On the night of his surprise victory in the Connecticut gubernatorial Democratic primary over Ned Lamont, Dan Malloy addressed supporters in a brewery in Hartford. He ended the seven-minute speech on a recurring theme of his campaign: "We are going to … wage an aggressive campaign on behalf of the people, the working people, the middle class of the state of Connecticut."
That sounds like boilerplate populist rhetoric, until you look at Malloy's platform, which includes implementing a more progressive tax structure and building a relationship with unions. Reacting to public anger over the passage of health-care reform and financial regulation, Democrats nationwide are shying away from the message that government works for the working class, and, on many issues, successfully being pulled to the right by Republicans. Malloy bucks that trend.
In no area is that more true than on taxes. While Malloy, like most politicians, pays lip service to eliminating waste, the linchpin of his tax message is that localities work too hard collecting property taxes to make up for state spending shortfalls. He proposes raising the state income tax for the wealthiest citizens who, right now, pay a rate no higher than 6.5 percent. Neighboring states -- New York, New Jersey, Rhode Island -- have similar infrastructure and levels of wealth yet tax their highest-income residents at rates that range from 7.85 percent to 9.9 percent. Those states also have more tax brackets, while Connecticut only has three. It's a situation that, in Connecticut as in many other states, pits wealthy towns against needier towns and urban areas, usually an uneven matchup. But in this race, the progressive position looks like it has the upper hand.
In most respects, Connecticut is a progressive state; it went for Obama by 25 points, and has passed gay marriage and campaign-finance reform. But the state seems to have two allergies: to income taxes and Democratic governors.
Malloy is trying to become the first Democrat to occupy the statehouse in 20 years. Connecticut had no income tax at all until 1991, when a quirky one-term third-party governor with nothing to lose, Lowell Weicker, pushed it through. It's still one of the lowest in the country, and the result is a dependence on property taxes that exacerbates inequality in a state that has several of the richest towns in the U.S. as well as several of the poorest small cities.
The level at which taxes are collected determines how well, and how equitably, services can be provided. Local property taxes are particularly non-redistributive -- the wealthiest towns and neighborhoods can collect on high-value properties and use the revenue on good schools, big parks, and well-stocked libraries. Lower-income areas usually can't afford such services, and, to complicate matters, struggling to provide more amenities has the unhappy effect of raising neighborhood property values, making it impossible for poor families to stay put. Income tax assessed on all residents statewide can even the score: statewide funding systems for programs like public education, for example, can flood money where it's needed most without burdening those who benefit.
Malloy's pro-tax message is tied to an anti-tax one: Property taxes in Connecticut are the first- or second-highest in the nation, depending on the metric used, and local tax burdens are a steady voter complaint. Raising income taxes would make it possible to lower local property taxes, which Malloy's spokesperson, Roy Occhiogrosso, says is Malloy's first priority. "Smaller towns and suburbs say yes to every development because they need the tax revenue," he says. The Malloy campaign says the focus on this type of development crowds out public spaces like parks.
Aside from jobs, taxes are the biggest issue for Connecticut voters this year. The state has a budget deficit of $3 billion, but future unfunded liabilities could put the deficit in the tens of billions. The other candidates mostly avoided talking about tax increases as a possible solution. In the primary, Lamont said it was too soon to talk about raising taxes. The Republican nominee, Tom Foley, hasn't taken a no-new-tax pledge, unlike some of his opponents in the Republican primary, but he has said he's not going to raise them. Foley, a classic Republican businessman turned anti-tax politician, only talks about decreasing spending. He says he can cut $1 billion from the state budget immediately through finding "efficiencies."
The position is a natural fit for Malloy when one considers his background. He served as mayor of his hometown of Stamford, a suburban city near New York and the fourth-largest in the state, for 14 years. Stamford is wealthy but still has a higher population of new immigrants and more housing and transportation problems than the richer towns around it -- which include five of the 20 wealthiest in the country. State representatives from these high-income areas, including Democrats, helped the current Republican governor, M. Jodi Rell, thwart recent attempts by the state Legislature to increase the top tax rate.
The tension between local government services and state budget deficits is playing out around the country. In New Jersey, which rivals Connecticut in property-tax rates, Republican Gov. Chris Christie spent his first year in office upholding a campaign promise to slash spending and not raise taxes. As a result, the very poor city of Camden might shut its libraries. At least one town, Westfield, had its bond rating downgraded because it couldn't make up for the loss of state aid with local taxes: The previous governor, Democrat Jon Corzine, capped increases on property-tax rates.
The opposite issue is an election-year concern in Maryland, where the current Democratic governor, Martin O'Malley, supported a surcharge on taxes on the wealthy. Former Gov. Bob Ehrlich, the Republican challenger, is trying to make inroads with Democratic voters in wealthy Montgomery County by arguing that those high taxes are unfair to them, because, he says, they only get about 17 or 18 cents in services for every dollar they send to the state.
More than just relieving local property-tax burdens, though, Malloy is promoting the idea that state government can help build and maintain the working and middle classes. He says he would do a better job than Rell of providing state education funding through a formula that gives more state money to needier districts and less to wealthier ones and also criticizes current state spending levels on affordable housing and public transportation as inadequate. These are all issues he worked on, with mixed success, in Stamford, and he touts his experience running a city slighted by state spending cuts. ("If you want a governor to address property-tax reform, elect a mayor," his website says.)
Foley's claims about cutting the budget solely through spending cuts seem disingenuous, especially because Connecticut residents are used to a large number of state services, and most observers expect a tax increase despite what he says. Malloy's position is seen as an honest reckoning -- residents have seen the Legislature toy with a tax increase for years -- and gives Malloy the benefit of seeming more decisive, like Weicker. Because raising taxes is often a tough sell, Malloy's stance is also seen as brave.
There hasn't been a poll since the primaries, but matchups between the top candidates in July showed Malloy beating Foley 46 percent to 31 percent. And that's a lesson for Democrats everywhere: Sometimes a pro-government, pro-tax message is the right one. Malloy's stance is authentic populism that appeals to the working class and not the faux Tea Party brand that is really just conservative anti-government rhetoric with a new name. Malloy picketed with a health-care workers' union outside a nursing home in Hartford the day of the primary. ("I walked the picket line with people who worked there for 20 years and were still making only $12 to $14 an hour. I will walk with them any day," he said later.) Foley, meanwhile, doesn't shy away from the fact that those in the higher tax brackets are his true base. While the 2010 election is mostly taking place in a topsy-turvy world where populism means cutting programs that benefit the poor and protecting the rich from modest tax increases, in Connecticut, at least, things are as they should be.
