He’s leaving and more power to him.
am a born-and-raised Connecticut Yankee. I have been extremely fortunate to have lived the American dream. When I was 18, I left my parents’ apartment in New Haven with two plastic suitcases, not a cent to my name and a dream. Through hard work, a fine education at UCLA and some luck, I began my career in investments in New York City. Twenty-five years later I retired a rich man — many would say extremely rich.
The question I keep asking myself is why should I stay in Connecticut? About 10 years ago, I had 25 to 30 super-wealthy friends here. Today, all but one has moved, most to Florida for tax reasons. I’ve been retired for 16 years — within the next two years, I will be an empty nester — and I am looking for a residence outside our state.
In fact, in March, I signed with a real estate agent to put my Darien home up for sale in May. When I die, and we all do, should I be thinking of what the costs will be to my heirs? I believe I have a responsibility to give them what I can and am asking myself a few questions.
First, as an American, have I paid my fair share? I think most objective people would say yes, as all my money was earned and taxed as ordinary income at the highest marginal tax rates (50 percent in all). When I die, another 40 percent (federal estate tax) of the remainder will go to the government and 12 percent to Connecticut up to $20 million paid. I have used the one-time gift exemption that the federal government allows.
So, over my lifetime, for every dollar that I earned, saved and wish to give to my heirs, I will have paid 76 percent to some government entity and my heirs will get 24 percent.
Is that not paying your fair share?
I can honestly say it never bothered me to pay my taxes. I’m proud to be an American and thankful that I had an opportunity to compete in such a great country. Nonetheless, I would like to leave as much as possible to my heirs.
I have read that it is better to give my wealth away than to die with it. Those familiar with the tax law understand why this is so. When you give money (more than $14,000 a year) to others there is a federal gift tax of 40 percent. Connecticut, however, is the only state in America that has a gift tax, which is 12 percent.
I can understand the state estate tax more than the state gift tax. Why? Because states around Connecticut also have an estate tax (even though this too is changing as they realize the folly of having high estate taxes, which risks pushing out their super wealthy people).
To be the only state that has a gift tax for its extremely wealthy citizens is paramount to erecting a huge sign that reads, “We don’t care if you leave our state. Go!” How much net revenue is raised by the gift tax vs. the loss of tax revenue when your wealthiest residents leave?
Wealthy people have options, especially mobility. If I sell my Connecticut home, move to any other state and then make gifts of my wealth to my heirs, I save them millions of dollars. My super wealthy friends call this the “free move.” You can move out of Connecticut and the gift tax savings more than offsets the cost of the move and the new home purchase. Why wouldn’t anyone do this?
The vast majority of my very wealthy empty nester friends have done this and others in the same position will move when the time is right. It is simply too high a price to stay.
Once a person, family or corporation moves out of state it is almost impossible to get them back. The revenue from their move is gone.
When very wealthy people move, their spending moves with them. Wealthy people are great for the local economy. They shop a lot, buy expensive cars, big homes, expensive jewelry, eat at fancy restaurants and hire many local workers like landscapers, plumbers, electricians, etc.
The political logic in Connecticut seems to be, “When one rich family leaves another will take its place.” That may be true but why not think expansively and ask, “Wouldn’t it be better for Connecticut and our tax base if we could keep all the wealthy families here?”
States try to keep corporations for obvious reasons. Shouldn’t the same logic be used for super-wealthy families? As time goes on, Connecticut’s expenses will only rise and our tax base will decline? Why? Corporations like GE will slowly leave the state for lower tax states and wealthy families will leave too.
Did the state and Federal government make the country better with 50% that they took from him every year? Is the country prosperous due to the spending of that money? Look around. Year by year I’ve been watching the state go down the tubes. Fairly soon it will be cheaper for people like Mr. Delucia to actually abandon their homes and just leave.
Meanwhile, in spite of all the higher taxes that the state has imposed, the only way the state is being run is more or less a “state of emergency.”
Deficits are not just corrosive to confidence in the business climate, but eliminating them through taxes or spending cuts is a drag on the economy.
It comes down to how do you follow short-term pain with longer-term gain? So far the state has been very inept at doing that.
Very little has been done about this problem over the last half-dozen years. We need to look to roll back existing benefits. Rhode Island rolled back cost-of-living allowances to state retirement beneficiaries.
But Rhode Island had more legal flexibility while Connecticut guarantees the overwhelming bulk of its public-sector retirement benefits by contract.
I understand there is a different legal set up, but all of that stuff that is sacrosanct should not be sacrosanct.
