General Electric has confirmed it’s formally considering a move out of Connecticut. This comes after the passage of a budget bill that hikes corporate taxes.
CEO Jeff Immelt sent an email to employees saying that he has assembled an exploratory team to review the company’s options to relocate to another state -- one with what he called a more “pro-business” environment.
Earlier this week, General Electric, Aetna, Travelers, and BoehringerIngelheim all raised objections to the budget proposals, an unprecedented intervention in state level politics. This, in response to the news that legislators and the governor’s office wanted to impose what’s known as combined reporting on multi-state corporations – effectively making them pay more tax in Connecticut.
But legislators weren’t phased, and passed the budget bill late Wednesday night with the measure intact.
Senate President Martin Looney went on the offensive at a Thursday morning press conference accusing GE of planning layoffs, and using the flap over taxes as a cover, something the company has since said is "completely untrue."
"In reality, business taxes in this state are quite moderate overall," Looney said. "If you think about historically, the percentage of taxes that come from the corporate tax in Connecticut now is about less than six percent of our whole budget. It was 17 percent or more, 25 years ago."
Looney pointed out this will make Connecticut the last state in New England to adopt combined reporting. “So we have not done anything in this budget that would make us an economic outlier,” he said.
For his part, Governor Dannel Malloy seemed unwilling to own the final compromise, pointing to the findings of a recent tax survey. "We have the second lowest effective corporate tax rate in the nation, second only to North Carolina," he told reporters. "The legislature has decided to make some changes in that to support a budget... not the budget that I proposed on February 18. I think those discussions will continue."
Malloy said he’s had talks with each of the concerned companies in recent days, and said he hopes potential improvements in the property tax may in the end be more meaningful to them than hikes in corporate tax.
“We’ll continue to work with those companies about some of the concerns. I also think there’s a level of misunderstanding about a budget and language that wasn’t out for them to actually review – it’s out for them to review now,” Malloy said.
Malloy hinted that the issue could be raised again during an upcoming special session.
