A Plan to Borrow $165 Million to Waive Income Taxes, Support Programs in Poor Areas of the State

State Rep. John Fonfara spoke in support of the measure to bond aid for low-income communities in Connecticut (Credit: CT-N)


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Middle class residents living in low-income neighborhoods may no longer have to pay state income tax.

The tax waiver is part of a $165 million bonding package aimed at low-income parts of the state, and would also grant towns as much as $3 million each for qualifying projects converting commercial property to mixed-income housing, to workforce development, preschool programs, improvement of school programs, infrastructure or gun violence prevention. 

The package was approved by the state’s Finance Committee on Wednesday and would apply to rural and urban areas in census tracts where at least 30 percent of the residents live below the Federal Poverty Line — $30,000 a year for a family of four. 

The cities of Bridgeport, Hartford, New Haven, Meriden, Middletown, New Britain, Tolland, Waterbury and Windham all contain census tracts that would qualify for the waiver, as well as a number of more rural areas. 

State Sen. John Fonfara, D-Hartford, said the goal of this bill was not to encourage people to move to these census tracts, but to keep people who were born and raised in a community from moving away once they can earn enough to live somewhere else.

“In very, very high-poverty communities — or in this case, census tracts … we export success stories on a regular basis,” said Fonfara. “In an effort to retain that talent and newfound wealth, to be able to chip away at the concentration of poverty and all of its negative effects — on people, on children — this is one small step.”

The income tax waver would apply to individuals earning $125,000 a year or less – reduced from an initial cap of $250,000 – and $200,000 for married couples. 

Each qualifying municipality applying for the grant money would receive $3 million per fiscal year for three years. The program would then be evaluated for success with an option for the governor to recommend extending the funding for an additional three years. 

State Rep. Holly Cheeseman, R-East Lyme, the committee’s ranking member, told CT Examiner in a call that she supported the modified bill, but unscored the need to evaluate the programs to make sure they were getting the intended results. 

“We have a number of initiatives to improve the lives and reduce poverty and make all our neighborhoods livable and successful. This is another one intended to do that,” said Cheeseman. 

Not everyone on the committee supported the proposal.

State Rep. Devin Carney, R-Old Saybrook, pushed back against the idea of basing an income tax waiver on where people live. He said that under this law, people making $125,000 who live in a low-income area might not pay income tax, while people who make $65,000 but live in a wealthier area, would still have to pay.  

“I just cannot support anything that would eliminate income tax on folks making six figures simply based on where they live, while someone making significantly less than that would not if they don’t live there,” said Carney. 

He also objected to the fact that other municipalities, like New London, Stamford, Groton and Derby, were not included in the list of potential census tracts. 

“My concern with this is we are basically erasing income tax for something that has nothing to do with income but based on where you reside,” said Carney. “I could understand a property tax credit or something like that for where you live. But for me income doesn’t seem to align with residence in this situation.” 

Gov. Ned Lamont also spoke against the idea at a press conference on Thursday. 

“We’ve increased the Earned Income Tax Credit by almost double in the last four years, based upon our current proposal, and I think that will mean folks here in Hartford and elsewhere are predominately getting a refund or not paying any income tax,” said Lamont. “I like to do broad-based tax cuts that apply to everybody, not those who live within this zip code, but not the guys across the street.”

The bill still has to be approved in the full legislature.

Emilia Otte

Emilia Otte covers health and education for the Connecticut Examiner. In 2022 Otte was awarded "Rookie of the Year," by the New England Newspaper & Press Association.