By Paul Hughes
Journal Inquirer, Manchester, Conn.
(TNS)
Former New York Lt. Gov. Betsy McCaughey sought to make another big splash shortly after diving into the campaign for the Republican nomination for Connecticut governor by proposing to repeal the state income tax.
With that bold and ambitious proposal, McCaughey quickly distinguished herself from chief rivals Greenwich state Sen. Ryan Fazio and former New Britain Mayor Erin Stewart, but she is hardly the first Republican candidate for governor to campaign on ending the tax.
Like other Republicans candidates before, McCaughey, whose name is pronounced McCoy, offered few details and a vague timeline for how she would repeal the tax on personal earnings if elected to lead Connecticut. The Greenwich Republican proposed to assemble a panel of financial and government experts to plan the elimination of the income tax. She expressed confidence that could be accomplished within five years. The gubernatorial term is four years.
Connecticut was the last U.S. state to enact an income tax on all personal earnings in 1991, and a basic and consequential question that McCaughey’s campaign promise to end the income tax raises is whether repeal is even doable 35 years later.
Economist have doubts about income tax repeal
Don Klepper-Smith, a business economist who has followed the Connecticut economy for more than 40 years, is a firm doubter that repeal is practicable. He was chair of the Governor’s Council of Economic Advisors for former Gov. M. Jodi Rell, a Republican, from 2007 to 2010.
“It is not feasible at this point, No. 1,” said Klepper-Smith, chief economist and director of research for DataCore Partners, “and, No. 2, as former chair of the Governor’s Council of Economic Advisors, I’m going to stay with economics, and we’ll leave politics to others. Right now, from an economics standpoint, this fiscal situation would become precarious with the elimination of an income tax.”
The mainstay tax currently accounts for nearly 50% of budgeted revenue for the current $27.2 billion state budget. In contrast, the sales tax represents 20% as the second largest source of revenue.
Fred V. Carstensen, a long-time professor of economics and finance at the University of Connecticut, dismissed McCaughey’s campaign promise as “ridiculous” because he said her plan is full of so many holes, including how to replace the revenue from the income tax. He said McCaughey also glossed over the potential repercussions, particularly spending or workforce reductions that an elimination of the income tax might necessitate.
“It’s a great way I suppose to make headlines, but it is hard to take it as a serious proposal,” Carstensen said.
Patrick R. O’Brien, research and policy for the progressive Connecticut Voice for Children, shared Carstensen’s assessment that the loss of income tax revenue would be crippling and require a massive increase in other taxes, or drastic spending cuts, or some combination of the two.
He predicted such a massive loss of state revenue would have a knock-on effect of increasing local government’s reliance on property taxes in a state where property tax rates consistently rank among the highest in the U.S. Klepper-Smith said the loss of income tax revenue, coupled with reductions in federal funding to Connecticut could lead to cuts in municipal aid and increases local property taxes.
O’Brien said he believes increasing consumption and other state taxes or slashing state spending, or a combined approach are all unworkable options, and undesirable, too.
“If you wanted to use the sales tax to offset the personal income tax, you’d basically have to triple the sales tax, meaning you’d have to use a base sales rate of 20%. So, that is one option I don’t think would be feasible,” O’Brien said.
The general sales tax rate is 6.35%, but prepared meals and takeout food are subject to a 7.35% rate and luxury items are taxed at a 7.75% rate, including motor vehicles costing more than $50,000, jewelry costing more than $5,000, and clothing and footwear items priced higher than $1,000.
Outside of the income tax, O’Brien said Connecticut’s state and local tax system is largely regressive, and the elimination of the income would increase the unfairness and disparities. He cited the latest tax fairness study that the state Department of Revenue Services released two years ago. It found lower-income households shoulder a disproportionately higher tax burden relative to their income compared to higher-income households.
He said increasing sales taxes or property taxes to make up for the loss of income tax revenue would increase the tax burden on low- and middle-income households.
Economists Carstensen and Klepper-Smith agreed with McCaughey on a key point that the state economy is weaker than recently released federal statistics showing strong 5.6% annual growth in real gross domestic product in the third quarter of 2025 suggest. Unlike McCaughey, the two economists said repealing the income tax would likely make economic conditions worse.
“We have 35 years of very problematic economic performance,” Carstensen said.
After nearly eight years of running state government, Gov. Ned Lamont said he, too, doubts Connecticut can eliminate the income tax.
McCaughey scoffs at skeptics
McCaughey said she anticipated skeptics would say ending the income tax could not be done for the very reasons Klepper-Smith, Cartsensen and O’Brien cited. But she insisted she will be able to deliver on her campaign promise if elected governor.
“First of all, I expected the naysayers to say that, but being a high-tax, low-growth state is not an act of nature,” she said. “It can be changed.”
McCaughey said Grover Norquist, president of Americans for Tax Reform, and Steve Moore, a prominent conservative economist, author, and senior economic advisor to President Donald Trump, back her up. The two were quoted endorsing McCaughey’s proposal to end the income tax in the two-page news release that the McCaughey campaign issued when she announced her repeal plan on Jan. 22.
McCaughey said Lamont is wrong when he says repealing the income tax is not doable. She pointed to other states that have taken action to phase out their income taxes.
In 2025, 12 states cut their income taxes, with 14 states endorsing income tax elimination, according to the Tax Foundation, a conservative, Washington, D.C.-based think tank. Most recently, five states—Mississippi, Oklahoma, Kentucky, Iowa, and Georgia—have passed legislation targeting the full elimination of their individual income taxes.