We also have a lot of duplication. We’ve got a boatload of state college and community college and University of Connecticut campuses, all of which require lots of well paid administrators. … If this was a business it would not be run like that.
I don’t want to hear that it’s not possible. If we have the courage and the foresight to deal with it, it can be dealt with.
If we didn’t have the obstacle (of current and future projected deficits), we could do better with jobs, we’d have a faster-growing population, we could invest in an updated infrastructure.
In economics, so many things are interrelated.
The financial services and insurance industries absorbed major losses during the last recession, while the recovery has been marked chiefly by growth in the much-lower-paying retail and services sectors. What strategy should Connecticut be pursuing to grow higher-paying jobs here?
It’s hard to address it directly. We do try lure companies to the state by incentives and keep them here by incentives. But you can’t compete with Boston or Massachusetts with that alone.
One of the many reasons we have to go after companies is because we drive companies out.
If you grant that, then it’s going to be a tough road to hoe in Connecticut job-wise, for years to come. All the latest legislature did, vis a vis the [state employee] pension liability, was spread it out over a number of years, reduce the peak but increase the overall cost. It kicked the can down the road and made it bigger.
How much damage did GE’s announcement last year that it would move its headquarters to Boston do to Connecticut’s business image?
What did we lose?
We probably lost several hundred jobs, but these weren’t just extremely well-paid jobs. They were visible jobs.
I don’t think there was a development director in any state or town outside of Connecticut who didn’t drool at our ineptness to deal with the problem. … It was sad to see what was going on.
Even more important than that was the fact that we brought this about with punitive tax legislation…
Despite Connecticut’s reputation as a high-tax state, some point to a study prepared annually for the Council on State Taxation by Ernst & Young. This report, which measures state and local taxes as a share of gross state product, finds Connecticut to have one of the most favorable business tax climates in the country. Is there merit to this sort of ranking system?
I think there is. But I think that a couple of things are important to remember.
It’s not just the level of taxes that are of concern vis a vis the business climate of the state, it’s the gross uncertainty around these taxes that has been with us, particularly over the last half-dozen years. A company like GE or any large company doesn’t know if they’re going to get something big thrown at them or not.
If you were to rank states on anxiety generated by the state budget process, I’m sure we’d rank near the top.
But I also think there is another point to be made. (The Ernst and Young study) doesn’t reflect the full picture of cost. There is the horrendous cost of energy in the state. I don’t know how you measure regulatory burden, but if you’re a large company pondering locating in the Northeast you look at all of these things.
The business community keeps pressing legislators to keep state and municipal taxes flat, insisting this is a prerequisite to any economic growth. But surging fixed costs alone are projected to mandate frequent spending increases over the next 15 to 20 years. Can our economy grow if we are forced, out of contractual obligation, to raise taxes every two-year budget cycle over the next decade or two?
It’s a gamble I wouldn’t be willing to take. I think it runs the risk of leaving us in a worse situation in 10 years. You and I could be having the same conversation a decade from now.
I think what this calls for, in a sense, is the recognition this is a state emergency. It can’t be business as usual. Drastic measures have to be taken.
The State Of Connecticut Hasn’t actually reached the condition of an emergency on the scale of say, Detroit, but if what I see around me is correct, the state is heading there real fast.
CT’s decline has been a long slow step by step, policy by policy process. The decline has been masked by a good economy and dependable defense contracts, but in the end the decline is the result of not watching the goose that lays golden eggs’ health and indeed feeding it slow poison.
My local paper had this article in it the other day.
The “Preferred Alternative: A Vision for Growth of the Northeast Corridor,” as laid out at www.necfuture.com, shows tunnels, trenches, embankments and “aerial structures” carving new routes through the highly developed corridor.
Those and other improvements, from Washington, D.C., to Boston, would boost capacity and shorten travel times, the FRA said.
But, local officials and one commuter advocate aren’t swooning over the plan, which could entail extensive property seizures and massive construction in densely populated communities.
“Be careful what you wish,” said Jim Cameron, founder of the Commuter Action Group, which represents Metro-North Railroad and Shore Line East riders. “If the state basically said to the Federal Railroad Administration, ‘We endorse going along the coast,’ now they’re going to have to look at the consequences of this realignment, because it’s massive disruption in some of the most affluent communities in the state.”
Cameron said an inland route following Interstate 84 would achieve “true world-class high-speed rail” without disrupting densely populated coastal communities.
