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glj^ T H K HERALD, Sat., Dec. 5, 1981 Abate's 'Response to the Budget Challenge' Chance of more Manchester, Conn. snow Tuesday Here is a copy of ‘‘A Response to the Budget the local level. We should not remove a major calling would be limited to the amount of rental income. Thus, states as it is to the federal government, but a policy Mon., Dec. 7, 1981 Challenge." the alternative budget proposal made this card of our state taxing system which attracts new the trustee or executor could not use rental tax losses which stimulates revenue generation may be quite — See jaage 2 25 Cents week by Rep. Ernest Abate, D-Stamford, speaker of the business to Connecticut — the absence of a state per­ resulting from depreciation to offset, or reduce, taxes different from one state to another, and from one or. Connecticut House of Representatives. sonal income tax. due on the other forms of income. more states or regions to the country as whole. HanrliPBlrr ItpralJi Surely we cannot look again to revenue gimmicks and The Fiduciary Tax must be broader than the current In fact, the same principle of revenue generation may require one approach at the federal level and another Connecticut And The New Federalism fiscal baridaids. The crisis will not be solved by issuing capital gains and dividends tax in order to prevent cat licenses, expanding lotteries or taxing meals under her in Connecticut. We are not the first state legislature to be called into trustees and executors from avoiding payment of the $ 1. tax by switching assets from dividend areas such as For example, the accelerated depreciation of cor­ special session to resolve a state budget crisis, but we But our options are not limited to raising revenue. We stocks to interest areas such as bonds, or switching porate assets is designed to promote investment in new may be the first called to face such an enormous can and we should make cuts in the budget. Surely there assets to real property to produce rental income. plant and equipment, thus generating more jobs and in­ challenge. We are challenged to balance a budget tilted are areas of fat and inefficiency we can trim and im­ Although this tax base would be new to Connecticut, creased productivity, resulting in more income which in by heavy debt and strained by unprecedented expense. prove, without severely impacting the lives of those who the concept is already in effect in our neighboring states turn will result in more tax revenues. That, at least, is And we are challenged to forge a consensus within a depend on state government services. Rather, we must which have already adopted a state income tax. the premise. Leak reveals legislature deeply divided by personal conflict, differing begin to look closely at productivity levels within state Therefore, the state will not only be closing a loophole in At the federal level it is essentially immaterial where political loyalities and opposed economic theories. in the country that investment takes place; but does that Yet the challenge that confronts us during this special government with an eye towards reducing duplication its current taxing system, it will also be eliminating a which is rampant in our social service delivery system state tax haven for those taxpayers who reap the mean that Connecticut should help finance the decision session goes beyond our problems within the House and as against dollars targeted for deliberable services. benefits of estate and trust income. of a Connecticut corporation to build a new plant in the Senate chambers. Our grappling here is part of a larger The central question of this special session must be: REVENUE IMPACT: $80.7 Million in FY 1981-82. Sun-Belt by blindly giving that corporation the benefit struggle, a struggle now ongoing throughout the nation “Can we repeal the so called unincorporated business $88.8 Million in FY 1982-83. on its Connecticut taxes of accelerated depreciation of as state governments adjust to a reversal in America’s tax and the fourth base corporate tax and still close the that investment? takeover bid political order. deficit while continuing to provide necessary services STEP FOUR: RESTRUCTURING THE Would it make more sense, for Connecticut, to allow The Connecticut State Legislature has convened for without crippling cuts, increases in regressive taxes or ESTIMATED TAX PAYMENT REGULATIONS accelerated depreciation only if the investment were this emergency session not only to debate budget cuts adoption of an income tax? IN THE CAPITAL GAINS AND DIVIDENDS made in Connecticut, or the assets purchased were and new taxes, but ultimately to put in practice the To this discouraging question I answer with a confi­ TAX AND THE STATE CORPORATE TAX, produced in Connecticut? philosophy of a new president in Washington. The answers to those questions may be more complex This philosophy is what President Reagan calls new dent “Yes.”