey)
continue to attract individuals from New
York who want to remain close to New
York City, but want to escape the even
higher tax burdens levied by the Empire
State and its localities. I would counter
by asking a key question: If people have
relocated once to find a lower tax loca-
tion, why would they necessarily be sat-
isfied as they continue to evaluate their
tax environment?
Connecticut is only relatively attractive
tax-wise to New York.
On an absolute basis, Connecticut re-
mains one of the highest-taxing states.
And it's not just this tax or that tax; it's
the aggregate income tax, property
tax, sales tax, succession tax, gasoline
tax, etc. We pay the price, dearly, for
every aspect of our Connecticut life-
style, cradle to grave.
Our elected representatives regularly
compare Connecticut taxes with those
of neighboring states and conclude
that our taxes aren't out of line. The
problem is, lawmakers are looking at a
region that is out of step with almost
the entire country. Of the 10 states with
the highest state and local tax burdens
per capita, seven (including Connecti-
cut) are within a three-hour ride by car
from Hartford.
A number of studies by others, includ-
ing the Tax Foundation, a Washington
D.C.-based think tank, support the an-
ecdotal information coming from Con-
necticut CPAs. People with wealth are
moving from higher-taxing states, to
states with lower tax burdens.
One year ago, USA Today reported
Connecticut was the third-highest-tax-
ing state in the nation. More recently,
CNBC rated Connecticut the second
worst "tax friendly state for retirees"
in a report that concluded "seniors
looking to stretch their hard-earned
savings further might do well to cast a
wider net (beyond Connecticut)."
As the so-called "silver wave" of retir-
ing Connecticut Baby Boomers review
their bank accounts, they will likely be
reviewing their geography as well.
By Arthur J. Renner, CPA, CTCPA Executive Director
This piece originally appeared in the October 14, 2013 Hartford Business Journal.
Connecticut Taxes Encourage
Wealthy to Flee