According to the FRA, the Preferred Alternative would increase the number of trains and improve performance along the Northeast Corridor. The number of trains running daily from Penn Station to Boston, for example, would increase from 19 to 94. The travel time would decrease from three hours and 30 minutes to two hours and 45 minutes.
To boost capacity and improve performance between New York City and Boston, the FRA has recommended improvements to the existing line and adding several new segments. Among the latter would be new two-track segment, beginning west of the New Rochelle station and continuing into Fairfield County. The segment would allow for more trains to operate between New York and Boston and allow express trains to pass local or freight trains, the FRA said.
Here’s the NEC Future site
Here is the page for the “preferred alternative.”
They hid the more or less detailed map in the Enivronmental Impact Statement, but here it is.
One thing that I see is that the people who wrote this up probably did it with the map in hand and haven’t really seen the area, at least in my neighborhood. Now the map shows RTE 95 as being relatively straight and flat. As somebody who has traversed that stretch of RTE 95 thousands of times, it’s neither. That stretch is scary enough at 65, let alone at 150 mph+ . The fact is that coastal Ct through Fairfield and New Haven Counties is mostly ridge and valleys all running North and South. The Original New Haven Line(now Metro North’s New Haven Line) ran as close to the coast as possible and even then is mostly cuts and embankments. Along with curves, lots of them. Those curves have been the bane of the railroad’s existence since it was laid out back in the 1850’s
Still the RTE 95 route is even worse. What interesting is that according to the NEC Future website, most of the route through Fairfield County will be “aerial structures.” That’s especially true of the route through Greenwich and Stamford. Which tells me that these people are either not serious about actual improvements to the NEC or really want to stick it to a bunch of wealth and well connected people with lots of clout. Because I know what Aerial structures for high speed trains means.
Here’s a picture of the Tohoku Shinkansen structure near Omiya Station.
The is typical aerial structure high speed railbed in Japan. It’s also something that would never fly in here in CT. Even out in the eastern part of the state, the opposition is stiff and in Fairfield County the opposition would be incredible.
The funny thing to me is that the “preferred alternative” didn’t eve address the biggest opportunity for real improvement, a tunnel through east Bridgeport to eliminate the 35 MPH Jenkins curve. Right now the tunnel and a new station could be built relatively cheaply because East Bridgeport is mostly empty lots with various and sundry development plans that have gone awry. Yet the rout through Bridgeport, with it’s 19th Century roadway is kept intact while the route messes around in Greenwich and Stamford real estate. Which tells me that the whole thing can’t really be taken seriously. Which is a shame because the improvements are really needed and all this did was waste money that could have been spent on other things that Amtrak needs or even better, not spent at all.
I hate writing about this stuff. Yet It seems that I keep getting my nose rubbed into it. The cloud people are determined to pound the rest of us into the ground by making what was once cheap and available into something that is expensive and unreliable.
This is something that would NEVER expect to hear. “Greenwich is the worst housing market.”
Here’s a drive down Greenwich Ave in the middle of town. Now I haven’t been down Greenwich Ave in at least 15 years. I Haven’t had a real need to go there and there are no shops on the Ave that I want to visit, so why go. Still it’s amazing how little it’s changed since I moved out of town in 1991. Still too much wretched excess. Thanks to zoning and the fact that the town is close the train to NYC I don’t think that things will change very much.
Now I grew up in Greenwich. In all the time that I lived there, house prices only went in one direction, up. That seems to have changed. Apparently the economic issues that are hitting the rest of the state are hitting Greenwich as well. I’ve posted about those issues before, with more coming.
Still when you see the signs of decline in place that heretofore you thought were relatively immune the reality of how deep the problems are become clear. The fact is that the state is eating itself and somehow our elected officials don’t seem to understand that there may be no crawling back unless truly radical changes are made. It’s not just Connecticut. As the following post from the Powerline Blog shows, it’s most or all the blue states. Every single one is losing population to more red states. More importantly the businesses that are the source of jobs and revenue are probably leaving even faster.
If things keep going in current trends, the blue states are going to be up a creek without the obligatory paddle. They will have made too many promises and the people who are supposed to pay for those promises and debts, all too often made in back rooms will just fade away, leaving nothing more than a empty husk where there was once prosperity. This erosion has been going on one way or another for my entire life, but Connecticut, at least had been avoiding dealing with the consequences of that until fairly recently. The bill, at last has come due and all the bad polices have come home to roost. Hopefully, we can change things before things get even worse, but right now, that’s a slim hope indeed.
According to a recent survey CT is dead last for small business.