- There's this story from CTMirror.org, which notes that Gov. Malloy's budget proposal has a $120 million hole in it.
- There's this interesting analysis by the Courant's Dan Haar of CNBC's annual ranking of "America's Top Places for Business." The state actually rose in the rankings, but Dan explains why.
- Danbury Mayor Mark Boughton, a potential GOP gubernatorial candidate, is test driving a proposal to eliminate the state income tax as part of his platform. You can read about that here.
- Meanwhile, check out this Courant story about restaurant owners who are not happy that an increase to the state sales tax is still being discussed as a way to help close the state budget deficit.
And, last, but certainly not least, is an email I received from Chamber Lobbyist Armando Paolino. He wanted to share some thoughts he received from a mutual friend, Antonio "Tony" Paulo Pinto, an insurance consultant who previously started a staffing services business.
Tony did some analysis of the proposed increase to the Sales and Use Tax, and I think it's worth sharing. So I will leave you in the capable hands of Mr. Pinto:
I was thinking about the 'proposed' CT Sales and Use Tax (SUT) increase over the weekend; and it got me thinking ... Does anyone understand that the SUT has been extended to almost all services, beyond just purchasing items?
One major issue here is that if you increase the SUT to 6.99%, which might as well be 7%, and allow cities to charge an extra 1% on top of the 7%, then you are effectively creating an 8% SUT that also applies to temporary staffing services!
I am not even going to get into the cost of gasoline or any other day-to-day items, which is the real issue, as many goods are purchased online today; also, understand that cities may not charge the full 1% the first year, but will if the state cuts their funding.
The hit to employers is going to be significant in the cities! Why? For this reason:
First, note that starting in 2014 there has been an increase of 32% on top of adding the state SUT to all kinds of services, including temporary staffing wages, which in essence results in an additional cost-of-business to employers using staffing services of an additional 16% to 21% to account for the sales tax on labor hours for staffing services.
The net result of the combined minimum wage increase AND extending sales taxes to services has resulted in an increase cost to the employer — if they hire through a staffing service, for the average employee making minimum wage — of over 40.5% per hour compared to what it was in 2013. Think about that for a minute.
Connecticut's minimum wage rose to $8.70 per hour as of January 1, 2014, an increase of 13.73% from $7.65 in 2007.
Connecticut's minimum wage rose to $9.15 per hour as of January 1, 2015, an increase of 5.17%.
Connecticut's minimum wage rose to $9.60 per hour as of January 1, 2016, an increase of 4.92%.
Connecticut's minimum wage is now $10.10 per hour as of January 1, 2017, an increase of 5.21%.
So the net minimum wage increase was 32% within the last four years! Plus, add 6.35% CT-SUT to staffing services and now, another 0.64% for the state SUT and 1% for cities, increasing the 32% by an additional 11.99% after including the minimum 50% markup on staffing service hourly rate, typically closer to 65%, which would make it a 13.18% increase. The new net increase for employee wages is not 32%, but around 36%, if not 37%.
If I'm a CT employer, I either leave or I don't use staffing services, effectively eliminating the CT-SUT on temporary employee wages, netting the state and cities nothing in SUT. In addition, I'll just hire people in less than 90-day increments, to avoid Obamacare penalties, and less than 160-day increments, in order to class all people as "seasonal," and churn through a whole bunch of people, as it's cheaper than the alternative by at least 15-20%, more if I'm a manufacturer or hire blue-collar staff.
I restarted my last company as a staffing service; they're dying in CT thanks to the SUT, which is already higher than most of their profit margins.