If you're a billionaire living in Connecticut, chances are the tax
department is keeping an eye on you.
Connecticut, home to some of the richest Americans, has a big
stake in the billions of dollars in revenue their income taxes
generate.
State tax officials track quarterly estimated payments of
100 high net-worth taxpayers and can tell when payments are down. Of
that number, about a half-dozen taxpayers have an effect on revenue
that's noticed in the legislature and the state Department of Revenue
Services.
"There are probably a handful of people, five to seven
people, who if they just picked up and went, you would see that in
the revenue stream," said Kevin Sullivan, the state's
commissioner of the Department of Revenue Services.
With one exception, he said, state officials don't actually
approach the super-rich. He said: "There isn't friendly visiting
or anything like that, how are you feeling? Doing all right? Doing
OK?"
Two years ago, tax officials were alarmed that a super-rich hedge
fund owner might leave and reduce the state's income tax revenue.
They met with the unidentified taxpayer to stay. The effort was
partly successful, with the taxpayer leaving Connecticut but agreeing
to keep the hedge fund here.
"It would be nice to have both, but at least we didn't lose
both," said Kevin Sullivan, the state's revenue commissioner.
Tax officials in a few states said they do not track individual
tax payments, though state budget officials typically follow total
quarterly tax payments by the rich to make sure revenue projections
hold up.
And some experts don't believe there's any need to worry about the
super-rich moving to avoid high taxes. "The claims are almost
always anecdotal," said Matt Gardner, executive director of the
institute on Taxation and Economic Policy.
Connecticut tax officials won't say who the super-rich are, citing
privacy, but it's not hard to guess.
Many movers and shakers in and around New York City, the capital
of the banking and hedge-fund world, work in or populate the verdant
suburbs next door in Connecticut.
They include names like hedge fund
owner Steven Cohen; Thomas Peterffy, of Interactive Brokers; Ray
Dalio, of Bridgewater Associates; and Paul Tudor Jones, of Tudor
Investment Corp. Combined, their net worth is more than $40 billion,
according to Forbes.
If they or other big-moneyed individuals or their businesses
decide to leave, the danger is real.
In April 2014, super-rich taxpayers in Connecticut and elsewhere
shielded their income through charitable donations or other means to
avoid a tax hit following the expiration of federal tax cuts.
The result: Connecticut income tax revenue plunged by nearly $281
million, more than 14 percent, compared with the same month a year
before. In the 2014 budget year, state income tax revenue was $8.7
billion, more than half the $16.4 billion in total revenue from taxes
and fees.
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