New Plan Restores Credit To Senior Citizens, But Democrats Say It's Still A Shell Game
March 29, 2006
By CHRISTOPHER KEATING, Courant Staff Writer
Recognizing Democratic opposition to
her car-tax elimination proposal, Gov. M. Jodi Rell offered a compromise
plan Tuesday that would allow senior citizens to keep their $400
property tax credit and pay no taxes on their cars.
Rell's new plan, offered in the days
before two legislative committees will begin voting on her budget
and tax proposals, extends an olive branch in an election year to
one of the most politically potent voting blocs: senior citizens.
Some seniors have criticized Rell's original plan, which also would
have eliminated the property tax credit on the state income tax.
They argued they could be losers under such a plan, particularly
if they no longer drive, because they would lose the credit that
offsets their taxes on a house or condominium.
"Some senior citizens have let
me know that they believe the earlier plan would put them at a disadvantage
because many no longer drive or have older cars and limited incomes,"
Rell said. "Frankly, their argument is a valid one."
Rell's compromise would keep the property
tax credit for those 65 and older, regardless of whether they are
single filers, heads of households or joint filers.
Some Democrats have harshly criticized
Rell's plan, saying it is essentially a shell game because drivers
would lose the credit at the same time that they would pay no car
taxes. The credit is scheduled to be a maximum of $400 in the 2006
tax year, and the full credit goes to individuals earning up to
$55,000 and couples earning up to $100,000 annually. Above those
levels, the credit begins to phase out before being eliminated for
singles earning more than $145,000 and couples earning more than
$190,500. The maximum credit for the 2005 tax year was $350.
Rell's budget office estimates that her new plan would benefit 110,000
senior citizens and cost an additional $15 million, which would
possibly be covered by the state's growing budget surplus, which
has surpassed the expectations of budget watchers.
But Senate President Pro Tem Donald
Williams, the highest-ranking senator, said Rell's changes are not
"The governor's movement on the
issue shows the administration knows the plan is seriously flawed,"
Williams said. "When her plan means income-tax increases for
the middle class, lost revenue to cities and towns, and the biggest
beneficiaries of the plan are multimillionaires, it's a problem."
The Democratic-controlled finance committee
is still formulating its response to Rell's car-tax plan, and no
decisions are expected to be announced until next week. But the
committee's co-chairman, Rep. Cameron Staples, said Tuesday that
Rell is moving in the Democrats' direction.
"I think it's encouraging that
she's recognizing the value of the property tax credit," said
Staples, a New Haven Democrat. "She's acknowledging what we've
been saying all along. It's a step along the way toward some final
Although he declined to flatly rule
out Rell's plan or reveal the Democratic alternative, Staples said
he is interested in potentially increasing the credit beyond $400
"My sense is it's better to stick
with the property tax credit rather than any form of car tax relief,"
Another problem in Rell's plan, Staples
said, is that she does not provide any limits on the number of cars
or the value of the cars. As a result, millionaires in Greenwich
would receive a windfall - by paying no local car tax and because
they earn too much to qualify for the current property tax credit.
Both Williams and Staples cited the example of famed clothing designer
Tommy Hilfiger, a longtime Greenwich resident, who owns more than
a dozen vehicles, according to the Greenwich assessor's office.
Rell's plan is "mostly beneficial
to the Tommy Hilfigers of the world with several expensive cars,"
Staples said. "It's unlimited relief to the Tommy Hilfigers
of the world."
Public records show that Hilfiger owns
a stable of cars that include a 2003 Ferrari Enzo Coupe, a 2004
Bentley Continental, a 2004 Mercedes-Benz and a 2003 Cadillac Escalade,
among others. The very rare Ferrari is valued at more than $1 million.
But Rell's budget director, Robert
Genuario, said the case of Hilfiger and other millionaires would
not make him favor legislating limits on the number of cars or the
overall value that would be exempt from the car tax. Instead, the
entire system should be eliminated, including the tax on cars owned
by the wealthiest individuals, he said.
"The Tommy Hilfiger concept is
the tail wagging the dog," Genuario said. "I don't think
we should craft our public policy looking at one particular individual.
The Tommy Hilfiger example is an anomaly. ... Those are so few in
number that I really think it represents a diversion of the real
Despite any disagreements, Genuario
said the Rell administration intends to reach an overall budget
agreement by the time the legislative session adjourns on May 3.
Reprinted with permission of the Hartford Courant.
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