Connecticut Is The Latest Blue State Basket Case

It's not news that a number of states have gone from being robust and business-friendly to economic nightmares and business-hostile. Four that come to mind immediately are California, Illinois, New Jersey, and New York. Not that there aren't other states that are or are becoming more hostile to businesses or increasing the tax burdens on their residents to pay for every nice-to-have their legislatures (and the lobbyists) can think of. They seem to think the individual taxpayers and businesses are an endlessly full ATM to be used at the whim of tax-and-spend politicians, not understanding that there is a tipping point where residents and businesses say “Enough!” and either revolt, go Galt, or pull up stakes and move to greener pastures.

One of those states that that can now be added to the four I listed above is Connecticut, once “widely known as the Switzerland of New England.”

The recent passage in Connecticut of a $40 billion budget that seeks $1.5 billion in tax increases and fees, makes permanent a 20 percent surcharge on business income, and for the first time taxes corporations on their foreign earnings has predictably attracted national attention. How did Connecticut, which just over two decades ago had no income tax….so quickly become the third highest-taxing state in the nation, the most indebted on a per capita basis, and, according to Barron's, the worst managed?

It once had a 3% sales tax, one that applied only to certain goods. Now the sales tax is 6.35%, with some higher sales taxes applying to things like car rentals (9.35%), jewelry (7%), clothing (7%), and cars above $50,000 (7%).

Much of the fault must be placed upon the all but one-party rule that has been in place for a couple of decades, much of which was funded by the public employees unions.

It hasn't helped that three of the state's counties – Fairfield, Litchfield, and New Haven counties – have been so-called bedroom communities for Manhattan for decades. The residents there really don't care all that much about taxes as long as they are even a little bit less than what they would pay in New York.

Even the town where the WP Clan's former Connecticut beach house is located, one that had been in the family for 50 years, fell prey to the PYS's (Pretentious Yuppie Scumbags) from New York moving in and driving out families that had been there for generations. (A note: Most of the PYS's moved there and other shoreline towns in New Haven County because they couldn't afford to live in the wealthy communities of Fairfield and Litchfield counties, having only 7-figure incomes rather than the 8, 9, or 10-figure incomes of those required to live in those affluent counties.)

The tax-and-spend policies that have weakened Connecticut may also drive out some of its largest corporations because the cost of doing business is getting prohibitive, if not punitive. “Much has made of the fact that three of Connecticut's largest corporations....have finally expressed their displeasure over this last round of tax increases along with not-so-veiled threats to move their headquarters to friendlier jurisdictions.” They might not just pack up and leave in one fell swoop. As one commenter to the piece linked above put it, they'll locate new operations out of state and expand some of their existing operations in states other than Connecticut. Eventually those corporations – General Electric, Aetna, and Traveler's Insurance - will have a much smaller footprint in the Nutmeg State and only then will they pull up stakes and move the rest of their operations out of Connecticut.

It isn't just businesses that have been suffering under the increasing fiscal burdens being placed upon them, but the local schools as well. School enrollment is a pretty good indicator of the health of a state's economy. Unfortunately, even the better schools in many communities are seeing a decline in enrollment.

A far more likely catalyst for change is the unexpectedly dramatic drop in public-school enrollment. As far back as 2005, the National Center for Educational Statistics predicted a 6.3 percent decline in the state's school census versus a 10 percent increase nationally.

Estimates commissioned since then by individual districts suggest that even towns with highly regarded schools are destined for stunning loses. Lyme will be down 21.9 percent by 2020, Simsbury 25 percent by 2021, Litchfield 18.5 percent by 2022, and Easton 27.4 percent by 2024.

These towns are not poor or even middle-class towns, but rather well off and even they're seeing the effects of the crushing burden of always increasing taxes, profligate spending by the state, and the corruption of one-party rule.

Between that and the wealthiest retirees leaving for states with less confiscatory income and estate taxes, Connecticut is heading towards a downward spiral that will leave most of it looking like its already decaying cities – Bridgeport, Middletown, New Britain, and Waterbury – all once healthy middle class cities. It will go from being one of the wealthiest states in America to one of the poorest, all within two generations. What's sad is that it could have been stopped. It still can, but only if the good people of Connecticut finally wake up and throw the corrupt pandering spendthrift Democrat political machine out of office lock, stock, and barrel.