Generating revenue is an ongoing concern of state governments and the subject of numerous political fights, especially when it comes to taxation. Connecticut’s income tax may be an accepted fact of life today, but when the General Assembly attempted to implement an income tax in 1971, it was met with so much resistance that the tax was repealed a month after passage.
In 1971, Governor Thomas Meskill, the first Republican governor in twenty years, entered office facing a $250 million budget deficit. Revenue would have to be increased in some way, and Connecticut, despite having the highest per capita income in the country, relied on sales tax for the bulk of its revenue. Imposing an income tax was a possible solution, and was actually recommended by a legislatively-created state revenue tax force, but the issue was politically tricky.
For an income tax to have an impact on the budget problems, it had to be substantial, meaning that a large number of citizens, both Democrats and Republicans, would feel the pain. Democrats wanted the proposal to come from the governor, hoping they could attack him on an idea that was unpopular even within his own party. At the same time, it was inevitable that taxes would have to be increased in some way.
Governor Meskill decided to avoid immediate political trouble. In his budget address, he did not propose an income tax, but instead proposed raising the sales tax from 5% to 7% and removing almost all exemptions. This would be the highest sales tax in the nation, and nearly all of life’s necessities would be subject to it. Democrats, taken by surprise, opposed the proposal, although they would not commit to an income tax as an alternative.
The General Assembly struggled with the issue of how to raise taxes throughout the 1971 legislative session. Meskill stood by his sales tax increase, while General Assembly members met in bipartisan compromise sessions, trying to come up with a plan that could pass. Throughout May and June the idea of an income tax was raised several times, but it suffered from a lack of support. Moving toward the end of the legislative session, it appeared that the chance for an income tax was dead.
The end of the session arrived with no deal on taxes. On June 30, the last day of session, there was a sudden surge of support for the income tax, with the Senate passing a bipartisan bill implementing a steeply graduated income tax at 12:35 a.m. The Senate’s income tax bill went to the House. At 4 a.m., the House passed the bill: Connecticut had an income tax.
For members of the public, it was as if the income tax came out of nowhere, and there was immediate opposition to it. The Governor, of course, could still veto the bill. There was an anti-tax rally at the Capitol on the last day the governor had to veto the bill, but although he was vocal in his dislike of the bill, he did not veto it, and it became law.
The passage of the law did not end the controversy. Only a few days later, there were discussions of calling a special session to repeal the income tax, and indeed, in August, the legislature commenced a special session to revisit the tax issue. The Finance Committee held sweltering, twelve-hour public hearing during which 250 people appeared. Those appearing were split fairly evenly on their opinion of the income tax, but passions were high, and at one point, a senator called for the room to be cleared, but those in attendance would not move, singing patriotic songs and reciting the Pledge of Allegiance.
Throughout the special session, various proposals were debated, with the major disagreement centering on the sales tax rate in the wake of a repeal of the income tax. Governor Meskill pushed for a 7.5% tax, but ultimately, on August 12, in another late night vote, the General Assembly repealed the 42-day old income tax and replaced it with a 6.5% sales tax.
Again, there was speculation over the possibility of a veto. Then State Senator Joe Lieberman stated: “If he vetoes this bill he either deserves a chapter in ‘Profiles in Courage’ or a commitment to Connecticut Valley Hospital.” Meskill complained that Democrats were trying to force a veto on him by giving him a bill to which he was opposed. Still, he did not take any action on the bill for a number of days causing a state of confusion in government and among the public. Finally, he signed the bill on August 23. The income tax was repealed.
It took until 1991 before an income tax was implemented in Connecticut.
Theodore A Driscoll, Income Tax Possibility Cheers Cash-Poor City, Hartford Courant, Jan. 24, 1971, p. 3B.
Jack Zaiman, The Income Tax: Politics of Blame, Hartford Courant, Feb. 8, 1971, p. 18.
Charles FJ Morse, Meskill for 7% Sales Tax: ‘No,’ Say Stunned Democrats, Hartford Courant, Feb. 17, 1971, p. 1.
Charles FJ Morse, Income Tax Appears Doomed, Hartford Courant, May 4, 1971, p. 1.
Ready to Negotiate Tax, Budget Compromise, Meskill Says, Hartford Courant, May 12, 1971, p. 30.
Charles FJ Morse, Meskill, Legislators Hopeful on Tax Plan, Hartford Courant, May 26, 1971, p. 1.
Charles FJ Morse, Collapse of Tax Talks Linked to Sen. Caldwell: Deadlock Remains Unsolved, Hartford Courant, June 5, 1971, p. 1.
Charles FJ Morse, Income Tax Support Gains in Senate: 18 Votes Assure Passage, Hartford Courant, July 1, 1971, p. 1A.
Charles FJ Morse , State Senate Votes for Income Tax, 21-12: Odds Good For House Acceptance, Hartford Courant, July 1, 1971, p. 1.
Charles FJ Morse, Bars Using His Veto Against the Bill, Hartford Courant, July 2, 1971, p. 1B.
Charles FJ Morse, Meskill Says Tax Will Hurt the Economy, Hartford Courant, July 5, 1971, p. 1.
Charles FJ Morse, 1,000 At Anti-Tax Rally, Hartford Courant, July 8, 1971, p. 1.
Jack Zaiman, Meskill Again Asks 7% Sales Tax Plan: Income Tax Discussion is Monday, Hartford Courant, July 15, 1971, p. 1A.
Jack Zaiman , Assembly Looks Bad, Hartford Courant, Aug. 7, 1971, p. 1.
Charles FJ Morse, Income Tax Opposition Insists on Being Heard: Quiet Mood of Hearing Disappears, Hartford Courant, Aug. 10, 1971, p.1
Charles FJ Morse , Senate, House Fail to Agree on New Tax: Legislators Battle Late Into Night, Hartford Courant, Aug. 12, 1971, p. 1.
Charles FJ Morse, Assembly Overturns State Income Tax: Meskill Due To Accept Sales Levy, Hartford Courant, Aug, 13, 1971.
Joel Greenberg, Meskill Set to Sign Compromise on Tax, Hartford Courant, Aug. 16, 1971, p. 1.