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She said legislation working its way through the South Carolina General Assembly includes a mechanism that automatically lowers tax rates whenever state income tax revenue grows by 5% or more until it reaches zero. She said Connecticut could replicate this same approach.
The White House Council of Economic Advisors released a research study on Jan. 28 encouraging states to eliminate their income taxes. It suggests states could broaden sales taxes to replace revenue lost from ending their income taxes, corporation taxes and existing general sales taxes. But a Tax Foundation analysis found the report dramatically underestimated the cost of replacing state income taxes and overstates the ease with which states could replace their income taxes, though it agreed with conclusions concerning the economic benefits of shifting from income to consumption taxes.
McCaughey said she believes she can eliminate the income tax without having to raise the sales taxes or other state taxes.
“I’m not going to raise any taxes. It is against my religion,” she said. “I’m not raising taxes, I can tell you that.”
Before Connecticut adopted the income tax, the sales tax, corporation tax and a limited income tax on capital gains, dividends and interest raised the most state revenue. In 1991, when the income tax was adopted, Connecticut confronted a nearly $1 billion budget shortfall for the upcoming fiscal year after having posted combined deficits of $1.2 billion over the previous four years.
The adopted 1992 state budget reduced sales tax from 8% to 6%, lowered the 13.8% corporate tax to 10.5% over two years, and a 20% surcharge was cut to 10% and scheduled to phase out in two years. The flat income tax rate of 4.5% replaced a 7% tax on capital gains and a tax as high as 14% on dividends and interest. Carstensen, the UConn economics professor, said the sharp reduction in the capital gains and dividends tax help secured approval of the income tax.
Since its enactment in 1991, Connecticut’s income tax has gone from a flat 4.5% tax to a graduated tax, ranging from 3% to 6.99%, with seven tax brackets.
In 1996, the income tax went from a flat 4.5% rate to dual rates of 3% and 4.5%. In 2003, the legislature increased the highest rate from 4.5% to 5%. These rates and brackets remained unchanged until 2009, when the legislature added a 6.5% rate and bracket. Two years later, a new rate schedule was adopted with six brackets, ranging from 3% to 6.7%. In 2015, the sixth bracket was increased to 6.9%, and a new top bracket of 6.99% was added.
In 2022, the legislature and Lamont approved the first reductions in the income tax rates since 1996 as part of a bipartsan budget deal. For the 2024 tax year, the initial rate declined from 3% to 2% and the second rate decreased 5% to 4.5%. The five other rates remain unchanged,
The repeal movement
Once the income tax was adopted in 1991, a “repeal the tax” movement started. It peaked in the years immediately following the adoption of the income tax, but eventually faded.
Connecticut did repeal an income tax that was briefly instituted 20 years before the adoption of the current tax. In 1971, the state legislature adopted a state income tax during a fiscal crisis, and then-Gov. Thomas J. Meskill, a Republican, allowed the legislation to take effect without his signature. The Democrat-controlled legislature repealed the tax 42 days later following public protests.
Two decades later, state adopted the current income tax amid a much more dire financial crisis. In August 1991, then-Gov. Lowell P. Weicker signed the income tax into law after dramatic budget votes in the state House of Representatives and state Senate ended a tumultuous, 11-month showdown between the newly seated independent governor and the 187-member legislature under Democratic control. The approval of the income tax was touch-and-go right up until last moment. Lt. Gov. Eunice Groark had to break an 18-18 Senate tie.
An estimated 40,000 protesters rallied on the state Capitol grounds five days after withholding first started in October 1991 to demand the repeal of the income tax in what is believed to be the biggest demonstration in state history. Rally organizers claimed tens of thousands more attended the protest.
The House and Senate voted to repeal the income tax in December 1991. Weicker vetoed the legislation, and an override attempt failed. The income tax has remained in place since then.
State taxpayers have paid nearly $250 billion in state income taxes since Connecticut started taxing all wage, salary and investment earnings. At this time, more than 2 million state residents pay the tax, according to the state Department of Revenue Services.
The state budget has more than tripled in size from $7.7 billion in 1991 to $27.2 billion today. The $19.5 billion increase in spending since 1991 compares to a $6.6 billion increase between 1971 and 1991.
Republicans legislators regularly introduced bills proposing to eliminate the income tax for 14 years following its adoption, but the last repeal bill was introduced in 2005.
In the last open election for governor in 2018, the five candidates in the Republican primary for governor had some plan for eliminating the income tax or exempting taxpayers below certain income thresholds from having to pay income taxes. Primary winner Bob Stefanowski ran on a vague plan to eliminate the income tax in eight years and lost the open gubernatorial election to Lamont. Stefanowski did not resurrect the plan in his losing 2022 rematch against Lamont
Former Gov. John G. Rowland is the only winning Republican candidate who campaigned on a promise to repeal the income tax, but Rowland never proposed a state budget that delivered on his 1994 campaign promise to eliminate the income tax during his nearly 10 years in office.
Alaska is the only state to have wholly repealed an existing broad-based individual income tax on wages and salaries, according to the Tax Foundation. It happened in 1980 following the state’s oil boom. The tax dated back to 1949. In addition to Alaska, eight other states do not tax personal income—Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming.
Under her administration, McCaughey said she is committed to making Connecticut the first state to have repealed an income tax twice, and the second time for good.
Photo caption: The Connecticut State Capitol building in Hartford. (DutcherAerials/iStock)
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© 2026 Journal Inquirer, Manchester, Conn. Visit www.journalinquirer.com. Distributed by Tribune Content Agency LLC.
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Tags: connecticut, income tax, income tax changes, Income Taxes, Taxes
