From PowerPoint to policy BY ALEXANDER SOULE
casoule@westfairinc.com “Well, I hope to God we are done with PowerPoint,” said Kevin Sullivan, co-chairman of a task force examining Connecticut’s Byzantine labyrinth of business taxes and incentives. Almost. Presenting six months of work on a dozen or so PowerPoint slides, a task force determined that Connecticut taxes similar businesses “inequitably” on the basis of their corporate structure, and said Gov. Dannel P. Malloy should push for a simplified code that better stimulates business investments. If an imperfect document still requiring revisions at the 11th hour – one bullet that referenced “used businesses” was edited to the intended “mixed-use businesses” (“this is not focused only on consignment shops,” Sullivan said tongue in cheek) – panelists hope their efforts will lead to a more perfect tax code, advising Malloy to allow up to six years to enact changes. “I would be uncomfortable – since we are responding to the governor’s executive order – kind of giving him a series of steps
to go through,” said Sullivan, who is commissioner of the Connecticut Department of Revenue Services (DRS). “We put in front of him what we think are good ideas … and then (he can) pick and choose the sequence.” The question becomes whether Malloy will undertake radical change as he attempted this year with his education bill, or a more gradual approach to avoid spooking businesses aghast at any overhaul that obliterates assumptions on their future balance sheets. “Our ultimate goal here is to provide a tax structure in the state that stimulates the economy, that provides a competitive place for businesses to do their work and is fair and equitable to all taxpayers,” said Catherine Smith, co-chairwoman of the task force and commissioner of the Connecticut Department of Economic and Community Development. “We’re demonstrating that we’re going to make the right set of combinations of these. We’re not going to pick off all the ones that … only help large manufacturers, for example; but we’re going to try to find a mix that helps consumers so they have more disposable income to spend, that helps businesses so they have more disposable income … and that makes us as competitive
as we can possibly be.” Panel members included Chris Bruhl, CEO of the Business Council of Fairfield County in Stamford. Among specific recommendations, the task force suggested the state scrap its tax on gifts and cap estate taxes and create “safe harbors” for part-time residents, acknowledging the impact personal income taxes have on corporate executives deciding whether to live or establish an office here. The panel recommended Connecticut eliminate a $250 biennial “business entity” tax, which Sullivan estimated this month about half of small businesses in the state have not bothered paying. Instead, the panel suggested the state require any company doing business in Connecticut to file electronically with the state, while paying a fee, with Sullivan previously having suggested setting at $120 – possibly resulting in more revenue for the state given the delinquency rate that Sullivan stated the DRS is seeing. The Connecticut secretary of state currently fines companies that do business here without having registered with that office. The panel did not publicize any fine that
might be levied on companies that do not register and pay under a new system. The task force also recommended the state: • phase out Connecticut’s practice of enacting surcharges on corporate taxes; • provide a simplified, “EZ” tax form for smaller businesses; • sunset tax credits that generate few or any takers; • “phase down” sales taxes on consumers; • expand access to tax credits to all forms of business; • track and rationalize tax credits based on their performance; and • create safe harbors for charitable activity and limited business activity. The task force recommended the state clarify the current definition of “engaging in business” in Connecticut to ensure out-ofstate businesses do not enjoy any advantages compared to their rivals with locations here, and said the state should create a working group to study the taxation of e-commerce. The panel said the state should also study business property taxes, which it otherwise did not address in its recommendations as it lies primarily within the jurisdiction of municipalities.
Malloy addresses Stamford businesses BY JENNIFER BISSELL
jbissell@westfairinc.com
R
inging in the Stamford Chamber of Commerce’s 25th anniversary, Gov. Dannel P. Malloy addressed members and state politicians Sept. 27, touting the state’s economic recovery since the recession. “We’re making progress,” said Malloy at the Hilton Stamford Hotel. “But we’re not nearly far along enough yet.” Mentioning a laundry list of accomplishments, Malloy focused on programs aimed at growing businesses in the state. The Small Business Express Program, which gives loans and grants up to $100,000 to companies with fewer than 100 employees, has given about 200 companies access to capital. Nearly 1,400 companies have applied. Spurring job creation and growth, the program has had a “buoyant effect” in the state’s cities and towns, Malloy said. The First Five program, which provides large businesses with incentives and tax credits in exchange for pledges to stay in the state and create at least 200 additional jobs, has also been a success, he said. About 15,000 jobs have come out of the program
and approximately $1.4 billion in capital has been invested in the state, Malloy said. The program has now been extended from five to 15 companies. Malloy also emphasized a third program, the state’s Bioscience Connecticut initiative, which aims to position the state as a leader in the growing bioscience field. Earlier in the day, Malloy announced Durata Therapeutics Inc. will be relocating from New Jersey to Branford, as reported Sept. 10 by the Fairfield County Business Journal. The move will bring 80 new fulltime jobs to the state in exchange for $2.25 million in grants. Over the next 10 years, the total capital investment in Connecticut is expected to be $13 million. “Bioscience is a great strength of the state,” Malloy said. The University of Connecticut is playing a significant role in the initiative. Bioscience Connecticut is expected to provide 3,000 construction jobs annually through 2018 and by 2037 generate $4.6 billion in personal salaries and 16,400 permanent jobs, according to the Connecticut Center for Economic Analysis, a nonprofit organization based at UConn. The only area of improvement needed
that Malloy stressed was the state’s educational system. Schools are no longer producing the skilled workforce businesses need and are falling behind other states’ schools in terms of test scores and graduation rates, he said. In urban areas, half of all students aren’t graduating and the other half is not getting the education they should have, he said. “We’ve worked very hard to offer opportunities for Stamford business to grow,” said Jack Condlin, Stamford Chamber of Commerce president. “This recession has really been a challenge … but we’ve still done very well.” Stamford has emerged from the recession as a key player in the state’s economy and has been chosen as the home for many large relocating businesses in the last year, with the Stamford Chamber of Commerce the fastest growing chamber in New England according to its website. Looking at the growing number of residential buildings being built, Condlin said he expects the city to replace Bridgeport as the largest city in the state five to 10 years from now. “It’s happening more slowly with the recession,” Condlin said. “(But) it will happen.”
2 Week of October 8, 2012 • Fairfield County Business Journal a division of Westfair Communications, Inc. • www.westfaironline.com