. AND IMPLEMENTING ESTIMATED TAX Yes we can balance the budget and continue to PAYMENT REQUIREMENTS FOR THE than they appear; however, it is not my purpose to an­ by Solidarity Federalism, a philosophy based on the conviction that provide, necessary services without heavy-handed cuts ticipate the answers: rather, it is to see to it that the the federal government has become too large and too PROPOSED FIDUCIARY TAX. across-the-board. It can be done with (1) tax reform Present Law: Connecticut currently does not require right questions are raised and fully explored. That will dominant in American politics by usurping functions that will close current loopholes and prevent the further never happen if we blindly continue to allow the that rightfully belong to the states. To correct this im- taxpayers to make estimated tax payments in the WARSAW. Poland (UPI) - radio and television,” he was quoted erosion of our capital gains and dividends tax base; (2)^ capital gains and dividends tax areas. In addition, cor­ decisions of Congress to automatically apply to Connec­ Authorities said today the Solidarity as saying. J..- blance. New Federalism holds that states must be improved and more efficient regulations which will ticut. granted greater autonomy. Under President Reagan's porations are allowed a $10,000 deduction when union held a top secret meeting last Bujak also was quoted as saying, require estimated tax payments; (3) a re-evaluation of calculating the amount of the estimated tax payment. We may discover that in many instances we share week in which members discussed a New F’ederalism. the federal government provides with the federal government precisely the same "a general strike should be autonomy to the states by removing restraints from federal taxing policies which do not serve the needs of These policies are in anachronism in today’s economic forceful takeover of power from the prepared for and (the union) should Connecticut; and, (4) improved cash management climate since the state could be receiving tax payments economic and social goals, and that they are being well- communist regime. Federal allocations and reducing the share of tax served by the federal taxation policies; in those in­ wait for a good reason to start it.” throughout our budgetary system. in June of the current year instead of in April of the The official press today published And influential activist Karol dollars collected by the Federal Government. The effect This tax reform program consists of six steps which, stances we should further those goals by incorporating of removing restraints was intended to give state following year, and investing the funds at high interest details of the meeting which quotes Modzelewski, referring to an in­ when combined with selective budget cuts, will balance rates during the interim period. those policies in our taxation system. But we should only militant leader Jan Rulewski as ad­ evitable clash between Solidarity governments freedom to spend federal dollars in accor­ the budget, maintain all necessary services, increase do so as a deliberate, affirmative and independent act of dance with state rather than national priorities and the Tax Reform: Require dividend taxpayers to make es­ vising the union to form a tem­ and the authorities, said, “That will governmental efficiency and finally leave the hate with timated tax payments equal to one-half of the prior our own, not as a knee-jerk reaction to an unexamined porary government “to stabilize the be the final struggle.” lessening of the federal tax bite was intended to create a comfortable surplus, and time to decide for ourselves "principle” of conformity. more "tax room" for states to tax according to their year’s, tax liability, or one-half of the expected current situaUon in the country until there The newspaper accounts also 7 how to re-order our priorities in the face of cutbacks in year’s tax liability; whichever, is greater. Require the We must study the underlying federal socioeconomic are elections.” detail bitter, militant debate.: in particular needs. goals associated with all federal tax policies, with par­ When candidate Ronald Reagan announced he had em­ federal funding. It will give us the resources to defer same estimated tax computation and payment for Solidarity spokesman Marek which Solidarity leader Lech those cuts, so that we can deal with them on the basis of capital gains taxpayers. Eliminate the current $10,000 ticular reference to the deductions allowed cor­ Brunne, in a telephone interview, braced New Federalism many of us in state government porations, so that we can come'to an independent deter­ Walesa, who tries to be a moderate, embraced him. We were annoyed that every federal Connecticut's needs and priorities, rather than being corporate deduction. Require corporations which only confirmed the press account of the bowed before radicals and militants rushed into across-the-board slashes.

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