SENATOR HONIG HONES HIS TAX-SAVINGS PAYCHECK PLAN AT THURSDAY ROUNDTABLE
Sen. Paul Honig (D-Harwinton), a graduate of the Wharton School of Business who spent more than two decades working in fixed-income finance, led a roundtable discussion today on one of his key public policy proposals: how to make Connecticut’s tax code more efficient to lower residents’ federal taxes and keep more money in people’s pockets.
Sen. Honig first proposed his tax-savings plan back in February, when he introduced Senate Bill 61, “AN ACT ESTABLISHING A VOLUNTARY EMPLOYER PAYROLL TAX AND A PERSONAL INCOME TAX CREDIT FOR CERTAIN EMPLOYEES.” The Finance, Revenue and Bonding Committee adopted his idea and raised it in Senate Bill 513.
S.B.513 passed through the Committee with bipartisan support but ultimately did not get called for a vote. However, Sen. Honig’s idea for saving people money did generate enough interest to create a working group to study the matter, which was the focus of today’s Payroll Tax Working Group meeting.
The idea is relatively simple: imagine someone who earns $100,000 per year and who pays $5,000 per year in Connecticut state income taxes. Instead of that, they can take a pay cut to $95,000 but no longer pay Connecticut state income taxes on those wages; their employer pays a $5,000 payroll tax. The employee still nets $95,000 after Connecticut income taxes, and their employer still pays $100,000 in payroll expenses, but now that employee shows $95,000 on their federal income taxes instead of $100,000.
Sen. Honig estimates that a person earning $100,000 a year would see a net savings of $1,117 in state and federal taxes.
“I’ve been fascinated by this idea of payroll tax savings since I first heard about it in 2019; wages are reduced, but taxes are reduced by an even-greater amount, and the result is you get to keep more of your money,” Sen. Honig said today. “I’ve always thought this was an idea that had enormous potential for Connecticut residents, who could save upwards of a billion dollars a year in federal income and payroll taxes. We had a lot of expertise and input in the room today, and I’m encouraged that this idea could have a future in Connecticut.”
The next step is to survey working group members on solutions to issues that were raised, such as mitigating lower Social Security benefits, whether the program should be voluntary or mandatory, and whether the program applies to special classes of employers.
Sen. Honig earned a bachelor’s degree in computer science and finance from the University of Pennsylvania. After college, Sen. Honig spent more than 20 years in the financial services industry in New York City, eventually becoming a managing director at JPMorgan Chase Bank. He developed analytical software for bond traders, worked on an interest-rate trading desk, and later taught mathematics for a year before becoming a tutor and a varsity tennis coach.
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